What Is a Partition Action in Colorado?
In Colorado, a “partition action” arises when co-owners can't agree on the proper use of the property, requiring court intervention to settle the dispute. Partition actions are used to physically divide property between the co-owners or compensate each owner for the interest they hold in the property upon its sale.
In this blog, we’ll explore how partition actions work in Colorado and what to expect if you find yourself involved in one.
When Does a Partition Action Arise?
Partition actions generally occur when co-owners are unable to reach an agreement on the use or management of a property. This can happen for a variety of reasons, such as differences in opinion over repairs and maintenance, leasing out the property, or selling it. Common circumstances leading to partition actions include:
- Relatives that jointly own or inherit property
- Unmarried couples that jointly own a property
- Friends who purchase investment properties together
Another common scenario is when multiple family members inherit a property, but have different ideas regarding its use. For example, one relative may want to keep the property for sentimental reasons, while another may prefer to sell.
No matter the reason, understanding partition actions is critical to protecting your rights as a co-owner. Securing representation from a trusted attorney can make a significant difference in your case and ensure your hard-earned assets are protected.
Different Types of Partition Actions
There are two types of partition actions: partition in kind and partition by sale. A partition in kind divides the property physically, giving each co-owner a specific portion of the property. On the other hand, a partition by sale involves selling the entire property and dividing the proceeds among co-owners based on their ownership interest.
Below is a brief overview of partition in kind vs. partition by sale:
Partition in Kind
Partition in kind involves the physical division of the property among co-owners. In cases where equitable division isn’t possible, one co-owner may receive a portion of the property with a higher value than another. For example, if one co-owner is awarded a portion of land with oil access while the other co-owner receives a portion without, the court may determine that the oil access property is more valuable and require the party with the more valuable parcel to pay an equalization charge (owelty) to the other party. Owelty is imposed to ensure that all parties get equal value from the division of the property.
Partition by Sale
Partition by sale is another type of partition involving the sale of the disputed property and an equitable split between co-owners. Keep in mind that an “equitable” split isn’t necessarily the same as an “equal” split. In a partition by sale, the split is generally based on the percentage of shares each owner holds in the property. However, either party may argue that they deserve a larger share of the proceeds than their co-owner and present evidence to support their contention.
Understanding Manifest Prejudice
In the majority of circumstances, a partition in kind is favored over a partition by sale in Colorado. However, a key exception applies when a partition in kind results in “manifest prejudice” to the parties. This occurs when:
- The property’s physical characteristics make it impracticable to divide equitably among co-owners; or
- The value of the entire property is significantly higher than the collective value of the parcels if the property were to be physically divided.
For example, if the property is a single-family home, physically dividing it among co-owners may be unrealistic. In such cases, partition by sale can be more appropriate.
How Are Partition Actions Determined by the Court?
Courts may consider various factors to reach a decision in a partition action lawsuit, such as:
- The property’s location and market value
- Each party’s contributions to the value of the property
- Any past agreements among co-owners regarding the use or division of the property
- Expert testimonies regarding the feasibility of dividing the property in a partition by sale
Courts may also consider maintenance, renovations, and expense coverage to determine the proper division of the sales profits. Additionally, any outstanding debts (such as mortgages or taxes) attached to the property will typically be covered by the sale profits first, with the remainder split between the co-owners.
In situations involving single-family homes, the court may allow one co-owner to keep the house and buy out the other owner’s interest, although this will include certain limitations regarding the length of time to complete the buyout and any necessary refinancing.
How Does the Partition Action Process Work?
To start the partition action process, a co-owner (“plaintiff”) must file a lawsuit in court. The other co-owners are considered the “defendants” in the case. The plaintiff is responsible for providing sufficient evidence indicating the need for court intervention to resolve the dispute among co-owners.
If the judge determines that a partition action is necessary, they may order an appraisal of the property to determine its value. The property will then be physically divided or sold, and the proceeds will be divided among the co-owners according to their ownership interest.
What to Expect in a Partition Action
As part of a partition action, courts generally require the parties to attend mediation to attempt to resolve the dispute without the court's involvement. Common settlement agreements include selling the property using a mutually approved real estate broker or agreeing to buy out shares belonging to the owner who prefers to sell.
If you believe that a partition action is necessary for your property, seeking sound counsel is a must to navigate the legal process effectively. Your lawyer can help you file a complaint in court that outlines the details of your case and requests a partition or sale of the property.
After filing, all other owners must be notified and given time to respond. If no response is received, the court may enter a default judgment in favor of the party who filed the complaint. However, if parties are unable to reach an agreement in mediation or settlement negotiations, the court will make a final decision on how to divide or sell the property.
Remember, the process of filing a partition action can be lengthy and complex. Don't risk your financial security by failing to seek experienced representation. Partnering with a qualified lawyer who is well-versed in Colorado law is crucial to protecting your rights and livelihood.
Contact Our Partition Lawyers in Centennial, CO
Whether you’re defending against a partition action or preparing to initiate one, partnering with a skilled lawyer is paramount to obtaining a fair outcome. At Solutions Based Family Law, our top-rated lawyers have a reputation for providing reliable representation throughout the legal process, giving you peace of mind that your rights and assets are protected. From drafting a detailed settlement to negotiating effectively with other involved parties, you can trust our advocates to represent your best interests while keeping you informed and up-to-date throughout your case.
If you’re preparing to file a partition action, call (720) 463-2232 to schedule a consultation with our award-winning attorneys in Centennial.