Disclaimer: This article is for informational purposes only. It does not constitute legal advice. Consult a licensed attorney in Kentucky for guidance on your specific situation.
Detailed Answer
When co-owners of real property in Kentucky cannot agree on a buyout price, the law offers several pathways to resolve the deadlock:
- Negotiation and Mediation: Co-owners can attempt voluntary negotiation or hire a neutral mediator. Mediation often helps parties reach consensus on valuation, payment terms, or timing without court intervention.
- Appraisal and Buy-Sell Agreement: If a co-ownership agreement exists, it may include an appraisal clause. A qualified real estate appraiser determines fair market value. Co-owners may then follow the contract’s formula for a mandatory buyout.
- Partition Action Under Kentucky Law: If private efforts fail, any co-owner may file a partition action in the circuit court of the county where the property lies. Under Kentucky Revised Statutes (KRS) Chapter 381, the court can order:
- Partition in Kind (division of property): KRS 381.050 allows the court to divide the parcel into distinct portions if practical and equitable.
- Partition by Sale (court-ordered sale): If division in kind is impracticable or would diminish value, the court may order the property sold at public auction. Proceeds are distributed to co-owners according to their ownership interests. See KRS 381.090 and KRS 381.110.
In a partition action, the court appoints a commissioner or master to manage appraisal, notice, sale procedures, and distribution of proceeds. Any co-owner may purchase the entire property at auction by paying other co-owners their share of the sale price.
Costs in a partition suit—court fees, appraisal fees, attorney’s fees, and sale expenses—typically come out of the sale proceeds. Co-owners should weigh these costs against the benefits of litigation.
Helpful Hints
- Review any written co-ownership or buy-sell agreement for appraisal or buyout provisions.
- Obtain at least two independent appraisals to establish fair market value.
- Consider mediation early to avoid court costs and delay.
- Consult a real estate attorney to understand Kentucky partition statutes (KRS Chapter 381).
- Be prepared for procedural timelines: partition suits can take several months to complete.
- Keep detailed records of expenses and communications with co-owners.