Detailed Answer
When co-owners of New Jersey real estate cannot agree on a buyout price, they have both non-judicial and judicial paths to resolve the dispute.
1. Non-Judicial Options
- Independent Appraisals: Each owner hires a licensed appraiser. Compare values and negotiate a midpoint.
- Mediation or Arbitration: A neutral mediator or arbitrator helps co-owners reach a settlement without court. Mediation is voluntary; arbitration results are usually binding.
- Buy-Sell Agreements: If an existing co-ownership agreement includes a buy-sell clause, follow its valuation and redemption procedures.
- Right of First Refusal: Offer one owner the option to match an outside offer before a sale to a third party.
2. Judicial Options: Partition Action
If negotiations fail, either co-owner can file a partition action in Superior Court under N.J. Stat. § 2A:65-1 (link).
a. Partition in Kind vs. Partition by Sale
- Partition in Kind: The court divides the property into distinct parcels. Ideal when land can split without significant loss of value.
- Partition by Sale: If physical division is impractical or would substantially reduce value, the court orders a public sale and divides net proceeds. See N.J. Stat. § 2A:65-2 (link).
b. Sale Procedure
The court appoints a commissioner to oversee the sale. After advertising and auction, the clerk distributes proceeds proportional to each owner’s interest, less costs and liens.
c. Timeline and Costs
A partition action can take several months. Court fees, legal expenses, appraisal and advertising costs are typically deducted from sale proceeds.
Disclaimer
This article is for educational purposes and does not constitute legal advice. Consult a licensed New Jersey attorney for guidance on your specific situation.
Helpful Hints
- Obtain at least two independent appraisals before negotiating.
- Consider mediation to save time and expense.
- Review any co-ownership or operating agreement for buy-sell terms.
- Understand that court costs will reduce net proceeds in a partition sale.
- Act promptly: statutes of limitations may affect your right to partition.
- Consult a real estate attorney early to explore strategy.