Disclaimer: This article is for general informational purposes only and does not constitute legal advice.
Detailed Answer
When co-owners of real property in Pennsylvania cannot agree on a buyout price, they have several options to resolve their dispute efficiently and fairly under Pennsylvania law.
1. Negotiation and Mediation
Co-owners can engage in direct negotiation or hire a neutral mediator. Mediation often reduces tension, controls costs, and leads to flexible solutions tailored to all parties.
2. Expert Valuation and Appraisal
Hiring a licensed real estate appraiser provides an unbiased market value. Parties may agree to split appraisal costs and use the appraisal as a basis for a buyout.
3. Buy-Sell Agreements and Shotgun Clauses
Many co-ownership agreements include buy-sell provisions or “shotgun clauses” that set detailed procedures and timelines for offers and counteroffers.
4. Partition Action
If informal efforts fail, a co-owner can file a partition action in the Pennsylvania courts. Partition forces either a physical division of the property or a sale with proceeds divided among co-owners.
a. Partition in Kind
The court divides the property into distinct portions if practical. This method preserves ownership of real estate rather than converting to cash.
b. Partition by Sale
If a partition in kind is not feasible—for example, with a residential home—the court orders a sale. Net proceeds are distributed based on ownership shares.
Pennsylvania’s partition laws are codified at 68 Pa.C.S. Chapter 13 (Partition of Real Property).
5. Court-Appointed Referee
The court may appoint a referee to supervise valuation, coordinate sale, and allocate proceeds, reducing the supervisory burden on judges.
Helpful Hints
- Begin discussions early to avoid litigation fees.
- Request written appraisals to set realistic values.
- Review any existing co-ownership or operating agreements.
- Understand court timelines and filing requirements under Pennsylvania Rules of Civil Procedure for partition actions.
- Consult a qualified attorney to guide you through complex procedural rules.