Detailed Answer
Short overview: If co-owners of real property are in a partition action in South Dakota, one owner can often stop or avoid a court-ordered sale by offering to purchase the other owners’ interests. The process combines negotiation, proof of value and ability to pay, and—often—court filings that ask the judge to approve a buyout instead of a sale. This article explains practical steps, legal considerations under South Dakota law, and what courts typically expect.
1. Know the legal context
Partition actions let a court divide property among co-owners or order a sale and divide proceeds. Under South Dakota law, courts have authority in partition cases to divide the property in kind if practicable or to order sale and distribution of sale proceeds. For statutory language and general provisions governing actions and remedies, see the South Dakota Codified Laws: https://sdlegislature.gov/Statutes/.
2. Confirm ownership type and your stake
Determine whether the co-ownership is tenancy in common, joint tenancy, or another arrangement, and verify each owner’s percentage interest. Ownership type affects rights, allocation of proceeds, and how courts calculate each party’s share of value, liens, taxes and costs.
3. Get a reliable valuation
Arrange a current, written appraisal performed by a licensed appraiser or compile recent comparable sales and a broker opinion of value. A neutral, professional valuation strengthens your buyout offer and reduces later disputes over fairness.
4. Calculate the buyout number
Start with the property’s fair market value, subtract outstanding liens, and allocate remaining equity according to each owner’s legal share. Also account for closing costs, unpaid taxes, and the court-ordered costs or attorney fees that may be charged to the estate. Present a clear net-equity calculation with your offer so co-owners can see how you reached the figure.
5. Put the offer in writing and include key terms
A written offer should include:
- Buyer identity and the specific ownership interest to be purchased;
- Offer price and the calculation used (appraisal and net equity calculation);
- Payment terms (cash at closing, financing contingency, earnest money amount, deadline to accept);
- Allocation of liens, prorations, closing costs and who pays transfer taxes;
- Proposed closing date and escrow instructions;
- Any condition that the court approve or enter an order reflecting the buyout (if the matter is already before the court); and
- A clear deadline for acceptance and method for delivery of acceptance.
6. Use the court docket to your advantage
If a partition action is already pending and the court has set a sale, give opposing parties and the court notice of your offer. Typical approaches include:
- Filing a joint stipulation and proposed order dismissing or staying the sale if co-owners agree to your buyout terms;
- If co-owners won’t agree, filing a motion asking the court to allow you to purchase the other parties’ interests and to either vacate the sale or enter an order confirming the buyout and directing entry of deed and distribution of funds; and
- Offering to deposit funds into the court registry or an agreed escrow to demonstrate your ability to close, which can persuade a judge to accept a buyout instead of proceeding to public sale.
7. Be prepared to show liquidity and close quickly
Judges will want assurance that a buyout is genuine and will promptly resolve the dispute. Demonstrate available funds with bank statements, a lender pre-approval (if you’ll use financing), or by making an escrow deposit. The stronger your proof of funds, the more likely the court and co-owners will accept a buyout.
8. Draft the settlement documents and proposed court order
If co-owners accept, prepare or have counsel draft:
- A buyout agreement that releases the selling owners from future claims related to the property;
- A deed transferring the sellers’ interests to you and instructions for recording;
- A proposed judgment or order for the court that disposes of the partition claim (dismissal, entry of judgment reflecting transfer, or distribution of funds). The court must be able to see that the buyout resolves the litigation fairly.
9. Consider tax, mortgage and title issues
Confirm whether mortgages will need payoff or assignment, and whether your purchase triggers transfer taxes or other fees. Order a title commitment to identify liens and required curative steps. Discuss tax consequences (gain recognition, basis changes) with a tax advisor before closing.
10. If co-owners refuse, alternative strategies
If co-owners decline a reasonable buyout, you still have options:
- Make a stronger offer (increase price or improve terms);
- Bid at the court-ordered sale or sheriff’s sale to attempt to acquire full ownership that way;
- File a motion to challenge the sale procedures if they are unfair or set improper valuation methods; or
- Proceed through settlement mediation to avoid auction and litigation costs.
What the court typically evaluates
South Dakota courts will want to know whether the buyout compromise is fair, whether the parties understand and consent to the transfer, and whether the buyout resolves the dispute adequately so the litigation can be dismissed. Courts also weigh lien priority, distribution of net proceeds, and any potential prejudice to absent or unknown parties.
When to hire a lawyer
Consider speaking with a South Dakota real property litigator when:
- The partition action is already filed;
- Co-owners contest value, credits for improvements, or contribution claims;
- Liens, mortgages or title defects complicate the transfer; or
- You need a proposed order or stipulation filed with the court to resolve the lawsuit.
Helpful links: South Dakota Codified Laws (statutes and searchable codified laws): https://sdlegislature.gov/Statutes/
Helpful Hints
- Start negotiating early. A timely, well-documented buyout offer often saves time and court expenses.
- Use a licensed appraiser. Neutral valuation reduces disputes and supports your offer in filings or at hearing.
- Show proof of funds. Courts and co-owners want to see you can close on the proposed purchase.
- Offer clear, simple terms. Avoid vague contingencies that invite rejection.
- Consider mediation. A neutral mediator can bridge valuation gaps and craft terms acceptable to all parties.
- Account for liens and prorations in your offer. State the net-equity calculation so sellers see what they will actually receive.
- File a proposed order with any settlement. Courts prefer a clear document they can enter to end the litigation.
- Keep records of all communications and offers. Good documentation helps at hearings and in case of later disputes.
- Ask about tax consequences. A buyout has different tax effects than a public sale and distribution of proceeds.
Final note and disclaimer: This article provides general information about options and typical steps related to purchasing co-owners’ interests in a partition case under South Dakota practice. It is not legal advice, and it does not create an attorney-client relationship. For advice tailored to your situation and help preparing offers, court filings or a proposed order, consult a licensed South Dakota attorney.