Partition Actions Are When One Party to Jointly-Owned Property or a Business Wants to Sell Their Ownership Rights
To most, Partition is a confusing legal action that often seems convoluted to the average person. Within this article, one of the most confusing aspects of a Partition Action; is the difference between a Partition in Kind and vs Partition by Sale. Overall, a Partition action is a term referencing a division of real property among co-owners into separate portions, i.e severing the unity of possession between owners.
Partition in kind is when the real property at issue is physically divided between the co-owners to use as they wish in an equitable and fair manner. Usually, this means each co-owner after partition will owe a certain percentage of the property. On the flip side, Partition by sale is when the property at issue is sold and the co-owners split the sale proceeds.
Courts do not prefer to force someone to sell and partition their property against their will at any cost, so a Partition in Kind Colorado action is favored by the Colorado Courts.
This extension of favoritism is so highly valued by Colorado courts that Partition in Kind “shall be ordered unless doing so would result in manifest prejudice to the parties,” (see McNamara v. Mossman, 230 P.3d 1286, 1288 (Colo. App. 2010); CRS § 38-28-07.)
However, partition in kind is usually impossible, as the real property being split is not an empty lot, but rather a home or an improved property that physically cannot be divided into equal shares.
If Partition in Kind is not available and would result in manifest prejudice as found by the commissioner’s report, the court may direct the sale of such property at public sale upon such terms as the court may fix. Basically, the court orders the sale of the real property at issue against the party’s will.
Once the sale has been made, the proceeds from the sale will be divided among the co-owners according to the percentage of shares they held previously. This sale can be held either through a public sale, public auction, or with the help of a licensed, approved real estate broker.
In order for a court to order a partition by sale, the party bringing the partition action must prove that the property cannot be physically broken without manifest prejudice or that the property would “Significantly decrease” the value of each owner’s interest.