What happens when co-owners can’t agree on how to share the ownership responsibilities of a piece of real estate? Perhaps it is a residence, a commercial property or vacant land and the owners cannot agree on how to share the payment of taxes, costs of maintenance, or need for improvements to the property. Perhaps they cannot even agree on selling the property to resolve their disputes. In cases where co-owners cannot work out a resolution on their own, one or more may need to resort to the Courts for a solution.
New Jersey provides an equitable remedy known as partition. The term “partition” means the division of property among co-owners. Real property held by co-owners as a tenancy in common or a joint tenancy (but not by spouses as tenants by the entirety or by N.J. registered domestic partners) may be partitioned. The process for doing this is governed by New Jersey statutory law. N.J.S.A. 2A:56-1 et seq. Any co-owner can seek a partition, provided he/she has not previously waived their right to do so.
While properties can be physically divided by the Court and distributed among the co-owners, this is not common and generally applies only to vacant land. If there is to be a physical division, then the Court may appoint a commissioner to recommend a proposed division of the property. More often, the Court will order a sale of the property and an equitable division of the proceeds among the co-owners. The Court may direct the sale of property if it appears that a partition of the property cannot be made without great prejudice to the owners, or persons interested in the property. See N.J.S.A. 2A:56-2. The Court may also order a partition which would permit one co-owner to purchase the interest(s) of the remaining co-owner(s) in lieu of a physical division of the property or a court-order sale.
It is not unusual for a party to a partition action to seek an adjustment by the Court of sale proceeds to take into account any taxes paid by an owner in excess of the owner’s fair share, or repairs or other improvements made by a co-owner which increased the value of the property. A co-owner may also want an adjustment for the use of the premises by another owner or by another owner’s failure to properly maintain the property.
In certain instances, frequently with commercial property, the Court may decide to appoint a receiver to oversee the property and collect rents and other income and pay expenses during the course of the litigation.
Co-owners should recognize that anytime it is necessary to resort to the courts significant additional expenses are incurred, whether it is for attorneys to properly represent co-owners’ interests or for commissioners to propose a division of the land or receivers to oversee the property. It is always worthwhile to attempt to work out an amicable solution among the co-owners. However, if that is not possible, there remains a partition action with the Court.