Q: A while back, I bought a property with a partner, and we each paid part of the purchase price. Since then, I have been taking care of it and paying the taxes and insurance. We have been splitting the profit from renting it. Now, my partner wants to quit the partnership and cash out. How would this work? — Anonymous
A: When people own property together, they are expected to share the rights and responsibilities associated with ownership. The co-owners decide how to split the work and profits, either by an agreement or just by what happens as time passes.
Everyone getting into this situation should have a written agreement clearly outlining the relationship, as this will make sure everyone is on the same page and will make things easier to deal with should a disagreement occur. Unfortunately, most people forego this step in the excitement of beginning a new endeavor.
While many people can get along well enough, sometimes a conflict will develop regarding the maintenance or disposition of the property.
For instance, one owner might wish to sell the property while the other does not, or an owner may believe they are contributing more than their fair share to the maintenance.
Should this occur, it is best to work things out in a way that is fair to both parties.
Conflict can be emotionally and financially draining and is best avoided when possible. Have a sit-down with your partner and work through your options. If you want to buy out their share, try to agree on a price. If not, try to work out how to fairly divide the proceeds when the property is sold.
If conflict cannot be avoided, filing a “partition” lawsuit may be necessary. In a partition, the court will examine the circumstances of the property’s purchase and ownership to determine a way to divide the owners’ interests fairly. This type of lawsuit is similar to a divorce for property owners.
The judge will consider factors such as the down payment, mortgage payments, taxes, expenses, and use of the property to create a fair division.
This process typically requires selling the property, sometimes to one of the existing owners, then settling any debts and distributing the remaining equity fairly.
Board-certified real estate lawyer Gary Singer writes about industry legal matters and the housing market. To ask him a question, email him at gary@garysingerlaw.com, or go to SunSentinel.com/askpro.