Whether it’s a home, a commercial property, or a tract of land, owning property with other people isn’t always easy. Sometimes, it can even lead to a stalemate when one party wants to sell, and another wants to stay. Especially in Indiana, where family farms or acres of forest are passed down through generations, these disputes can be common. That’s why Indiana law has allowed for a lawsuit among property owners, called partition action, for more than a century.
But doesn’t suing your co-owners sound unpleasant, like the kind of thing that could end a business or break up a family? That’s why this process involves mediation and careful conversation with the support of a property dispute lawyer or another professional mediator. Here’s what you need to know about the reasoning and process of judicial partition in Indiana.
What is a Judicial Partition Action?
A judicial partition action is the last resort when property owners cannot agree among themselves about the future of their real estate. These rulings by the court establish how the property will be divided. The process requires the owners to submit to mediation and agree–or agree to disagree. If they cannot develop a plan, under Indiana law, the property must be sold and the proceeds divided.
Each situation is different, which is why an experienced Indiana real estate attorney should be called on as early as possible when disputes arise. This allows the owners to know what to expect if they cannot agree and how to proceed with a partition action if they consider it necessary.
Indiana Partition Action Process
Once an owner decides they want to pursue a partition action to divide up property through the courts, there’s a clear timeline under Indiana law of what to expect next.
- Petition and Title Search: Documents are filed with the court in the county where the land is located. These include a description of the property as well as the rights and titles of the owners. A title search must be filed and accompany this as well.
- Appraisal: Within 30 days of the petition, the court will send a professional to appraise the property. The court will notify all the interested parties of the appraised value. The parties can all agree to waive the appraisal if they desire.
- Mediation: Within 45 days of the petition being filed, the court will refer the case for mediation, or the owners can hire their own mediator. The interested parties then have 60 days to agree about the future of the property. Sometimes, people can’t even agree on how to sell the property. In those cases, the property will be auctioned.
- Agreement or Sale: If the owners reach an agreement, the court will be notified by the mediator and the case resolved. Otherwise, the court is notified the property must be sold. The interested parties can agree on how to sell the property, or they have 30 days to pick an auctioneer before a sheriff’s sale is enforced.
- Proceeds: Once the property is sold, the title search, appraisal, and other expenses of sale must be paid. Then, the proceeds are divided among the owners based on their percentage of ownership. It’s important to know that you can’t be reimbursed for the costs of advertising the sale (like a realtor). If one of the owners ultimately buys the property in full, they are still given credit based on their previous ownership percentage.
This timeline exists to give the owners every chance to achieve a settlement agreement. With three months or more between the filing of the petition and the forced sale of the property, the help of a professional mediator supports siblings, co-investors, or other parties to finding a solution by working through emotions and seeing the other side.
Preventing Partition Action Through Estate Planning
Especially when a property has been in a family for generations, owners might wonder how to prevent the land from being divided up. An experienced Indiana estate lawyer can help you in two ways.
Property owners can establish a trust that takes over the land when they pass away. This means instead of ownership transferring to one or more heirs, ownership is transferred to the trust. The land management will then be overseen by the trustee, the person in charge of the trust. This can be a legal professional or firm or an individual. However, being a trustee comes with significant legal obligations, and if those aren’t met, the property could be at even greater risk. This is why many choose to hire professionals to manage the trust. Heirs can still benefit from the land proceeds even when they do not own it, depending on how the trust is established.
Another option is to establish a limited liability corporation (LLC) that owns the real estate. This is usually a strategy employed by farm owners or commercial property owners. The LLC’s advantage over a trust is that the creditors of beneficiaries can’t pursue the LLC. The LLC can also use profits to improve the property and expand it over time.
Both these strategies require careful planning and the ongoing support of an experienced trust estate lawyer. However, the effort can ultimately provide peace of mind for property owners concerned about the future of their property for generations to come.
Rely on the Indiana Real Estate Attorneys of Bennett, Boehning, and Clary
Whether you want to prevent against a partition action or know you need one to resolve a dispute, the experienced attorneys of Bennett, Boehning, and Clary have the experience to support you through this time. We believe that every real estate law case is unique and can be decided on tiny details. Reach out to Cecelia Neihouser Harper at 765-742-9066 if you need an advocate and someone to fight for you.
Disclaimer: The content of this blog is intended to be general and informational in nature. It is advertising material and is not intended to be, nor is it, legal advice to or for any particular person, case, or circumstance. Each situation is different, and you should consult an attorney if you have any questions about your situation.