Understanding Your Options When Co-Owners Disagree on a Buyout Price in Montana
Disclaimer: This article is for educational purposes only and does not constitute legal advice.
Detailed Answer
When multiple people share ownership of real property in Montana, they may eventually disagree on a fair price if one wants to buy out the other. Montana law provides several paths to resolve a deadlock, including negotiation, appraisal, mediation, and, as a last resort, a court-ordered partition or sale.
1. Negotiation and Mediation
Begin by discussing a buyout price informally or with a neutral mediator. Mediation lets co-owners craft a solution without court involvement. A mediator can help balance interests, reduce conflict costs, and preserve relationships.
2. Independent Appraisal
If negotiation stalls, hire a licensed real estate appraiser. An independent valuation gives each co-owner a reliable market-based number. Many buyout disputes resolve when both sides accept the appraiser’s conclusion.
3. Court-Ordered Partition
If co-owners still cannot agree, any co-tenant may file a partition action in district court under Mont. Code Ann. § 70-29-101 (link). The court examines whether it can physically divide (partition in kind) the land so each owner retains a separate parcel.
Partition in Kind
The court divides the property into distinct parcels proportional to each owner’s interest. This method works when the land’s shape and value allow fair splits.
Partition by Sale
If a physical division proves impractical or unfair, the court orders a sale of the entire property under Mont. Code Ann. § 70-29-202 (link). A court-appointed commissioner conducts the sale at public auction or private sale. After sale, proceeds distribute among co-owners according to their ownership shares.
4. Distribution of Proceeds
Once the court sells the property, it deducts expenses—commission, attorney fees, and court costs—and then allocates net proceeds. Each co-owner receives a portion matching their fractional interest.
Helpful Hints
- Obtain a professional appraisal early to frame negotiations around an objective market value.
- Use mediation or collaborative law to resolve disputes and save time and expense.
- Document all communications and offers in writing to create a clear record.
- Review operating agreements or deeds for buy-sell clauses that may set a price or process.
- Consider tax implications of a sale versus a buyout; consult a tax advisor.
- Understand court timelines: a partition action can take several months from filing to sale.