This is a common scenario. Sometimes, people will buy real estate together, such as brothers, sisters, fathers, sons, or daughters. Due to the high price of real estate, sometimes even strangers decide to invest together in real estate in the hopes of buying something they might not be able to afford individually. Other times, people who are in committed relationships and live together but are not married decide to buy real estate together. Engaged people also buy real estate together. These real estate purchases sometimes turn out well and sometimes do not. The ones that my firm deals with are when the parties cannot get along.
The cause of the problems can vary. Sometimes it can be that the connection the people had that caused them to buy the real estate has changed. Partners or fiancés may break up. Relatives or business partners may need to get their money out of a property for another use. People may also move out of the area and don’t want to stay invested in a place they no longer live.
What are some practical first steps even before contacting an attorney?
The first step I generally advise my client or clients to do is to try to talk to their co-owner to see if any agreement can be reached on how to wind down this ownership. A voluntary sale of the property and dividing up the proceeds is a good way to resolve issues. If the parties cannot work this out on their own, then I would generally try to start that process myself for my client and see if that can be negotiated prior to initiating legal action.
What if negotiation fails?
Another step to take if direct negotiation fails is alternative dispute resolution. Alternative Dispute Resolution (ADR) is basically an alternative to Court action. ADR can be done either before, during, or even after court action. The most common ADR I utilize is mediation. Mediation is basically a more formal type of negotiation. Mediation does not force the parties to a resolution, but rather tries to facilitate a negotiation. There are a few differences between negotiation and mediation.
- First, mediation involves a mediator, which is a person who tries to facilitate the negotiation by talking to parties and their attorneys about their case and then talking to the other side’s attorneys and the other party. The mediator is generally either a former Judge (Judges are attorneys as well in almost all cases), or a very experienced attorney. The mediator often has extensive experience attending and conducting mediations between parties. Mediators also go to training to learn how to discuss and interact with parties in ways that help to facilitate settlement of a dispute.
- Second, is that a mediation is normally conducted on a certain day and time for half or a full day. So, you set a time where all parties will be focused on just the negotiation of this dispute at the mediation. By having the parties be focused, then it increases the commitment level of the parties and hopefully can propel the parties toward a settlement or a process to work toward a settlement.
- Third, a mediation can be conducted either in person or remotely (I’ve done both many times now). This is important as many people may not want to drive long distances or be away from their home at a particular time.
- Fourth, a mediation usually involves a mediation brief where each party sets forth their arguments and some evidence for their positions. The mediation brief may also involve asserting case law, legal argument or extensive documentation. A good mediation brief is very helpful to educating the other side and the mediator about your client’s position.
- Fifth, pre mediation preparation is also key for both parties. When I work with clients, I try to discuss the mediation process and discuss how they would like this dispute resolved. I also try to understand their concerns, preferences, and goals. Knowing these beforehand move the mediation along. Another key step in preparation is being familiar with and having read and reviewed (and having ready) key documents in the case.
What if mediation fails?
If mediation cannot resolve the dispute, then the next step is likely either a court action or arbitration. However, even after a court action or arbitration starts, there is often more negotiation and mediation done later in a case to try to resolve it. Not all cases can resolve right away with mediation, especially if the parties are very far apart in their positions.
What results have you gotten for co-owners who can’t get along?
Due to the confidentiality my clients expect, I cannot share results of individual cases. Many of my clients have confidentiality clauses in their settlement agreements as well, so I cannot discuss their individual cases. But, what I can tell you is that many clients have been extricated from their co-ownership relationships in real estate so that they can move on with their lives. Helping clients get out of real estate relationships is key, but can often take many months or sometimes years
