Partitioning Property: A Private Sale May Be Authorized Only by Agreement

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Partitioning Property: A Private Sale May Be Authorized Only by Agreement

February 3, 2016

By: Justin C. Carlin

Knife cutting house in halves

When property (such as real estate or a building) is co-owned and not capable of being divided in half (e.g., a house cannot be cut in half without ruining the house), either co-owner may petition the Circuit Court in which the property is located to have the property partitioned—i.e., sold by an Order of the Court, with the proceeds from the sale, after payment of the costs of the sale and attorneys’ fees associated with the partition action, divided between the co-owners in accordance with his or her proportionate ownership interest in the property.

The procedures for partitioning property are set forth in Chapter 64 of the Florida Statutes. In addition, there are several appellate court decisions that have interpreted that Chapter. Taken together, the rules for partitioning property are well-defined but, unfortunately, often misunderstood or misapplied, even by experienced lawyers and judges. Moreover, some of the rules are counter-intuitive, resulting in the erroneous application of the rules by trial courts and the implementation of nonsensical strategies by lawyers initiating or defending against partition actions.  These patterns are illustrated by (among other things) the frequency at which appellate courts have reversed all or a portion of trial courts’ decisions relating to the partition of property.

A new decision in the First District Court of Appeal, for example, illustrates one of the most common mistakes lawyers make when seeking to partition property on behalf of their clients: asking the Court to order the property sold at a private sale over the opposing party’s objection.  In the Crusaw case, the First District reversed a trial court’s Order for the private sale of the property to be partitioned absent the agreement of the other co-owner of the property, observing the well-settled principle that, under Chapter 64, a court may order a private sale only if all of the property owners agree to such a sale.  Otherwise, it must order that the property be sold at a public auction.

The current partition law concerning this issue can be costly to the  parties.  A private sale, of course, permits the co-owners of the property to maximize their investment, because the sale price at a private sale will be considerably more than what would be produced at a public auction.  At a public auction, the pool of potential buyers is much smaller, because most people looking to buy a home do so by retaining a realtor to help them locate a property or otherwise searching the Multiple Listing Service, or the “MLS.”  Because there are fewer potential buyers, there is less competition among buyers, which drives down the purchase price.

Moreover, unlike in a private sale, a buyer at a public auction has no right of inspection, which creates considerable risk to the buyer that could be avoided simply by buying another home that is capable of being inspected prior to closing.  The risk involved in purchasing a home without having it inspected further reduces the purchase price that a buyer at a public auction is willing to pay.

In sum, despite the obvious economic benefits of ordering a private sale, the partition statutes do not authorize a private sale absent the parties’ agreement that the property should be sold at a private sale, rather than at a public auction.  Remarkably, parties to partition cases will often stubbornly—out of apparent spite or apparent ignorance as to the consequences—refuse to agree to have the property sold at a private sale, thereby throwing away thousands of dollars, all for the purpose of “winning.”

If you own property jointly with someone and can’t agree on how the property is to be used or whether the property is to be sold, it is important that you contact a Florida real estate attorney who is familiar with the laws relating to partition.  As evidenced by the Crusaw decision, there are a lot of traps into which parties, their lawyers, and trial courts are apt to fall.  If you are in need of legal representation in a partition action, please contact our office in Fort Lauderdale to schedule a consultation with a Broward County real estate attorney.

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