Gordon Orloff

Some individuals are looking for ways to raise cash as the COVID-19 pandemic continues. Among the assets that someone may consider liquidating is jointly owned real estate. There are practical issues in the real estate market at present. However, this article will discuss the legal issues surrounding the sale of jointly owned real estate when the joint owners do not agree on how to dispose of the property, or even on whether to sell it. 

The simplest way to address this issue is for one owner to buy out the other or others. However, this is not always a viable solution. When co-owners of property in Massachusetts remain at loggerheads regarding whether to dispose of it, they can turn to the courts and file a “petition to partition.” 

When faced with a petition to partition, courts first look for a way to physically divide the property on the ground. However, if that is impractical, as in the case of a a single–family home, then a different approach is called for. A recent Land Court decision, Clarke v. Morgan, provides a good example of the issues faced in these types of actions. 

Recent Case Shows Issues 

Janice Clarke and Sheila Morgan are sisters. Clarke, a sophisticated individual, purchased a condominium unit with her husband that was meant to provide a home for Clarke’s and Morgan’s elderly mother. Morgan also lived there and took care of their mother at night. Clarke received full ownership of the unit after her divorce and later, in 2009, conveyed it to herself and her sister as joint tenants. By then, their mother had moved to a nursing home and Morgan had found a rent–paying tenant to live in the unit with her. 

After a falling out, the sisters agreed to sell the unit, but they could not agree on how to allocate the proceeds of the sale. In some cases, when parties cannot agree on a sale the court may appoint a commissioner and authorize him or her to engage a broker to sell the property; however, this did not happen here. 

Judge Michael Vhay first considered Clarke’s claim that she was entitled to more than 50 percent of the net sales proceeds because she had been the sole owner of the unit. However, he rejected that position because Clarke was sophisticated and had knowingly decided to create the joint tenancy despite having other ownership options available. 

Judge Vhay also refused reimbursement for improvements that a party could not establish were made after the joint tenancy was created. Nevertheless, the improvements discussed are typical of those that arise in partition actions: purchasing a refrigerator, a dishwasher, a stove and garbage disposals, replacing the roof and an oil tank, adding a deck and improving the basement and drainage. 

On the other hand, the decision did credit $13,925 to Morgan for her outlays following the time that she became a joint owner to install new windows, siding and other exterior improvements and to replace the unit’s boiler. 

Morgan was also entitled to reimbursement for  half of certain real estate taxes she had paid. However, she was required to reimburse Clarke for her share of the net profits from some of the rent that Morgan had collected. 

What Owners Should Know 

This example demonstrates the detailed accounting issues that frequently arise in petitions to partition. Presenting this evidence will require combing through receipts and also may necessitate engaging an accountant. Although the court may order the parties to share the costs of a petition to partition, the proceeding will be more costly than simply engaging a broker, selling the property and reaching a consensual agreement on how to divide the proceeds of a sale.   

Before commencing a petition to partition, an owner should also consider that all litigation moves far more slowly than most parties expect or would like. At this time, courts in Massachusetts are hearing only emergency matters and so one can expect even longer delays than usual. It is unlikely that a newly filed case could be resolved in under 18 months, and it may well take longer. So, barring a prompt settlement, a petition to partition will not result in fast money. Another consideration is that beneficiaries of a trust that owns real estate do not have the right to file a petition to partition that land.  

Notwithstanding these issues, a petition to partition is the only way to engineer a break–up when co-owners of real estate cannot agree on whether to sell their real estate or how to divide the proceeds of a sale. Always consult with your attorney before taking this route.  

Gordon M. Orloff is a Boston-based attorney at Rackemann, Sawyer & Brewster who focuses on real estate, probate and business litigation.