Decoding Co-Owner Rights in New Jersey Property Sale Disputes

You and your romantic partner thought it was a brilliant idea when you went in on a property together. You both needed a place to live and had the savings and goal to buy real property. Sharing the expenses would make the house affordable, so you thought it was a wise investment. However, the relationship has ended, and now you want to sell the property. Unfortunately, your partner does not. Now, you wonder what you can do.

Primary Ways to Co-Own Property and their Impact on Rights to Sell in NJ

Your answer depends on many factors, one of which is the type of co-ownership you have, tenancy in common, joint tenancy, or tenancy by the entirety.

1. Tenancy in Common

The first type, tenancy in common, is when multiple people own a property, each having rights to the entire property. The key feature of this type of co-ownership is the right to pass an ownership interest to heirs. In other words, when one of the co-owners dies, their percentage of the property passes to their heirs, according to their will or trust.

2. Joint Tenancy

On the other hand, joint tenancy includes a right of survivorship, meaning the co-owner who survives the other co-owner automatically inherits the property. Like tenancy in common, each owner has rights to the entire property but not the right to pass their property interest to someone other than the remaining joint tenant or tenants. Spouses often own homes or other real property in joint tenancy or tenancy by the entirety.

3. Tenancy by the Entirety

Tenancy by the entirety is available to married couples only. Each has an equal interest in the property with the right of survivorship with the added benefit of creditor protection. So, if one spouse incurs debt, their creditor cannot seek payment from the property. However, married couples with too many jointly owned assets may lose available tax exemptions at the transfer of property upon one spouse’s death.

All three forms of ownership are specified in the title of the deeds and have specific benefits. For instance, a parent may wish to avoid the costs and time of probate by adding their child to the property deed as joint tenants. However, joint tenants cannot sell a property without co-owner consent or a court order to sell the property. Likewise, spouses cannot sell property held as tenants in its entirety without consent or a court order. Tenants in common may sell their interests in real property without the co-owners’ consent.

Finding Options and Solutions When New Jersey Co-Owners Disagree About Selling

When a co-owner refuses to sell real property, the one desiring to sell has several options.

Negotiation and Compromise

One place to start is negotiating a mutually acceptable compromise. Parties to the dispute can negotiate more favorable terms to the withholding party for a current or future sale or promise to buy the other party’s interest. They can agree to sell one party’s interest to a buyer who will rent to the party disputing the sale. In any event, the parties can create their own solutions and enter a written agreement to resolve the dispute.

Mediation

Another option is mediation, which calls on a third party to hear each side’s reasons for selling or not selling and suggest compromises. A person familiar with real estate law is helpful through professional real estate mediation services, which may be the best choice, and all parties can have attorneys help them through the process. Even informal mediation can help facilitate communication between the parties when a third party understands the issues.

Partition Action in Court

Barring an agreement, those wishing to sell can petition the court for a partition of the property. In filing a partition action, the plaintiff requests a court to divide the property (partition in kind) or sell it and divide the sale proceeds (partition by sale). Since dividing a physical property is not always possible or fair, the more common partition action result is a sale and proceeds split according to each owner’s interest and credits for maintenance, enhancements, taxes, repairs, and other contributions to the property. Courts prefer the partition by sale.

Buyout Considerations

Should the parties agree to a buy-out, they must ensure that the co-owner buying can qualify for a mortgage or can buy out the other co-owner at the fair market value price. A trusted realtor can provide comparable property listings to help the parties arrive at a fair price, or an appraiser can value the property. The parties can also agree on a price without the use of outsiders.

Co-Ownership Agreement

Ideally, the parties enter into an agreement before jointly purchasing property so that solutions to disputes are already in place. Unfortunately, many co-owners do not have agreements, but if they do, one or several owners may have a breach-of-contract action. Typical disputes arise when some co-owners are not paying their fair share of the expenses of property ownership. When contract terms require each co-owner to share equally in the expenses, the one who breaches the contract may face a lawsuit.

What Influences Partition Action Determinations in New Jersey?

In a partition action under New Jersey statutes (N.J.S.A. 2A:56-1 et seq.), the court considers several factors in deciding whether the partition is appropriate and, if so, how to accomplish it. The first consideration is the best interests of the parties. Parties resisting partition may have financial issues restricting them from finding other housing or similar financial or life situation concerns. Likewise, a person filing for partition may need the sale proceeds for urgent needs, like healthcare. A court must consider the hardships to the parties in a partition action and decide how to address each party’s needs.

Another factor is the partition method. Undeveloped land may be suitable for a partition in kind, where each party retains their proportional interest in the land. However, partition by sale is typically the most logical choice and serves the parties’ best interests, especially when dividing the property in kind is impractical, impossible, or destructive. Here, the court considers whether partition in kind would devalue the property or be unworkable given the disputes between the parties.

Other factors include the property’s fair market value and the real estate market, as well as each party’s contributions to the property upkeep to arrive at a fair distribution of proceeds. To resolve money disputes, the property’s rental value for non-occupying co-owners may be relevant when one party claims an offset to another’s overpayment of property maintenance. Another factor is the sentimental value to co-owners for family co-owners to an inherited property. Some may want to keep the property in the family. Finally, prior agreements between the parties might affect the outcome of the partition action.

Analyzing How to Manage Property Co-Ownership Disputes in NJ Divorce

Co-owner spouses in divorce proceedings have similar options as others seeking to sell real property when a co-owner does not. The spouses can negotiate a solution, including buying the reluctant spouse out or exchanging the value of the hesitant spouse’s interest for another property or valued item. In the absence of an agreement, however, both have the right to the disputed property, so that legal action may be the only solution.

In divorce, a spouse may petition the family court to compel the sale of the property in dispute. The outcome depends on many factors, including the parties’ financial resources and needs, the type of real property, sentimental value, and children’s needs. Individuals and courts can arrive at creative solutions, such as waiting until the children are no longer minors to sell property with financial incentives to the non-occupying property. Divorce and the marital home is always a complicated matter, and each couple’s situation must be assessed based on the unique factors of the case.

Ease Your Frustration about Co-Owner Property Sale Disputes in Monmouth and Ocean County, NJ with Help from a Real Estate Lawyer

Arguing with co-owners about what is fair in selling or dividing property is frustrating, especially when you do not know your legal rights. You may feel relieved and confident after receiving further guidance and education about your options and legal rights from an experienced real estate attorney at Bronzino Law Firm. We can discuss possible solutions in negotiating an agreement about your interests in real property, your rights to compel a sale, your ability to buy out co-owners, whether you can live at the property, and other questions. Disputes that seem impossible to bridge can open possibilities when you discuss possible scenarios with an experienced attorney on our team who has helped others in the same situation. Whether you are facing a sale you do not want or you want to sell property that a co-owner refuses to sell in Freehold, Asbury Park, Long Branch, Brick, Middletown, Red Bank, Holmdel, Toms River, Lakewood, Jackson, Point Pleasant, Berkeley or elsewhere in Ocean and Monmouth County, seek counsel and skilled representation from our seasoned real estate lawyers today. Contact us at (732) 812-3102 for a free consultation.