Detailed Answer
When co-owners cannot agree on a buyout price for jointly held property in Virginia, they have several paths to resolve the dispute. These options range from private negotiation to a court-ordered partition or sale.
1. Negotiation and Appraisal
Start by hiring an independent, licensed real estate appraiser. A professional valuation establishes a market-based price. Use the appraisal report as a discussion tool. If one owner offers to buy out the other at the appraised value, this often settles the dispute without further action.
2. Mediation and Arbitration
If direct talks stall, consider mediation. A neutral mediator guides both sides toward a solution. If you previously agreed to arbitration in an ownership or operating agreement, an arbitrator can issue a binding determination on price.
3. Buy-Sell Agreement or Shotgun Clause
Review any existing buy-sell or shotgun clause in your ownership documents. These provisions allow one co-owner to offer a price per share, compelling the other to either buy or sell at that price. This mechanism often expedites resolution.
4. Court-Ordered Partition Action
If private methods fail, either co-owner can file a partition action in Virginia circuit court under Va. Code § 8.01-318. The court examines whether it can divide the property physically (partition in kind) or must sell it and split proceeds (partition by sale).
• Partition in Kind (Va. Code § 8.01-319): When the property is divisible without harming its value—such as a tract of land—the court orders each owner a separate portion.
Link: § 8.01-319
• Partition by Sale (Va. Code § 8.01-321): If dividing the property would reduce its value or if the interests are too intermingled—common in condominiums or closely built lots—the court orders sale at public auction or private sale.
Link: § 8.01-321
The court may adjust proceeds to account for unequal contributions to maintenance, improvements, or mortgage payments under Va. Code § 8.01-323. The partition process can take several months and involve legal fees.
5. Post-Judgment Options
After sale, the clerk distributes net proceeds to co-owners in proportion to their ownership interests. If one owner cannot pay a buyout judgment, the court may order sale despite objections.
Disclaimer: This article is for informational purposes only and does not constitute legal advice.
Helpful Hints
- Obtain a professional appraisal early to frame negotiations.
- Check your ownership or operating agreement for dispute-resolution clauses.
- Consider mediation before incurring court costs.
- Weigh the time and expense of a partition action against the dispute’s value.
- Consult a qualified Virginia real estate attorney before filing suit.