If you are a co-owner of real estate, or a real estate professional, it is important that you understand how to navigate disputes between co-owners of real property and how to bring those disputes to an end.
Partition - Dividing Co-Owned Real Estate
You own real estate with a another person or business entity and now want to sell the property, but the other owner refuses to cooperate or participate in the sale. How can you divide the property and be properly compensated?
Unless you and the other co-owner have a written agreement to the contrary, every co-owner has the absolute right to institute an action in partition. A partition action allows co-owners who no longer can afford, or want, to own a particular piece of real estate to divest themselves of all ownership for fair compensation. The end result of this court supervised process could result in the physical division of the land, a sale of some or all of the land, or the individual ownership of some or all of the land by certain co-owners. Also, improvements, expenses, unpaid rental, liens, mortgages, taxes and other claims on the real estate are addressed during a partition action and subtracted or credited from each co-owner’s share of the value of the real estate.
Fair Rental Value and Co-Owned Real Estate
You own real estate with another person or entity that rents or occupies the property for their own use
and benefit, excluding you from the property. Are you entitled to rent from the other co-owner?
Yes, unless there is a contrary enforceable agreement. Pennsylvania law provides that a co-owner of property who is not in possession of the real estate at issue may sue for proportionate rent from the co-owner in possession for the entire period that the co-owner occupies the property for their own use and benefit. You are entitled to the rent the property will command in the open market had the co-owner not been in possession. A rental claim may be asserted in a partition action, where the rental value will be deducted from the co-owner’s distributive share after partition.
Recovering the Value of Improvements to Co-Owned Real Estate
As a co-owner of real estate, may you improve the co-owned real estate, by expending money, making repairs, or adding features or structures?
As a general rule, where a co-owner places improvements on the common property, equity will take this fact into consideration on partition of the ground and will in some way compensate him for such improvements, provided that the improvements are made in good faith and are of a necessary and substantial nature, materially enhancing the value of the common property. Such credits can be claimed only for those improvements "that may be necessary to preserve and protect the integrity of the existing premises for the common benefit of all the co-tenants." Thus, as a threshold matter, the improvements for which a party seeks credit must have been "necessary" to preserve or safeguard the residence.
It is important to remember that just because “the work was done” does not make it “necessary.” For example, the installation of kitchen cabinets, the replacement of 22 windows, and of the kitchen floor tiles, sink, faucets, and a countertop were found to be not necessary to preserve or safeguard the property. One joint tenant or tenant in common cannot unilaterally erect buildings or make improvements on the common property, but instead must have the consent of the rest if any recovery of expenses for the improvements are sought.
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