Detailed Answer
When co-owners in Tennessee cannot agree on a buyout price for jointly owned real property, state law offers a clear path to resolve the dispute through a partition action. Under Tenn. Code Ann. § 29-27-101, any co-owner may petition the circuit or chancery court in the county where the property sits to divide or sell the property.
1. Partition in Kind
The court first considers whether it can physically divide the land so each owner gets a distinct portion. If the division does not materially reduce value, the court orders a partition in kind. It appoints commissioners or referees to survey and allocate parcels fairly. Each co-owner receives clear title to their allotted segment.
2. Partition by Sale
If a practical division would diminish overall value or the property has unique features (such as a single commercial building), the court orders a partition by sale. Per Tenn. Code Ann. § 29-27-102, commissioners sell the entire property at public auction or negotiated sale. The net proceeds, after costs and fees, split among co-owners according to their ownership interest.
3. Court-Appointed Appraisals and Buyouts
If co-owners still wish to keep the property collectively, they can ask the court to appoint a neutral appraiser. The appraiser sets fair market value. Then each co-owner has the option to buy out the other at the appraised price within a court-set timeframe. Failure to complete the buyout by the deadline leads back to partition by sale.
4. Alternative Dispute Resolution
Before or during litigation, owners often use mediation or arbitration to negotiate a buyout price. These private processes can be faster and less expensive than court. Some deeds or operating agreements include mandatory mediation or binding appraisal clauses. Check your governing documents early.
5. Practical Considerations
- Filing fees and attorney’s fees can accrue quickly in court.
- Commissioners’ reports and appraisals add time and cost.
- Forced sales may yield below-market proceeds at auction.
- Partition actions become public record.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Laws change frequently. For guidance tailored to your circumstances, consult a licensed attorney in Tennessee.
Helpful Hints
- Review any existing buy-sell or operating agreement for dispute-resolution steps.
- Propose a written agreement on valuation methods (appraisal, market data, formula).
- Consider an independent real estate appraiser before filing court papers.
- Explore mediation to preserve relationships and control costs.
- Act promptly; delays can increase legal expenses and complicate valuations.
- Keep detailed records of all communications and offers between co-owners.