In Washington, DC, the Superior Court has the authority to divide property among its owners in two primary ways. The first method, known as partition in kind, involves a court-ordered physical division of the property. The second approach, termed a sale in lieu of partition, involves the court mandating the sale of the property and subsequent division of the sale proceeds among the owners. These partition cases fall under the regulations outlined in D.C. Code Section §16-2901 et. seq.
What is Partition in Kind?
In Washington, DC, partition in kind is a court-ordered physical division of property among co-owners, and it’s an option considered under specific criteria. The court assesses whether such a division would substantially prejudice the co-owners by considering several factors. These include the practicality of dividing the property, whether dividing it would substantially decrease its aggregate market value, and the collective duration of ownership among co-owners. The court also considers any sentimental attachment a co-owner might have to the property, especially if it holds ancestral or unique value. Additionally, the court looks at the lawful use currently being made of the property and how significantly a co-owner would be harmed if unable to continue that use. The court evaluates whether co-owners have fairly contributed to property taxes, insurance, and maintenance costs and considers any other relevant factors. These considerations help the court determine whether partition in kind is the most equitable solution for all parties involved.
What is Sale in Lieu of Partition?
In Washington, DC, if the court finds that partitioning the property in kind—physically dividing it among co-owners—would result in great prejudice to the co-owners, it may order a sale in lieu of partition. This action involves selling the property and distributing the proceeds among the co-owners according to their ownership interests. The court makes this decision after considering various factors. If the court does not order partition in kind, it must either order a partition by sale or dismiss the action if no co-owner requested a sale. Additionally, if partition in kind is ordered, the court can require certain co-owners to pay others to ensure the division is just and proportionate. If co-owners are unknown, unlocatable, or subject to a default judgment, the court allocates them a portion of the property, which remains undivided.
Determination of value in Sale in Lieu of Partition
The court orders an appraisal
To determine value, the court primarily determines the property’s fair market value by ordering an independent appraisal. However, the court may accept a previously completed appraisal if it meets specific criteria, such as being no older than six months, carried out by a licensed and disinterested appraiser in the District, and unopposed by any party. If all co-owners agree on a property’s value or an alternative valuation method, the court adopts that figure. Should the court find the cost of an appraisal outweighs its evidentiary value, it can determine the property’s fair market value after conducting an evidentiary hearing.
The appraiser files a sworn report
Upon completion of a court-ordered appraisal, the appraiser files a sworn or verified report with the court. All parties are notified of the appraised value and are given an opportunity to object within 30 days. The court then holds a hearing to finalize the fair market value, during which it may consider additional evidence provided by the parties. This value determination is made before the court considers the merits of the partition action.
Buyout by a co-owner (instead of sale)
Notice of proposed buyout
In the context of partition actions, if any co-owner has requested a sale of the property, the court will first determine its value. Subsequently, a notice will be sent to all parties, indicating that any co-owner—except the one who requested the sale—has the option to buy out the interests of those advocating for a sale. Interested co-owners must notify the court of their decision to buy within 45 days of the initial notice. The purchase price is calculated based on each co-owner’s fractional ownership, multiplied by the property’s total value as determined by the court.
Buyout when more than one co-owner
Should only one co-owner elect to buy, the court informs all parties. If more than one co-owner elects to buy, the court apportions the right to purchase based on their respective ownership percentages. Co-owners must pay the allocated price into the court within 60 days of receiving notice from the court. Failure to do so leads to various outcomes: if no one pays, the court proceeds with a regular partition action; if some but not all pay, the court notifies those who paid about the opportunity to buy the remaining interests at a new price.
Report of open-market sale
The Broker’s Report
In partition cases where a broker is appointed to offer the property for sale on the open market, the broker must submit a comprehensive report to the court within seven days of receiving an offer that matches or exceeds the court-determined property value.
What is Included in the Report?
This report should include various details vital for understanding the proposed sale. Specifically, the report should describe the property intended for sale, identify the prospective buyer, and specify the proposed purchase price. In addition, it must also detail the terms and conditions of the proposed sale, which might include the terms of any owner financing. The report should also state the amounts that will be paid to satisfy any liens on the property. Brokerage fees, contractual arrangements, and commissions are also to be disclosed. Lastly, the report should include any other material facts relevant to the proposed sale.
Procedures following the partition of real property.
Procedures following an order for Partition in Kind
When a court orders a partition involving less than the full interest of a specific record or tax lot, a series of procedural steps follow. First, the court directs the Surveyor of the District of Columbia to create relevant subdivisions or tasks the Office of Tax and Revenue to generate corresponding lot divisions. Before these subdivisions become official, the property owners must settle all taxes, fees, and costs pertinent to the partition and subsequent subdivision, as laid out under D.C. Code. These subdivisions are then formalized in the Office of Tax and Revenue, within 30 days of receiving new lot numbers, the owners must record deeds that accurately represent their interests in these subdivided parcels with the Recorder of Deeds.
Procedures following a buyout
When a cotenant purchases the share of one or more other tenants in the property, that buyer must promptly record a new deed, specify the square and lot numbers and clearly describe the buyer’s resulting interest in the property. The buyer must also pay applicable taxes, fees, and costs related to this deed.
Who is entitled to rent when one co-owner lives in the property?
In a partition case, if a cotenant has collected rent or profited from the property for their personal use, they may be obligated to provide a financial accounting to their cotenants. This accounting would outline each cotenant’s rightful share of those collected rents and profits. Any amounts determined to be owed based on this accounting can be offset against that tenant’s equity in the property, or against their portion of the proceeds if the property is sold.
If you have a question or need to seek court intervention for relief involving a partition or sale in lieu of partition case, call Daniel Zaharevich and to get the process started. Call the office at 202-747-6478.