What Options Exist for Co-Owners Who Can’t Agree on a Buyout Price in Maryland?
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Consult a qualified attorney to address your specific situation.
Detailed Answer
When co-owners of real property in Maryland cannot agree on a buyout price, state law offers several paths to resolve the dispute. Parties should first consider negotiation or alternative dispute resolution (ADR) before seeking court intervention.
1. Negotiation and Appraisal
Co-owners can hire an independent, certified appraiser to determine fair market value. After obtaining an appraisal, they may agree on a buyout price based on the appraised value. This approach often saves time and litigation costs.
2. Mediation or Arbitration
Mediation involves a neutral third party who helps the co-owners reach a voluntary agreement. Arbitration allows a neutral arbitrator to issue a binding decision on value. ADR can be faster and more private than court proceedings.
3. Enforcement of Buy-Sell or Co-Ownership Agreements
If co-owners have a written agreement that outlines a valuation formula or buyout terms, Maryland courts generally enforce it according to its terms. Review any existing agreement for mandatory appraisal or buy-sell provisions.
4. Court-Ordered Partition
If the parties cannot agree, any co-owner may file a partition action in a Maryland circuit court under Maryland Real Property Article § 14-301 (link). The court has two main options:
- Partition in Kind: A physical division of the property if it is practical and does not significantly reduce value.
- Partition by Sale: If division in kind is impractical, the court orders a public sale. The property sells at auction or public market, and net proceeds distribute to co-owners per their ownership interests. See Maryland Real Property Article § 14-305 (link).
Court-ordered sale often requires a court-appointed commissioner or master to manage the sale process and report results back to the court.
Helpful Hints
- Document all communications and offers during negotiations.
- Choose an appraiser with experience in your property’s region and type.
- Consider including mediation clauses in future co-ownership agreements.
- Review any existing buy-sell agreement for valuation procedures.
- Consult an attorney early to assess litigation risks and costs.
- Understand that partition actions can take several months and involve court costs.