Disclaimer: This article provides general information about Hawaii property law. It does not constitute legal advice. Consult a licensed attorney for guidance tailored to your situation.
Detailed Answer
When co-owners of real property in Hawaii cannot agree on a buyout price, state law offers several options to resolve the dispute. These include negotiation, alternative dispute resolution (ADR), or a court-ordered partition action under Hawaii Revised Statutes.
1. Negotiation and Buy-Sell Agreement
Co-owners may hire appraisers to determine fair market value and then negotiate a buyout. This approach lets parties control timing, costs, and terms. A written buy-sell agreement can lock in procedures for future disagreements.
2. Mediation or Arbitration
ADR can reduce conflict and legal fees. Under voluntary mediation, a neutral mediator helps co-owners reach a settlement. Arbitration binds parties to an arbitrator’s decision. While Hawaii law does not require ADR for co-ownership disputes, parties can agree to follow rules under HRS Chapter 508A or other agreed procedures.
3. Court-Ordered Partition Action
If negotiations fail, any co-owner may file a partition action in circuit court under HRS § 667-53. A partition action forces a physical division of property or sale and division of proceeds according to each owner’s share.
- Partition in Kind: The court divides the property into separate portions when division preserves more value. See HRS § 667-54.
- Partition by Sale: The court orders a public sale and splits net proceeds among co-owners.
The court may appoint referees and require appraisal reports to set sale terms and confirm fairness.
4. Judicial Appraisal and Buyout Order
The court can also order an appraisal and set a buyout price if one co-owner wishes to keep the property. The other co-owner must pay the appraised value within a court-set deadline or risk a forced sale. Court fees, appraisal costs, and attorney’s fees may be awarded against the losing party under HRS § 667-56.
Helpful Hints
- Obtain a professional appraisal early to gauge market value.
- Include ADR clauses in co-ownership agreements to avoid court later.
- Document all offers and communications in writing.
- Review HRS Chapter 667 on partition actions before filing.
- Consult a qualified attorney to protect your interests and navigate court procedures.