What is a Sale in Lieu of Partition in Maryland?
Owning a property with someone else comes with certain benefits. You can split costs associated with property maintenance, tackle important decisions with the help of someone you trust, and benefit from the use of the property as you see fit. However, owning a property with another party can also be stressful, time-consuming, and unfair. Perhaps one party does not want to contribute to the upkeep of the property or pay the costs associated with the property. Maybe one party wants exclusive use of the property—or worse, maybe both do.
When multiple people have a stake in one piece of property, it’s not uncommon for everyone involved to have their own idea about how best to use that property. A sale in lieu of partition is one way to solve these disputes.
Solving Disputes
These disputes may arise when multiple beneficiaries inherit property or when a divorcing couple is trying to decide what to do with marital property.
Before taking this issue before a judge, it’s often best to try other dispute resolution methods first. Mediation is one option that can yield a beneficial outcome while still protecting the relationships of the people involved. This can be helpful if the other parties are your siblings or perhaps an ex-spouse with whom you have to co-parent for years to come.
Mediation or informal negotiations may provide different outcomes: continuing to co-own the property, one or more parties buying out those who no longer want to own the property, or selling the property.
Sale in Lieu of Partition
Unfortunately, negotiations don’t always pan out. They can fall apart at any step of the process, and you cannot force someone to continue negotiating—if they want to take it to court, they are free to do so. This may happen if one party wants to continue to own the property in question, but they do not have the credit or income to refinance it in their name or buy out the other owner.
In this situation, they may want their co-owner to remain as co-owner while they save up to refinance on their own. A dispute may also go to court if some owners want to buy the others out but cannot come to an agreement about how much their shares are worth.
When this happens, the issue generally goes to court. The owner who no longer wants ownership of the property can ask the court to force a sale in lieu of partition. Rather than continuing to co-own the property, the court can force the owners to put the house up for sale.
Once the owner who wants to force the sale takes the issue to court, the judge will look at the facts and determine whether or not to sell the property in question. If they side with the party who wants to sell, they will sell it via judicial auction after getting the property appraised. In some cases, the court will also have the property sold on the open market in order to protect its value and the owner’s investment.
Upon selling the property, the commissioners and trustees involved in the sale are paid their fees. The proceeds are used to cover other fees and expenses due upon the sale. Any money remaining is split among the co-owners as dictated by their share of ownership.
How a Sale in Lieu of Partition Can Affect You
It should come as no surprise that a sale in lieu of partition is generally considered a last resort in real estate disputes. It is almost always better to figure out these issues via mediation or negotiation, as it allows all involved parties to maintain control over the process. Once a sale is forced, the interpersonal relationships of the people involved may suffer as a result.
Additionally, a sale in lieu of partition will cost you. The fees associated with this are higher than they are with traditional real estate sales, due to the involvement of the court. Furthermore, everyone involved has their own legal fees to cover.
Having said that, this doesn’t mean that a sale in lieu of partition may not be the right solution for you. When you have truly exhausted all other avenues, this could be the best option remaining for you.
