I am sometimes asked by a client who has inherited property with their siblings, “what if my siblings and I don’t agree on what to do with land we inherited?”
Disagreements between co-owners may arise over whether to sell, who pays taxes, who gets to use the property, who gets income from it, etc. If all co-owners know the law, it may help prevent or resolve conflicts. Any co-owner has the right to use the property if he wants, but not the right to exclude other co-owners from using it. If one co-owner rents out the property, the other co-owners have a right to their share of the income. If one co-owner pays the property taxes, she has the right to have the other co-owners reimburse their shares.
The harder question comes about if some co-owners want to sell the property and others don’t, or if one co-owner wants his share out and there is no agreement to buy him out. The law will not require someone to be stuck co-owning land against his will. A legal action called a “partition” addresses the problem. However, what the court will do with the situation depends on the characteristics of the property.
If the land is large enough, the court will order a partition “in kind,” meaning that the land will be divided into separate parcels. At the end of the process, each co-owner will be the sole owner of his or her own smaller piece of land whose value equals his or her proportional share of the larger tract. So, if there are three equal co-owners of the large tract, a partition in kind will have each one owning his or her individual tract whose value is one-third of the value of the larger parcel. To accomplish this, the court will appoint three commissioners, usually a lawyer, a surveyor and an appraiser. These three commissioners are told to value the entire parcel, and then figure out a way to divide it up so that each smaller tract is correctly valued. This may not mean equal acreage for equal owners, but it will mean equal value. Remember that features like road frontage, perc sites, gullies, water features, and power lines may make some parts of the parcel worth more or less per acre than other parts. Co-owners may request the commissioners to assign them a particular part of the large parcel, but the commissioners are not bound by that. If a co-owner does not like the commissioners’ recommendation, she can raise that objection with the court, who will decide the issue.
If the land is not large enough to divide in kind, the court will order a partition “by sale.” This means that the court will oversee the sale of the property for fair market value. If any co-owners want to buy out the others instead of selling it on the open market, they may do so. Expenses of the sale and partition are paid first. After that, the proceeds are divided among the co-owners according to their percentage interest in the property.
It saves time and expense if the parties can communicate and resolve disputes by agreement. If they cannot reach agreement, however, that is what judges are for.