Estelle Kuchlik, 14

When ‘in-common’ is in strife

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When my mom died, I wanted to keep her house; my brother wanted to sell it. Not very much different from the scenarios I see when I serve as trustee for various estates.

Now, in my case, I elected to sell the house. I could have kept it and bought out my brother’s interest. That could have entailed getting an appraisal- and since there was a downturn in the economy then, I would have gotten away cheap. (Although, in my mind, most homes in Florida are cheap.) But, we did sell it. Which meant that we both took a financial hit. (I know if I bought him out and sold it later for another $ 100K, there would have been permanent resentment.)

Some parents bequeath the family home to their children as tenants in common. Which means that one of the parties can go to court and demand “partition”. This basically means that the residence is sold. Period.

But, sometimes a party will sell their interest to a third party. That third party becomes the tenant-in-common with the party(ies) that want to retain the propery. That third party may also then decide to file the partition lawsuit- or may be willing to hold on to the property, hoping its value escalates.

The real problem in both of these scenarios is that when something like this happens, the only winners are the lawyers- or the speculator who bought out the interest of one of the parties. Because if there is a partition- the sale often proceeds as if the house was foreclosed. Which means the house is advertised and then sold right on the courthouse steps after a few weeks.

Admittedly, this is not a national problem. Because some states have adopted what is called the “Uniform Partition of Heirs Property Act”. The purpose of this law is to enable those parties who want to keep the property obtain advance notice of sale. It requires appraisals of the property to ensure that the property can avoid being sold using “foreclosure” rules. And, it also arranges process for the party who wants to retain the property a proces to purchase the ownership from those who wish to sell the property (using the appraised value).

But, this is only the law in Nevada, Wyoming, Arkansas, Alabama, Connecticut, and Georgia right now. The act is being considered for adoption in DC, West Virginia, South Carolina, and Mississippi.

So, if you live elsewhere- or have a tenant-in-common ownership in any property- you could be at risk.

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11 thoughts on “When ‘in-common’ is in strife”

  1. I live in Colombia so this doesn’t apply to me, although I did live in the States for 30 years, but I don’t own property there. This is excellent advice for people caught in an inheritance mess like this.

    1. Paulette:
      I don’t know the rules in Colombia, so I can’t make a comment. But, as you can see, other folks who live elsewhere and have property in the States are subject to these issues.
      Thanks for the visit and the comment!

  2. ok, now you’ve got me thinking. We live in Puerto Vallarta, Mexico but still own our house in Wisconsin along with the bank that we pay each month. One of our daughters lives in the house and her and her husband maintain it. Should we die, which is more than likely to happen on day, the 4 of the 5 children are all going to want to take the money and run. The daughter that is living there and raising her family is going to want to keep it. Now I must come up with a way she can keep it without all her brothers and sister turning against her.

    1. This is EXACTLY why I wrote the blog piece, Chef William.
      I have seen this scenario way too many times. And, I earn my fees by negotiating a settlement that seems to match “the original intentions”. But, now, we are getting far more integrative and working with clients so these facts become clear before they’ve passed on property to their children. And, with business clients who buy large apartment complexes or malls as tenants-in-common.
      There are some great systems out there to use.

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