Partition: The End of Co-Tenancy
John Starkweather | 02.26.18
There are a number ways that you may find yourself owning real estate in common with others. You and your siblings inherit the family farm. You buy a hunting cabin with your brother. You and your sister buy a rental property for extra income. You and your significant other buy a starter home. In situations like this, you and the other owners are called “tenants-in-common,” or “co-tenants.” Although the word “tenant” is typically associated with renters and leases, the law refers to joint owners of property as “co-tenants.”
“Partition is like a divorce action for co-tenants…you can think of a co-tenancy agreement as a pre-nup.”
- Attorney John Starkweather
Co-tenancy is a complicated relationship. Each co-tenant has the right to occupy the entire property, and has no right to exclude the other co-tenants from any part of it. Each is entitled to income and responsible for expenses proportionately. But how do you all farm the same land at the same time? What happens when your brother stops paying his share of expenses on the hunting cabin, and starts living there full time after his wife kicks him out of the house? What happens when your sister wants to build a decorative fence but you can’t afford to pay half? And if you and your significant other break up, who gets to stay in the house?
I have represented someone like you in each of these scenarios, in something called a “partition” action. Partition is like a divorce action for co-tenants. It’s a no-fault concept: it merely requires one co-tenant to decide that he or she no longer wants to be in a co-tenant relationship. Unfortunately, like divorce, it’s an expensive, time-consuming, and emotionally fraught experience. In the end, the court usually orders the property to be sold — often for less than fair market value.
A better approach is to draft and negotiate a co-tenancy agreement at the beginning of the relationship. In some cases, it might make sense to form a limited liability company for further protection against liability. And although it’s not guaranteed to address every potential problem, we find that co-tenants invariably benefit from clear, written direction on how each is entitled and obligated to use, contribute to, and benefit from the property. You can think of it as a “pre-nup” for co-tenants.
DISCLAIMER: The information provided is for general informational purposes only. This post is not updated to account for changes in the law and should not be considered tax or legal advice. This article is not intended to create an attorney-client relationship. You should consult with legal and/or financial advisors for legal and tax advice tailored to your specific circumstances.