When more than one beneficiary inherits the same piece of real estate, chances are that conflicts will arise. This may be when a parent leaves the family home to all his or her children or when a vacation home or investment property is left to multiple family members. Each beneficiary likely has his or her own idea about how to use, benefit from or liquidate the property.
The first step towards resolving this conflict is to go to mediation. A mediator is more cost-effective and may be able to help all the co-owners find common ground. If that common ground is to sell the inherited property, then the parties have the option to sell it on the open market which typically yields greater proceeds than a sale through judicial process.
If mediation fails, the owner that wants to sell the property has some legal recourse available to make that happen. The process in Maryland is referred to as a sale in lieu of partition. Partition means to divide an item. “In lieu of” means rather than or instead of. A sale in lieu of partition means to sale the property rather than divide it.
A sale in lieu of partition occurs when one owner wants to sell and the other does not or when there is a disagreement between the owners as to how much one will pay to buy out the interests of the other. A sale in lieu of partition will incur expenses that will be shared by all the co-owners. It can also cause serious deterioration of the personal relationships between the owners. It should be used as a last resort to resolve ownership issues.
Once the co-owners determine they have arrived at an impasse, the owner hoping to sell can file a sale in lieu of partition with the court to force the sale of the property. A court will review the facts and determine whether to allow the sale to proceed. The court will then appoint a few commissioners to appraise the value of the property and sell it via a judicial auction. The court has the option to appoint a trustee and allow the property to be sold on the open market. Open market sales tend to bring a higher sale price than judicial auctions.
Once a buyer purchases the property, the commissioners and/or trustee is paid a fee, all other expenses incurred are paid and the remaining balance is split between the co-owners according to the interest they held in the property.
If you have inherited property and need assistance in resolving conflict with other co-owners, contact the experienced probate attorneys at Stouffer Legal in the Greater Baltimore area. They will help you brainstorm your options, facilitate negotiations with the other co-owners, and help you decide whether a sale in lieu of partition best fits your situation. You can schedule an appointment by calling us at (443) 470-3599 or emailing us at office@stoufferlegal.com or you can register for an upcoming webinar below:
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