What Is A Forced Sale?

Partition for Sakle

                   Court Ordered Forced Sale

If two or more people jointly own a real estate property and one wants out, can that person force a sale of the property? What is the solution when family heirs do not get along and cannot agree as to how inherited assets, mainly real estate, should be distributed or liquidated?

On several occasions over the last year, I have been contacted by one heir of an estate who wants to sell the family farm, undeveloped land or a residential home, a commercial building or whatever, but the other heirs involved cannot agree, and are not willing to sell their portion of the inheritance.  Situations such as this can be confusing and problematic, however, I will lay out for you several options that may prove helpful.

Before I get into this, let me say I am not an attorney and I do not give legal advice. What I am about to say is my understanding regarding certain options that are available to an heir(s) who wants to liquidate their interest in an estate.  Please note that you should always seek legal counsel before pursuing any of these options.  Rules and laws vary from state to state.  I live in North Carolina.

My first recommendation is to create a will as soon as possible.  I cannot emphasize the importance of this enough.  If you die without a will, it is called “dying intestate.”  In a situation such as this, the state will determine who gets the property, both real and personal.  This is beneficial to no one.  Those you care about most in your life do not benefit from your investments, unless the state deems it so.  In contrast, a legalized and well-documented “will,” ensures that your property will be distributed in accordance with your wishes after death.

Lastly, and perhaps most importantly, wills eliminate arguments and disagreements between family members.  Creating a detailed will prevents the emergence of disputes over any portion of an inheritance.  Essentially, the heirs have an “undivided interest” in the property when a will exists unless specified differently.

“Undivided” means that although an heir (example: one of three children) may own 1/3 interest in an estate, the heir cannot point to a specific piece of the property and say, “That is mine.”  Of course, if a specific asset was left to an individual as stated in a will, that would be different.  An heir may sell or transfer their interest in the estate without consulting the other heirs, i.e., owners.  On the other hand, one heir cannot sell or give away the other heir’s interest in the property.  The heirs/owners have the right to use and occupy the entire property regardless of the size of their interest.

Another option that can be beneficial in certain situations is a partition-in-kind.  When heirs disagree about what to do with the inherited property, like land or some other real estate, any heir can ask the court to order a “partition-in-kind.”  This divides the land between owners according to the heirs’ percentage of interest.  If an heir has a 1/3 interest in the property, through a partition-in-kind, that heir should receive a section of the land that is worth 1/3 of the entire value of the property.  If an heir receives a more valuable piece of the land than his share entitles him to, the court may order him to pay some money to the heirs of the less valuable land or property.  This type of court order is called an owelty.  There are many problems in seeking a partition-in-kind, especially when the inherited property is very dissimilar, so this option may not always prove helpful.

Apart from these, partition sales are also worth mentioning.  Heirs can request this type of court order without the consent of any of the other heirs.  Courts order partition sales if physically dividing the property equally is not possible or doing so may cause substantial injury to any of the heirs.  During a partition sale, the land is auctioned off and the highest bidder gets the property.  It does not matter how much or how little the highest bidder bids; there is no requirement that the property be sold for fair market value.

In summary, some of your options are (1) sell your interest to an outside party, (2) have other heir(s) buy you out, (3) request from the court a partition in kind, (4) or ask the court for a forced sale. Again, legal counsel can guide you through these and possible other options.

These options provide only a glimpse of some of the difficulties, as well as possible solutions that exist when inheritances involve multiple heirs.  I am sure that as you have read this, you may still have questions.  Please do not hesitate to give us a call at 252-257-4822 and we will be happy to discuss options related to your specific situation.  You’ll be glad you did!

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