Do You Own, or Want to Own, Real Estate with Someone Else? Know Your Rights
If you have purchased real property with another person or persons, apart from your spouse, you have most likely purchased that real property as a “tenant-in-common” with your co-owners. Tenancy in common constitutes one of the most, well, common forms of collective property ownership in Washington State. Although the concept of purchasing a home or investment property with your friends can sound like a great idea on its face, that ownership can nonetheless be fraught with risk. One way to minimize the risks would be to enter into a Tenancy In Common Agreement (“TIC”), essentially a partnership deal with your co-owners that will govern your relationship with respect to the real estate you have collectively purchased. For more information on TICs in Washington State, my colleague, William Kessler, has written a blog post that you can read here.
In the event you have already purchased real property without a TIC and have found yourself in a situation where you and your co-tenants (the other tenants-in-common) simply cannot agree on the future of the property, you have options on how to move forward. Partition remains the most powerful tool for breaking a stalemate with respect to real property ownership. I wrote about previously about partition lawsuits in a blog post here. As discussed in this blog post, when two (or more) parties cannot agree on what to do with real property, one of those parties can typically petition a court to order a sale of the property through the auction process. The auction process essentially forces a sale of the property even when not all the parties want it and thus leads to a final break of the tenancy in common. While the auction process does not typically generate the same level of proceeds that a private market sale would, the partition statute provides a strong remedy to those who want to force a sale over the objection of co-tenants.
However, the mere sale of the property does not end partition litigation. One of the biggest issues in partition actions relates to the ultimate split of the proceeds from any sale. This can result in significant litigation where the intentions and/or conduct of the parties are murky, and/or where the actual contributions to the property are haphazard. Often, tenants in common will make unequal contributions to the real property, through differing down payments, mortgage payments, payments for taxes and insurance, maintenance, and more. Whether the parties never really agreed upon how to address the contributions, or one party simply shirked its obligations, unequal contributions to the ownership of real property are a common situation addressed in partition acts.
Importantly, unequal contributions to a real property subject to partition can dramatically impact the ultimate entitlement of parties to the proceeds from an auction sale (or even an agreed upon private sale). One of the best steps that a co-tenant can do with respect to property ownership in a tenancy in common is to document and account for all the contributions made to the property by all the parties. This may seem very meticulous, especially when owning property with friends, but if a dispute ever arises, the less hazy that accounting, and the clearer the paper trail, the better.
For those who wish to sell a piece of real estate and cannot get the voluntary approval of co-owners, partition remains an extremely powerful tool for ending the tenancy in common and forcing a sale. For those who do not wish their property sold, however, a partition lawsuit represents a potentially anxiety-inducing process heavily laden with risks. The attorneys at Beresford Booth have significant experience in both assisting prospective property purchasers to avoid the pitfalls of future property ownership and helping current property owners navigate through complex issues pertaining to their ownership, including partitions.
If you have any real estate concerns and need assistance or guidance, please do not hesitate to contact Beresford Booth at info@beresfordlaw.com or by phone at (425) 776-4100.
