Dividing Real Estate in Maryland
What do you do if you own a piece of real property with someone else, but you can’t stand them anymore? Or you need to sell the property, but they want to keep it? In law, this implicates the doctrine known as “partition.” In a partition action, one owner of a property files suit against another and asks that the property be divided up or sold and the money split. It is similar to what happens in a divorce, but the owners aren’t married. Typical examples: two brothers are made joint owners in their Grandparents will. One brother uses the property, the other would like to sell it and use the money to work on his own house. Also typical two people are in love and buy a house together; their love cools and one moves out. The person that moves out wants to get her money out of the house; the one that stayed is happy with the status quo. What to do? File a partition action and ask the court to either divide up the land (perfect if there are two similar lots) or order the land to be sold and money split (necessary if there is one house on the property and it cannot be split in half).
The right to a partition is set out in the Real Property Article of the Maryland Code. It says:
“Decree of partition (a) A circuit court may decree a partition of any property, either legal or equitable, on the bill or petition of any joint tenant, tenant in common, parcener, or concurrent owner, whether claiming by descent or purchase. If it appears that the property cannot be divided without loss or injury to the parties interested, the court may decree its sale and divide the money resulting from the sale among the parties according to their respective rights. The right to a partition or sale includes the right to a partition or sale of any separate lot or tract of property, and the bill or petition need not pray for a partition of all the lots or tracts.” § 14-107
As the language indicates, if the property cannot be divided without losing value to its owners, then the court should order that it be sold and the proceeds divided. That is what is known as a sale in lieu of partition. Such sales are controlled by a section of the Maryland Rules of Civil Procedure that state: “When the relief sought is a sale in lieu of partition, the court shall order a sale only if it determines that the property cannot be divided without loss or injury to the parties interested.” MD R PROP ACT Rule 12-401.
This is the correct result — if the property can just be split, as with two similar lots that are not improved with buildings — they should be split and the parties can keep or sell them as they see fit. If the property cannot be split, however, it needs to be sold.
For the owners of the property, however, there are very strong reasons not to actually go through the sale as it would be ordered by the Court. Under the Rules, the normal procedure is to appoint three commissioners who can establish a value and oversee the sale. “When the court orders a partition, unless all the parties expressly waive the appointment of commissioners, the court shall appoint not less than three nor more than five disinterested persons to serve as commissioners for the purpose of valuing and dividing the property.”
MD R PROP ACT Rule 12-401. These commissioners, in turn, can be paid out of the proceeds of the sale. “Payment of the compensation, fees, and costs of the commissioners may be included in the costs of the action and allocated among the parties as the court may direct.” MD R PROP ACT Rule 12-401. If needed, the sale would then proceed to judicial sale –an auction on the courthouse steps. This means that, if the owners cannot agree to sell it on the open market, it will likely go for a steep discount and then be subject to significant fees to pay the attorneys, commissioners, trustee, and related court costs. Where possible, it is better to find a resolution before auction.
The bottom line: if you own property and the other side won’t sell, or if someone has sued you to partition a property you own — you will need pragmatic, effective counsel that realizes that all fees and costs will ultimately come out of the value of the clients’ property.
J. Dirk Schwenk is a Maryland Real Estate, Waterfront Property, Civil Litigation and Maritime Lawyer from Annapolis, Maryland. He provides civil litigation services in real estate issues, contract disputes, environmental and zoning issues, adverse possession and boundary disputes. He graduated cum laude (with honors) from the University of Maryland School of Law in 1997 and has been in private practice in Maryland ever since.