Owning property with others can make a lot of sense. It may be a way to afford an investment property without taking on a hefty mortgage, or to share the costs of a vacation home. In other cases, you may have come to co-own land with others through inheritance. 

Whatever the case may be, there may come a time when this joint ownership simply does not work any longer. Perhaps one owner has become responsible for paying most of the expenses, the co-owners can’t agree on how to use the land, or one owner just wants to be done with it. In these situations, a partition action to either divide or force the sale of the property might be necessary. In a partition lawsuit, a court will consider the ownership and interests and contributions of each party before deciding how to either divide the property or divide the proceeds of a sale pursuant to the action.

Ascent Legal Group offers representation to clients in Colorado in real estate matters, including partition actions. We help our clients understand their legal rights related to the co-ownership of property and explore their options for resolving disputes (which may include filing or defending against a partition action). Contact our law offices today to schedule a free consultation with a Colorado real estate lawyer.

What Is a Partition Action?

In a partition action, a person who has an interest in real or personal property can seek to divide (partition) that property through a lawsuit. Essentially, if you co-own property with another person and cannot agree on what to do with it, you could file a partition action to ask a court to decide the issue for you. In a partition action, a court may physically split the property between the parties (if possible) or order a sale of the property, with the proceeds split between the owners.

Any co-owner, tenant in common, or joint tenant with an ownership interest in property can initiate a partition action. While a partition lawsuit can be used to divide interests in both real and personal property (such as a vehicle), it is most commonly used for real property (i.e., real estate). It is usually not worth the expense of a lawsuit to divide personal property through a partition action.

Partition actions can arise in any number of situations. For example, consider a case where a trio of siblings inherits a family cabin. Two of the siblings rarely use the cabin and don’t want to pay their share of taxes, insurance, and maintenance on the property. The third sibling cannot afford to buy out their siblings or pay for everything on their own, but doesn’t want to sell the cabin. In this situation, the two siblings may file a partition action so that a court can decide how to resolve the issue.

Alternatively, consider a situation where the co-owners of a business purchased an office building using their own funds, rather than the business’ money. Eventually, the business split up, and one owner wants to keep the office building as an investment property, while the other wants to sell it. If the two cannot agree on a plan or on a price for one to buy the other out, they may need to resolve the issue through the court system.

In this way, partition actions can prevent a co-owner of real estate from being held hostage by the other owner(s). Instead of having to continue to own property that they may not want to own, a person can seek judicial intervention to resolve the matter.   

A partition action is used to divide co-owners’ interests in a property, not to settle a fundamental dispute over who owns it. While the court will determine each party’s share and contributions as part of the case, a serious question about whether someone holds title at all may need to be resolved through a separate quiet title action. A partition action also isn’t a tool for evicting a co-owner. Instead, it ends the shared ownership itself, either by dividing the property or by selling it and splitting the proceeds.

How Property Is Divided in a Partition Action

There are two possible resolutions that a court may use in a partition action: 

1. Partition In Kind: This is a legal procedure in which a shared property is divided into separate, individual pieces so that each co-owner gets their own title to a portion of the property. The court (with the help of a court-appointed commissioner) splits the asset or property into equitable parcels matching each owner’s legal share.
2. Partition By Sale: With this option, the entire property is sold, and the cash proceeds are split between the owners based on their interest in the property.

In Colorado, a partition in kind is favored over a partition by sale. A court will order a partition in kind unless doing so would result in manifest prejudice to the parties. This may occur when the physical characteristics of the land make it impracticable to divide into portions or where the value of the entire property is much greater than the sum of its parts.

In other words, if physically dividing the property wouldn’t be fair to the co-owners, then a partition by sale may be ordered. For example, if two brothers co-owned a restaurant, it probably wouldn’t be physically possible to divide the building in half between the two. However, if the two brothers owned a plot of land, it may be possible to divide the land so that each brother received title to a portion of the land that represented their share of ownership.

There are other situations where a partition in kind may not be practicable:

• If the characteristics of the land were so unique that the property could not be divided equitably
• Zoning ordinances 
• Land use restrictions
• The nature of the property itself

In these situations, manifest prejudice may result from a partition in kind, so a partition by sale may be ordered. The court must divide each party’s interests and compute the contribution of each owner.  For a partition by sale, the owner will then receive a portion of the proceeds from the sale based on their contributions to and interests in the property. In a partition in kind, these contributions may be considered when dividing the land.

Accounting for the parties’ contributions to the property helps courts reach a more equitable result. For example, two parties own a piece of real estate as co-tenants, which means that they each own 50% of the property. However, one of the owners may have contributed more towards the property, such as paying taxes, insurance, and general upkeep. Accounting for these contributions ensures that the division of the property is fair.

For example, consider a situation where two parties own a house with equity of $300,000 as co-tenants. One party put $50,000 towards the purchase of the house, while the other party put $100,000 towards the purchase. In a partition by sale, it would be inequitable for the court to simply divide the $300,000 proceeds in half based on their 50-50 ownership or to decide that one party had 70% ownership while the other had 30% ownership based on their initial contributions. 

Instead, the court may use an approach that accounts for each party’s contribution to the property to reach a fair result. Here, the party that contributed more would be entitled to half of the equity in the property ($150,000) plus half of their contribution ($50,000), minus half of the other party’s contribution ($25,000). They would be entitled to $175,000 from the sale of the property, while the other party would receive $125,000 ($150,000 + $25,000 – $50,000). Accounting for contributions in this way allows the parties to each benefit from the growth in equity of the property. 

In a partition action, the parties often dispute what may be considered a contribution. Certain expenditures, such as down payments, taxes, HOA fees, assessments, and basic upkeep of the property, could be considered contributions. However, other types of expenses may not necessarily be considered a contribution, such as any type of bill for an “extra” (like internet service) that wouldn’t potentially result in a lien on the property. If the property is renovated, then the additional value added to the property is often counted as a contribution instead of the amount one party paid towards it (some courts may cap the credit to the lesser of value added or cost paid).

As you can see, determining ownership interests and contributions in a partition action can get tricky. Our Colorado civil lawyers will advocate for your interests and fight for you to get the best possible outcome for your case.

Selling a Property Through a Partition By Sale

If a court orders a property to be partitioned by sale, it must also decide how the property will be sold. Colorado’s partition statute provides for a public sale on terms set by the court, but in practice, many co-owners agree on a different approach before the sale takes place. For example, one co-owner may offer to buy out the others at an agreed or appraised value, which can be faster and less expensive than a court-supervised sale. After a breakup, an unmarried couple who jointly owns a house might agree that the partner still living there will buy out the other partner’s share rather than putting the home on the market.

When a court orders partition, Colorado law requires it to appoint one or more disinterested commissioners, and a court-ordered sale generally proceeds as a public sale on terms set by the court. Because that process can be slow and expensive, co-owners often agree instead to have a real estate broker list and sell the property. The parties will need to agree on the terms of the sale, such as:

• Using a receiver or special master
• A sale price
• A forced acceptance of the sale if the offer comes back within a certain percentage of the sale price
• Use of an arbitrator to resolve any disputes
• The terms and conditions of the listing agreement with the real estate broker

Using a broker, commissioner, and/or arbitrator will lead to additional expenses in a partition by sale. These costs should be considered as part of the broader strategy when making decisions about a property dispute.

If the co-owners of a property have agreed to a right of first refusal, then one party may be able to purchase the other party’s interest. Of course, this may bring up the reality that one owner may not be able to buy out the other’s interest. In this situation, the property may be partitioned in kind or by sale.

Filing a Partition Action in Colorado

A partition action is filed in the District Court of the county where the property is located. For example, if the property is located in Colorado Springs, the partition action would be filed in the El Paso County District Court.

All title owners of the property must be named in the lawsuit. Typically, anyone who might hold an interest in the property should be included in the action as well. This may include lenders, lien holders, creditors, or anyone who has an easement on the property. If the property is owned in part by an estate, the personal representative of the estate must be included as a party.

Before starting a partition action, it is a good idea to obtain a title report and litigation guarantee. You should also file a lis pendens with the county clerk and recorder. A lis pendens is a formal public notice that warns others that the property is the subject of pending litigation. If someone else attempts to purchase the property while the partition action is ongoing, they will be on notice of a partition action.

Filing a partition action requires you to draft a formal complaint. The document should include the property’s legal description, ownership percentages for each co-owner, and contributions. It should also specify the relief requested (partition in kind or partition by sale).

If you are served with a copy of a partition lawsuit, it is important to understand that you have rights. This can include defenses, such as:

• Waiver (i.e., the parties agreed not to resolve disputes through a partition action)
• Restrictions on the ability to partition the property (such as restrictions on deeds)
• Non-contemporaneous interests (such as life interests and remainder interests)
• Conflict with the provisions of a divorce decree (i.e., a party seeks to divide property in a way that goes against the property division portion of a finalized dissolution of marriage order).

Broadly, Colorado courts have found that the right to partition is absolute. However, in certain situations, a defendant in a partition action can successfully prevent a division or sale of the property. Most often, this occurs because the parties have explicitly agreed not to resolve a dispute over the property through partition.

Partition lawsuits involve complex property rights. If you are contemplating filing a partition action, it is a good idea to consult with a Colorado civil litigation attorney before moving forward. A lawyer can help you understand your rights and may also advise you of other potential ways to resolve the dispute.

Our Perspective on Partition Actions in Colorado

A partition action is sometimes necessary to resolve disputes between people who jointly own property. However, in our experience, it often results in an outcome that is worse than what the parties may have been able to agree to outside of court. Rather than letting a court decide how your property should be handled, it is often preferable to work out a settlement yourselves.

Of course, if you already can’t get along with the co-owners of the property, then it may not be possible to reach an agreement outside of court. We have seen firsthand how intransigent some people can be when confronted with the prospect of selling property that they don’t want to sell. There is also the simple reality that one owner may not be able to buy out the others.

In our perspective, a partition action shouldn’t be the first resort if you are having problems with the co-owners of a property. It can be time-consuming and expensive to put together the necessary documentation and evidence to support a lawsuit, such as valuations, ownership verifications, an account of contributions made, and expert opinions. However, if you find yourself in a seemingly impossible position related to a piece of property that you own with others, a partition action may be the best solution to resolve the matter and get you out of an untenable situation.

Reach Out to Ascent Legal Group to Learn More

If you own property with one or more other people, you may decide that forcing a division or sale of the land is your best option. Whether you can’t get along with your co-owners or want to sell but can’t get them to agree to it, a partition action may be the solution. Our law firm can help you evaluate your options and decide how to move forward.

At Ascent Legal Group, we offer practical legal advice to Colorado clients across a range of civil matters. When possible, we help our clients resolve their claims outside of court to reduce the stress, time, and expense of litigation. To learn more or to schedule a free 30-minute consultation with a Colorado civil attorney, give us a call at 719-256-0067 or fill out our online contact form.

Frequently Asked Questions about Partition Actions in Colorado

Can I Avoid a Partition Lawsuit?

Yes. In many cases, it is possible to work out an agreement with your co-owners about a property instead of going to court. Partition actions can be costly and often result in a less desirable outcome for the co-owners of the property. In many cases, a Colorado attorney can help you negotiate an agreement with your fellow owners. Otherwise, alternative dispute resolution such as mediation or arbitration can help you come to an agreement.

How Is Property Valued in a Partition Action? 

Valuation of a property is often one of the most hotly contested aspects of a partition action. Each party may have the property appraised on their own to determine a value. If the parties can’t agree on a valuation of the property, a court may order an expert to appraise the property. This valuation will then become key to a fair division of the property based on ownership interests and contributions.

How Is Property Divided Fairly in a Partition In Kind?

In many cases, a piece of real estate cannot be fairly split “down the middle.” A judge will rely on experts and will consider a range of factors when deciding how to equitably divide property between co-owners. For example, if one portion of the property is more valuable because it fronts a major highway, then a court may award the party who receives that part a smaller overall percentage of the property. In some cases, a court may take other actions, such as creating an easement so that the property can be partitioned fairly.

What Happens If A Property Is Worth More As a Whole Than Divided?

Even if a property is capable of being partitioned, a court may not divide it if the value of the land is materially higher if left whole. For example, if a large parcel of land could be sold to a developer if undivided, but had little value if divided among co-owners, then a court may order partition by sale instead of partition in kind. While this may seem unfair to a co-owner who wants to continue to own a portion of the property, it may be the only way to avoid “manifest prejudice” to all of the owners of the property. 

Can Partition Be Used in a Divorce Case to Force the Sale of Our Marital Home?

No. In a Colorado divorce, assets and debts are split through the property division process, not through a separate partition action. However, if former spouses continue to own property together after a divorce is finalized as part of their divorce decree, one party may pursue a partition action to force a division or sale of the property. A Colorado family lawyer can advise you of this and other possibilities if you are considering jointly owning property with your spouse after your divorce is finalized.

Resources:

• Colorado Revised Statutes § 38-28-101. Justia. https://law.justia.com/codes/colorado/title-38/partition/article-28/section-38-28-101
• McNamara v. Mossman. FindLaw. https://caselaw.findlaw.com/court/co-court-of-appeals/1522770.html
• El Paso County Courts. Colorado Judicial Branch. https://www.coloradojudicial.gov/courts/trial-courts/el-paso-county
• Colorado Rules of Civil Procedure Rule 105. LexisNexis. https://advance.lexis.com/documentpage/?pdmfid=1000516&crid=b7d1c2de-38d7-4fb0-b6d1-eebce99121e0&nodeid=AABAAOAAB&nodepath=%2FROOT%2FAAB%2FAABAAO%2FAABAAOAAB&level=3&haschildren=&populated=false&title=Rule+105.+Actions+Concerning+Real+Estate.&config=0153JAAzODIzMTkyYi0wMGVlLTRjZTYtODJkYS0xNjNkYjg1ZWFiNmEKAFBvZENhdGFsb2fOlgkVCVbWdTuP47Jc42rK&pddocfullpath=%2Fshared%2Fdocument%2Fstatutes-legislation%2Furn%3AcontentItem%3A63CY-K261-DYDC-J0RN-00008-00&ecomp=6gf5kkk&prid=3679fff2-d653-4a16-9a04-75d94a0fc65d