This article provides clear instructions on how to force the sale of jointly owned property. Although forced sales can be complex, this article boils the process down to its basics. For more information on the forced sale and partition process, see the following articles: (1) Forced Sale of Jointly Owned Property (Partition); and (2) What is a Partition Action? (NOTE: this article is based on Oklahoma law, but the same concepts apply in most states.
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UNDERSTAND CURRENT OWNERSHIP
Make sure you understand current ownership. Clarify who owns what percentage of the property. If necessary, obtain a title report from a title company. You don't need a full title opinion; you just need a title report. Many title companies provide a title reports showing current ownership for a flat fee around $100.00.
IDENTIFY THE BURDENS AND BENEFITS OF OWNERSHIP
After confirming ownership, try to identify the “burdens and benefits” of ownership. The “burdens” of ownership include taxes, mortgage payments, repairs, and improvements. Basically, identify who shelled out money for the property. Whoever bore the financial burdens of ownership might receive a greater share of proceeds from the sale. You want to know this in advance. Likewise, determine the “benefits” of ownership. Has one person been living at the property, leasing it, or enjoying it more than the other owners? This person might suffer a reduction in sale profits due to the disproportionate benefits received in the past. Just get a basic idea of the economic factors at play.
ATTEMPT A VOLUNTARY SALE
Attempt to negotiate a voluntary sale. Typically, a voluntary sale on the open market brings more money than a forced sale at auction. Make every effort to resolve differences with the other co-owners and negotiate a sale. If the other owners will not agree, you can put some pressure on them. Send them a letter, preferably from an attorney, which mentions the possibility of a forced sale. Make them aware that under Oklahoma law, a co-owner can generally partition property. In other words, if a voluntarily sale cannot happen, then a forced sale may very well happen. Make it clear that you know how to force the sale of jointly owned property. Faced with the choice between a voluntary sale and a forced sale, the other co-owners might begin to think more seriously about a voluntary sale.
FILE AND SERVE A PETITION TO PARTITION
Failing a voluntary sale, prepare a Petition to Partition. This Petition must follow very specific Oklahoma partition statutes. See 12 Okla. Stat. Section 1501, et al. Partition requires detailed legal work, so most individuals prefer to hire a real estate attorney rather than go it alone. However, if you feel up to the job, read all of the partition statutes in detail and ensure that you understand them. All co-owners and anyone who claims an interest in the property, such as mortgage or lien holders, must be included. The Petition must be served on all parties in accordance with Oklahoma law.
DETERMINE WHETHER PROPERTY DIVISION IS POSSIBLE
If dealing with rural property, land, or acreage, the Court may prefer to literally divide up the property itself and give each co-owner a piece. This process, called “division in-kind” can only happen for land and acreage. You cannot literally divide a house in half. In the partition lawsuit, the judge determines whether to divide the property itself, or forcibly sell the property and divide the proceeds.
GET AN APPRAISAL
The partition process requires an appraisal. Three real estate professionals must be appointed and approved by the judge. The appraisers value the property and file a report in the court record. If and when the property goes to forced auction, it cannot sell for less than 2/3rds of the appraised amount.
SELL THE PROPERTY
If the Court approves the relief requested, you must coordinate a forced auction through the Sheriff's office. The Sheriff accepts bids from the public and deeds the property to the new owner. Ensure that you adequately market the property prior to the auction. The Sheriff will not do a good job of marketing the property. Preferably, use a real estate agent who understands the forced sale process. If only a few bidders show up at the auction, you may suffer a decrease in sale price.
DIVIDE THE PROCEEDS
As a general rule, the sale proceeds split according to ownership interests. If you own 10% of the property, you get 10% of the proceeds after deduction of fees and costs. NOTE: attorneys typically get paid from the proceeds, based on Oklahoma law. However, the profit splits may change if one of the co-owners calls for an “accounting.” To put it simply, an accounting occurs when the Court evaluates the “burdens and benefits” of ownership, as discussed above. The Court “takes into account” each party's level of investment and benefit, and if necessary, the Court adjusts profit splits to achieve a fair outcome. This adjustment process may not happen unless someone calls for an accounting.
LEGAL REPRESENTATION FOR FORCED SALES
Now that you know how to force the sale of jointly owned property, please feel free to contact me with any questions or concerns. Having dealt with Oklahoma partition lawsuits in the past, I would be happy to assist you.