Disclaimer: This article provides general information about South Dakota law and is not legal advice. Consult a qualified attorney for guidance on your situation.
Detailed Answer
When co-owners of real property in South Dakota cannot agree on a buyout price, state law offers several pathways to resolve the dispute. Co-owners often try negotiation first. If that fails, consider these options:
1. Mediation or Binding Appraisal
You and your co-owner can engage a neutral mediator to guide settlement discussions. Alternatively, include a binding appraisal clause in your ownership agreement. A certified appraiser sets the fair market value, and one party buys out the other at that agreed figure.
2. Voluntary Sale
If negotiations stall, co-owners can agree to sell the property to a third party. You split the net proceeds based on ownership interests. This route avoids court costs but requires consensus on listing price, marketing strategy, and sale expenses.
3. Court-Ordered Partition
Under South Dakota’s partition statutes (SDCL Chapter 21-43), any co-owner may file a partition action in circuit court. The court evaluates whether a physical division (“partition in kind”) is practical.
- Partition in Kind (Physical Division): The property is divided into portions reflecting each owner’s share. This works for large tracts or subdividable land.
- Partition by Sale: If physical division would impair property value or is impractical, the court orders a public sale. A commissioner, appointed under SDCL 21-43-7, oversees the auction. Sale proceeds are distributed per ownership percentages under SDCL 21-43-23.
Partition actions involve filing fees, attorney costs, and possible delays. The court’s determination is final, so consider all voluntary options first.
Helpful Hints
- Document Agreements: Keep written records of any appraisal or mediation terms.
- Hire Qualified Appraisers: Choose a state-licensed appraiser familiar with local market trends.
- Evaluate Costs: Compare court filing and attorney fees against voluntary settlement expenses.
- Understand Timelines: Partition actions can take months; plan accordingly.
- Consider Tax Implications: Capital gains or loss allocations may arise on sale or buyout.
- Seek Legal Counsel Early: Even an initial consultation clarifies rights and procedures under South Dakota law.