Although this blog was intended to focus on the purchase of a new property without really discussing the current property situation, I’ve come up with some information that may be beneficial to record, so now there’s a new category on this blog.
To be frank, I am in a situation where my current home is co-owned with another party and quite simply, this situation needs to end. An offer to buy out the co-owner’s share was fruitless. That is what lead me to pursue a second home of my own. Recently, I was searching for more information on how I can resolve my situation and I discovered a process called a “Partition Action”.
Here’s the gist of a partition action: No one can prevent you from selling your interest in a property. That might sound confusing. What I am trying to do is force my co-owner to sell to me. But go forward one step – The partition action forces a sale of the property and the proceeds of the sale are split evenly between the owners. My co-owner and I then have equal opportunity to purchase the property. I have the means to purchase it and my co-owner does not. So, in effect, my co-owner gets half of the sale proceeds, which is exactly the same thing as accepting my purchase offer.
The downside of a partition action is that it is very expensive. Thousands of dollars expensive ($5000 non-refundable retainer to begin). And a little detail I learned yesterday is that the legal fees come out of the sale price of the property, which means my co-owner bears half of that expense as well. This is an excellent means of leverage in negotiating.
Step one in this process is to create a fair and equitable purchase offer based on the appraised value of the house. I plan to get two appraisals as documentation that the offer is fair. So, let’s get some appraisals. This simple task gave me some interesting information.
First lesson learned: appraisers don’t answer their damn phones. Out of a list of seven candidates, only two answered the phone. One was answered by a receptionist and the other was a groggy “Hello?”. Out of seven, these are my winners? Second lesson: appraisals aren’t cheap. The number I had in my head was $280, but I ended up with $350 and $400. $700 in total just to make this fair offer (lawyer fees are more than double that so far). Third lesson: It’s not a quick service. Both appraisers had at least a week backlog and would take almost a week to get the report back after the service.
But here’s the interesting thing I learned. When I spoke to these people, the first question they asked was, “What is this appraisal for?” I explained it was for a buyout offer and both clarified, “this isn’t going to be used for a mortgage, right?” And I said no, but that was weird. The receptionist said they would only do appraisals requested by a bank. The groggy appraiser explained that they won’t do appraisals for mortgages at a person’s request because people would take appraisals to banks and say, “See? This is the value.”
I thought I was allowed to choose my appraisal/inspection companies in my last effort, but the post reports that it was the title company I was allowed to choose. So I guess I can understand that situation. And since it was just for my use, “market value” was the term used, they didn’t have any problem after that.
Future posts in this category will discuss some of the details of the purchase offer, since it will involve some non-standard elements, like the quitclaim deed and terms of how the co-owner will remove personal property. Hopefully, there will be a happy resolution, but if not, expect more posts of the details of the partition suit and how it’s going to be used to force the sale of the property to me.