How can a co-owner obtain monetary compensation instead of receiving physical property? (ND) | North Dakota Partition Actions | FastCounsel
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How can a co-owner obtain monetary compensation instead of receiving physical property? (ND)

August 8, 2025 5 min read

Detailed Answer

When two or more people own real property together in North Dakota and one co-owner would rather receive money than a portion of the physical property, the law provides several routes to obtain monetary compensation. The main paths are: negotiating a voluntary buyout; seeking an accounting for contributions or rents; or, if parties cannot agree, filing a partition action in district court that typically results in sale and division of proceeds. Below is a clear, step-by-step explanation of each option under North Dakota law.

1. Voluntary buyout or settlement (fastest, lowest cost)

Most co-owners first attempt a negotiated buyout. One co-owner hires an appraiser to determine fair market value (FMV). The co-owner who wants to remain in the property can pay the departing co-owner the departing owner’s proportionate share of FMV, adjusted for any agreed credits or debits (for mortgage payments, improvements, taxes, or rent). If both sides agree, they document the deal in writing (buyout agreement and deed transfer) and record the deed and any lien releases at the county recorder’s office.

Benefits: fastest, avoids court, lower fees. Risks: requires cash or financing, and both sides must trust valuations and accounting.

2. Demand an accounting or offset before (or during) a buyout

A co-owner who paid more than their fair share for mortgage payments, repairs, improvements, or who collected rents can insist on an accounting. The accounting can increase the amount owed to that co-owner or reduce the buyout price owed to the departing owner. These settlement-by-accounting adjustments are common and should be documented.

3. Partition action in North Dakota district court (when negotiation fails)

If co-owners cannot agree, North Dakota law allows a co-owner to file a partition action in district court. See North Dakota Century Code, Chapter 32-22 (Partition) for the governing rules: NDCC Ch. 32-22 — Partition of Real Estate (PDF).

Key features of a partition action:

  • Who may file: Any co-owner of the property may start the action.
  • Court options: The court can order partition in kind (physically divide the property) if it is practical and fair, or order a sale of the property with proceeds divided among owners according to their ownership shares. The court generally prefers an in-kind partition only if it does not harm the owners’ interests or reduce property value substantially.
  • Commissioners and sale: If the court orders sale, it may appoint commissioners to sell the property at public auction or by negotiated sale under court supervision, and then distribute sale proceeds after costs, mortgages, taxes, and liens are satisfied.
  • Buyout by co-owner: A co-owner can attempt to buy out the others during the court process. The court will require a valuation; the buyout price may be set by appraisal or court determination. If a co-owner pays the other owners the court-determined share, the court can enter an order transferring title to that purchaser.

Costs and timing: Partition actions can take months to more than a year, depending on complexity. Court costs, commissioner fees, appraisal fees, and attorney fees will reduce the net proceeds.

4. Valuation of the co-owner’s interest

Valuation is central. Courts and parties typically use a current market appraisal. The departing co-owner’s share equals FMV multiplied by the ownership percentage, with adjustments for:

  • Outstanding mortgages and liens (these usually come off the top of sale proceeds).
  • Credit for extra contributions (mortgage payments, taxes, repairs, improvements)
  • Debts owed to any co-owner for rent or use of the property

North Dakota courts will aim to achieve an equitable division; that may mean awarding money rather than dividing the physical land if a partition in kind would be impractical or unfair.

5. Other practical considerations

  • Mortgages and liens: A mortgage stays attached to the property. A buyer who buys out co-owners may need to assume or refinance the mortgage so the departing owner is secure that the lien won’t remain solely in their name.
  • Taxes: Sale or buyout may have tax consequences (capital gains, transfer taxes). Consult a tax advisor.
  • Timing of sale: Courts may postpone sale to allow one party to arrange financing for a buyout.

Relevant statute

North Dakota’s partition statute is located in Chapter 32-22 of the North Dakota Century Code. See: NDCC Ch. 32-22 — Partition of Real Estate (PDF). That chapter describes who may bring a partition action, procedures for commissioners and sale, and distribution of proceeds.

How to proceed (practical checklist)

  1. Collect ownership documents: deeds, mortgage statements, insurance, tax bills, rental records, and any written agreements.
  2. Order a professional appraisal to establish FMV.
  3. Request an accounting of contributions, rents, and expenses.
  4. Attempt a written settlement or buyout agreement using the appraisal and accounting figures. Consider mediation to bridge gaps.
  5. If settlement fails, consult a North Dakota real property attorney about filing a partition action in district court. An attorney can also advise about preserving rights, potential offsets, and how to structure a buyout offer.

Disclaimer: This article explains general North Dakota law and common procedures but does not provide legal advice. It is not a substitute for consulting a licensed attorney about your specific situation.

Helpful Hints

  • Get an independent, licensed real estate appraisal early — it often speeds settlement.
  • Document all payments, improvements, and rents — the court will consider these when dividing proceeds.
  • Consider mediation before suing — mediation is faster and much cheaper than a partition action.
  • If you plan to buy out a co-owner, secure financing pre-approval before making a firm offer.
  • Check for recorded liens and mortgages at the county recorder’s office — they affect net proceeds and who must be paid at sale.
  • Know ownership type: tenancy in common co-owners can force partition; joint tenants with right of survivorship have different consequences on death.
  • Expect court costs, appraisal and commissioner fees, and possible broker commissions to reduce net sale proceeds.
  • Consult a tax professional about capital gains and potential 1031 exchange options if selling the property.

The information on this site is for general informational purposes only, may be outdated, and is not legal advice; do not rely on it without consulting your own attorney.