FAQ: Co-owner buyouts, partition, and getting cash instead of the property under Colorado law
Detailed answer — how a co-owner can obtain money instead of taking physical property
If two or more people own the same real property and one owner prefers money rather than a physical share of the property, Colorado law provides several paths to get a cash award or a buyout. The main options are negotiation and buyout, mediation or settlement, or a court-ordered partition (often by sale). The court can order sale of the property and divide the proceeds, or in some cases order a cash award instead of allocating a portion of the real estate.
Key concepts:
- Agreement / buyout: Co-owners can voluntarily agree that one owner will buy the other(s) out for an agreed cash price. This is the quickest and least costly route when parties can negotiate.
- Mediation or alternative dispute resolution: Courts often encourage mediation. Mediation can produce a cash settlement, a payment plan, or other creative terms that avoid sale.
- Partition action: If co-owners cannot agree, a co-owner can file a partition action in Colorado district court. Colorado law governing property and partition gives courts the power to divide co-owned property or order its sale and distribute proceeds among owners. See Title 38, Colorado Revised Statutes (Property) for the statutes that govern property rights and partition procedures: https://leg.colorado.gov/sites/default/files/olls/crs2024-title-38.pdf
How a partition action produces money
When a partition action is filed, the court can:
- Order a partition in kind (physically divide the land) when feasible, or
- Order a sale of the entire property and then divide the sale proceeds between co-owners after costs, liens, taxes, and adjustments are paid.
If a physical division leaves some owners without a practicable share (for example, a single house cannot be split), the court typically orders sale and distribution of proceeds. A co-owner seeking money usually asks the court to order sale or asks the other owners to buy them out for a cash price — either by agreement or via a court-ordered accounting of value.
How the court determines each owner’s share
The court looks to the legal and equitable interests of the owners. If ownership is equal (e.g., two owners with 50/50 title), proceeds usually split accordingly after deductions. The court will account for:
- Liens, mortgages, and secured debts attached to the property;
- Costs of sale (real estate commission, closing costs, advertising, court costs, and costs of partition proceedings);
- Improvements, waste, or depreciation and any proven contributions by owners that should affect equitable distribution;
- Rents, profits, or payments made by one co-owner on behalf of others (the court can order an accounting and offset amounts owed).
Cash award instead of sale or physical partition
In some circumstances, a court may award a money judgment to one co-owner in lieu of giving them a portion of the physical property. Examples include:
- When a buyout price is determined through agreement, appraisal, or court valuation;
- When one co-owner has paid most mortgages or taxes and the court offsets those payments against the other’s share;
- When physical division is impractical and the court decides sale and distribution of proceeds is fair, which is functionally a cash distribution.
Courts have broad equitable powers in partition cases to fashion fair relief. While courts usually order sale when partition in kind is not feasible, they may also approve a buyout scheme proposed by the parties or enter money judgments as part of final relief. For statutory guidance, see Title 38, Colorado Revised Statutes: https://leg.colorado.gov/sites/default/files/olls/crs2024-title-38.pdf
Practical steps to pursue money rather than property in Colorado
- Gather documents: deed, mortgage statements, property tax records, insurance, leases, receipts for improvements, and any written agreements between co-owners.
- Request a buyout in writing: present a proposed purchase price or valuation method (appraisal) and proposed payment terms. A formal demand can support later claims for costs if the matter goes to court.
- Try mediation: the courts and many counties offer mediation or court-ordered settlement services. Mediation can produce a faster, cheaper buyout.
- Obtain an appraisal: a neutral market-value appraisal supports a fair buyout number and helps the court if the dispute goes to trial.
- If negotiations fail, file a partition action in district court where the property sits. Ask the court for sale and division of proceeds or for a buyout alternative.
- During litigation, seek interim relief if you have been paying the mortgage, taxes, or maintaining the property — you may be entitled to credits or reimbursement (an accounting of rents and profits).
- After sale, review closing statement carefully. Court-ordered sales will show how proceeds are distributed after deductions for liens, sale costs, and adjustments.
Estimated timeline and costs
Voluntary buyouts: days to months depending on negotiation and financing. Partition litigation: several months to a year or longer depending on court calendar, complexity, and appeals. Expect court costs, possible appraisal fees, attorney fees (if applicable), and sale-related expenses to reduce net proceeds.
Example (hypothetical)
Two siblings co-own a house. One sibling wants cash. They obtain an appraisal ($400,000). The sibling who wants the house offers $220,000 buyout. The other sibling rejects it and files a partition. The court orders sale because the house cannot be divided. Sale proceeds are $395,000. After mortgage payoff, commission, and court costs ($75,000 total), the net sale proceeds are $320,000. Each sibling receives their share according to ownership and any court-ordered offsets (for example, one sibling paid $10,000 in mortgage payments and may receive a credit).
This example shows why appraisal, documentation of payments and improvements, and early negotiation matter.
Helpful Hints
- Start with negotiation: voluntary buyouts are faster and cheaper than litigation.
- Get a professional appraisal early to set realistic buyout numbers.
- Document contributions: save receipts for mortgage, taxes, insurance, and improvements to support equitable adjustments in court.
- Consider mediation before filing suit — many Colorado courts require or encourage mediation in civil property disputes.
- Know the costs: partition lawsuits have filing fees, possible appraisal fees, and attorney fees; sale reduces proceeds by commissions and closing costs.
- Ask about temporary orders: you can ask the court for interim accounting or exclusive possession if one co-owner is occupying the property and causing loss to others.
- Keep clear communication: lay out proposed terms in writing (offer, price, timeline, and payment method). Written settlement offers can later be evidence in court.
- Consult a Colorado attorney experienced in real property or partition law if you face disagreement — they can explain local practice, deadlines, and likely outcomes.