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Why can’t I paint my house green, pink, or yellow: Architectural Restrictions in a Community Association

A common complaint among those unhappy with their community association, or disdainful of community associations in general, often sounds something like: “I don’t want to be told what color to paint my house or what kind of shed I can build in my backyard.” Putting aside the discussion of the pros and cons of community associations, the obstinate homeowner raises some important questions regarding the definition of architectural restrictions, the basis of the architectural review committee’s authority, and the architectural review committee’s options for enforcing its guidelines and decisions.

What Are Architectural Restrictions?

Architectural restrictions are guidelines, standards, or rules that set forth requirements for the size, color, location, and materials of construction and improvements within the neighborhood. Such restrictions serve the purpose of maintaining aesthetic quality and conformity within the community, and of increasing the value of the homes in the community. They are usually promulgated by the developer, the board of directors, or a committee of directors of association.

Where Do Architectural Committees Attain Power and What Rules Must They Follow?

Most often, the board of directors of the planned community will appoint the architectural review committee. The declaration of covenants or the bylaws of the planned community usually provide this power. If the governing documents do not state otherwise, the board of directors may appoint itself as the architectural committee. As with any committee in a community association, the architectural review committee must follow the rules set out in the governing documents as well as the requirements of the Planned Community Act (N.C.G.S. §47F) and the Nonprofit Corporation Act (N.C.G.S. §55A).

How Are Architectural Committees Appointed?

The community association’s governing documents should set forth whether the board of directors has the ability to appoint architectural committees and, if so, the process for appointing such committees. If the governing documents to not set out a procedure for appointing committees, and do not disallow committees, the creation of a committee and appointment of members to it shall be approved by the greater of (1) a majority of all the directors in office when the action is taken, or (2) the number of directors required by the governing documents to take action in a meeting. N.C.G.S. § 55A-8- 25. The association may wish to contact its attorney to ensure the architectural review committee was properly appointed.

How are Violations Enforced?

The most common method of enforcing the architectural restrictions is to impose fines for violations, or to suspend privileges such as access to association amenities. Before imposing any fines or suspending privileges, in most cases the association must provide the homeowner with notice of its intent to impose fines and allow the homeowner an opportunity to be heard to challenge the decision to impose the fines. N.C.G.S. § 47F- 3-107.1. If imposing fines and/or suspending privileges does not compel the homeowner to remedy the violation, the association may consider seeking injunctive relief. Getting the court to require a homeowner to comply with the architectural guidelines or the architectural review committee’s decision requires filing a complaint with the superior court of the county in which the property is located, serving the homeowner with the complaint, and holding a hearing before a superior court judge. It may be wise to contact your association’s attorney to review the governing documents and architectural review guidelines to evaluate enforcement options.

An Easement Crosses My Property – What Are My Responsibilities?

Robert Frost knows that “good fences make good neighbors.” If anything makes a bad neighbor, other than a bad fence, it is a bad easement. Easements can be a significant source of contention among neighbors, causing ill will, hostility, and sometimes costly litigation. Among the issues that may arise between the dominant estate holder (the person whose property is benefited by the easement) and the servient estate holder (the person whose property is burdened by the easement) are questions regarding who must maintain the easement area, what activities are allowed under the easement, and how to enforce each party’s rights under the easement.

Responsibility to Maintain the Easement

The North Carolina Supreme Court has held that the dominant estate holder is responsible for maintaining the easement area. Green v. Duke Power Co., 305 N.C. 603 (N.C. 1982). Unless language in the easement provides otherwise, the servient estate holder has no obligation to maintain the easement area. Id. As a result, "if the character of the easement is such that a failure to keep it in repair will result in injury to the servient estate or to third persons, the owner of the easement will be liable in damages for the injury so caused." Id.

Overburdening the Easement

To determine whether the dominant estate holder is exceeding the rights under the easement, the servient estate holder should look first to the language granting the easement. If the language is unclear (as often will be the case when a dispute arises), then the analysis may turn to the intent of the parties who created the easement. It therefore may be necessary to evaluate the circumstances that existed at the time the easement was created. Depending on the language of the easement and the circumstances existing at the time the easement was created, uses not expressly allowed could be found to be in violation of the servient estate holder’s rights. See Swaim v. Simpson, 120 N.C. App. 863, 463 S.E.2d 785 (1995) and Moore v. Leveris, 128 N.C. App, 276, 495 S.E.2d 153 (1998). In other cases, the seemingly expanded use may be deemed permissible. See Chestnut Branch, LLC v. Public Interest Projects, Inc. (COA04-1406, 2006 N.C. App.). In any case, determining the dominant or servient estate holder’s rights under the easement will require a careful review of the granting language, the surrounding circumstances, and the relevant case law.

Enforcement of Easement Rights

What do you do if the easement holder is overburdening or failing to maintain the easement? A court can issue a mandatory injunction, requiring the easement holder to take certain action (such as maintaining the easement by clearing the easement area), or a prohibitory injunction, requiring the easement holder to refrain from certain action (such as using a utility easement for vehicular access). The same remedies may be available to the dominant estate holder if the servient estate holder is obstructing access to the easement. Obtaining a mandatory or prohibitory injunction against another party requires filing a complaint in the county in which the property is located and holding a hearing before a superior court judge. At the hearing, the judge has the option to impose damages in favor of the aggrieved party. The damages could be calculated to cover compensation for injuries suffered as a result of the violation or the difference in value of the easement before and after the violation.

Bylaws

What are Bylaws? Bylaws outline the organizational structure of the corporation. B. They tell shareholders, directors, and officers the how, the what, the who, and the when in terms of how a corporation functions. Directors, officers, and shareholders should look to the bylaws for guidance on their roles and on how the corporation functions as a legal entity. When forming a North Carolina corporation, the first step is to draft and file articles of incorporation with the NC Secretary of State. “Corporate existence begins when the articles of incorporation become effective.” N.C.G.S. § 55-2- 03(a).

Bylaws, though, are not typically filed with the Secretary of State. This can lead some incorporators to assume that bylaws are not necessary to conduct business as a corporation. Indeed, there is North Carolina case law suggesting that the absence of bylaws will not necessarily invalidate the corporation. Conversely, the North Carolina Business Corporation Act (the “Act”) provides that “the incorporators or board of directors of a corporation shall adopt initial bylaws for the corporation.” N.C.G.S. § 55-2- 06(a). The Act further provides that, after incorporation, either the initial directors or the incorporator shall hold an organizational meeting to, among other things, adopt the bylaws. N.C.G.S. § 55-2- 05. It is therefore highly advisable for a corporation to adopt bylaws.

Should We Adopt Bylaws

North Carolina corporations should adopt bylaws not only because of the aforementioned provisions of the Act, but also because of the organizational clarity and procedural predictability that comes with having a clear and comprehensive set of bylaws. All bylaws should set forth the roles, authority, and duties of the officers, the number and manner of electing directors, and the time and date of the annual shareholders’ meeting. In addition, bylaws may contain “any provision for managing the business and regulating the affairs of the corporation that is not inconsistent with law or the articles of incorporation.” N.C.G.S. § 55-2- 06(b). These additional provisions may include, but need not be limited to, the quorum required for meetings of the shareholders or directors, the time and place of the annual shareholders’ and directors’ meetings, the vote and notice required to call meetings, the requirements for use of proxies in meetings, and the procedure for taking action without a meeting.

Amendments to Bylaws

To amend the bylaws, the first question to ask is whether the provision to be amended was adopted by the shareholders or the directors. If adopted by the shareholders, the shareholders must approve the amendment unless the bylaws or articles of incorporation specifically state that the directors may amend that particular provision. N.C.G.S § 55-10- 22(a). If the provision to be amended was initially adopted by the directors, then in most cases either the shareholders or the directors may amend that provision.

Contact your corporation’s attorney to discuss preparing, adopting, or amending your corporation’s bylaws.

Can a Board of Directors Take Action Without Meeting In Person?

 Anyone serving on a board of directors (whether for a business, for a charitable organization, or for a homeowner’s association) knows the situation: just a week after the last board meeting, the board needs to take a certain action, and half of the board is not available to meet in person before it is too late.  Fortunately, the North Carolina Business Corporation Act (the “Business Corporation Act”) and the North Carolina Nonprofit Act (the “Nonprofit Act”) allow board of directors to take action outside of a formal, in-person meeting.  Unfortunately, many individuals serving on boards of directors do not understand the requirements for taking such action.

The Business Corporation Act and the Nonprofit Act allow directors to “participate in a regular or special meeting by, or conduct the meeting through the use of, any means of communication by which all directors participating may simultaneously hear each other during the meeting.”  N.C.G.S. § 55-8-20(b) and 55A-8-20(b) (emphasis added).  The board of directors may take action during a regular or special meeting in which some directors are not physically present as long as all directors participating in the meeting can be heard simultaneously, for instance, through a conference call or videoconference.  Since directors cannot hear each other simultaneously using written communication or email, such communication cannot qualify as an acceptable means of conducting a regular or special meeting.

Alternative Actions for Board Meetings

As an alternative to holding a regular or special meeting through a conference call or videoconference, the Business Corporation Act and Nonprofit Act allow a board of directors to take action by unanimous written consent.  Action by written consent outside of a formal meeting is only effective if the board of directors unanimously approves the action.  N.C.G.S. §§ 55-8-21(a) and 55A-8-21(a).  The action must be accompanied by a written consent “signed by each director, describing the action taken, and included in the minutes or filed with the corporate records reflecting the action taken.”  Id.  “The action is effective when the last director signs the consent, unless the consent specifies a different effective date.”  N.C.G.S. §§ 55-8-21(b) and 55A-8-21(b).  

Obtaining a written consent signed by all directors may be more efficient than holding a special meeting, but it could still be insufficient for timely action when one or more directors is unable to sign the consent.  As a potential solution, both Acts allow the written consents to be in electronic format, including e-mail, if authorized by the articles of incorporation, bylaws, or by action of the board of directors.  N.C.G.S. §§ 55-1-50 and 55A-1-70.  To ensure that the board of directors can act as efficiently as possible for the benefit of the corporation, it may be in the corporation’s best interest to amend its bylaws to allow written consents to board action to be in electronic form and delivered by electronic means.

In summary, the Business Corporation Act and the Nonprofit Act provide only two ways in which directors of a corporation can take action outside of a formal, in-person meeting.  First, the directors can “unanimously take action without a meeting if the action is described in one or more written consents signed by all of the directors. . . .” §§ 55-8-21(a) and 55A-8-21(a).  The written consents may be in electronic format if authorized by the articles of incorporation, bylaws, or action of the board of directors.  Second, the directors “may participate in a regular or special meeting by telephone or any other means of communication by which all participants can simultaneously hear each other during the meeting.”  §§ 55-8-20(b) and 55A-8-20(b).

HOA Conflicts of Interest

Directors owe a duty of loyalty to the Association, meaning they must act in the Association’s best interest.  Doing so requires spotting and properly handling conflicts of interest.  But what, exactly, is a conflict of interest?  Does a director have a conflict of interest if the Board is accepting bids for a new pool facility and the director plays golf with one of the bidding contractors?  What if the contractor is the director’s cousin?  What if the Board member is a 10% owner in the contractor’s business?  Board members frequently face similar quandaries, and HOA Boards often struggle with how to identify and resolve conflicts of interest.  Stated simply, a conflict of interest arises when a director’s financial interests may be affected by the Board’s decision.  The director with the golf buddy is not conflicted out of the vote, and neither is the director whose cousin has submitted a bid.  The director with the ownership interest in the contractor’s company does, somewhat obviously, have a conflict of interest in voting on which contractor to hire.  A more detailed explanation follows.

Under N.C.G.S. 55A-8-31, there are two types of conflicts of interest: direct and indirect.  A direct conflict of interest is not defined in the statute, but occurs when the director may lose or gain money as an immediate result of the Board’s action.  An indirect conflict occurs when another entity in which a director has a “material financial interest” is a party to the transaction, or when another entity of which he is a director, officer, or trustee is a party to the transaction and the transaction is or should be considered by the Board.  For example, a director may own a thirty percent interest in a painting company the Association considers hiring, or the director might be vice president of a company to whom the Association might sell land.

Overcoming Conflicts of Interest

Many potential conflicts of interest can be overcome by disclosing the material facts of the conflict to the Board.  A transaction is not voidable merely because of the conflict of interest if the board knew or the director disclosed to the board the material facts of the transaction and the director’s interest and the board authorized, approved, or ratified the transaction.  Likewise, if members vote on the transaction, they can overcome the director’s conflict if the material facts and the director’s interest were disclosed or known to the members entitled to vote and they authorized, approved, or ratified the transaction.  Finally, a transaction is not voidable solely because of a director’s interest if the transaction was fair to the Association.  In summary, there are three situations in which a director’s conflict of interest is not fatal to a transaction: (1) the board was made aware of the material facts of the transaction and the director’s interest and authorized, approved, or ratified the transaction; (2) the members were made aware of the material facts and the director’s interest and authorized, approved, or ratified the transaction; and (3) the transaction was fair to the Association. 

The Board can authorize, approve, or ratify the conflict of interest transaction with an affirmative vote of a majority of the disinterested directors (those who have no direct or indirect interest in the transaction).  In this case, a quorum will be considered present if a majority of the disinterested directors vote to authorize, approve, or ratify the transaction.  The presence of, or a vote cast by, a director with a direct or indirect interest in the transaction does not affect the validity of any action taken pursuant to that vote if the transaction is otherwise authorized, approved, or ratified in this manner.

HOA Board Member Actions

A Board member who has a direct or indirect conflict of interest should recuse himself from the discussion and vote on the transaction.  The North Carolina General Statutes do not provide a system for forcing an interested Board Member from recusing himself from a vote in which he has a conflict.  If a Board Member refuses to recuse himself from a vote in which he has a direct conflict of interest, it is advisable to remove him from the Board of Directors.  North Carolina law allows the Association to impose additional requirements on conflict of interest transactions, either through its Articles of Incorporation or Bylaws or by a resolution of the Board.  If the Home Owners Association does not already have a conflict of interest policy, the directors would be wise to cause the Association to adopt one.  

 

Political Sign Display

In the building to a political election, neighbors may differ on whether they wish to support their preferred candidate with a sign in their yard, or to never see a certain candidate’s name again.  For community associations in North Carolina, the association’s declaration, the North Carolina General Statutes, and local ordinances provide the guidelines for how and when political signs may be displayed within a neighborhood.

A community association’s ability to regulate political signs is governed by North Carolina General Statutes Section 47F-3-121, which applies to all community associations regardless of when formed.  For restrictions registered prior to October 1, 2005, the statute provides that no restriction on the use of land shall be construed to “regulate or prohibit the indoor or outdoor display of political signs by an association member on property owned exclusively by that member” unless the restriction specifically uses the term “political signs.”  For restrictions registered on or after October 1, 2005, the restriction “shall be written on the first page of the instrument or conveyance in print that is in boldface type, capital letters, and no smaller than the largest print used elsewhere in the instrument or conveyance . . .” and must specifically state ‘THIS DOCUMENT REGULATES OR PROHIBITS THE DISPLAY OF POLITICAL SIGNS’”

Even when the declaration does not explicitly prohibit the display of political signs, the Association may prohibit or regulate the display of political signs earlier than forty-five (45) days before the day of the election and later than seven (7) days after an election day. The Association’s regulation cannot be more restrictive than any applicable city, town, or county ordinance that regulates the size and number of political signs on residential property. 

Wilmington Law and Politcal Signs

The applicable section of the New Hanover County Ordinances, Article IX Section 93(4), provides that non-illuminated political signs not exceeding 12 square feet in area may be placed on private property.  Such signs must be removed no later than 30 days after the applicable election or referendum.  Likewise, the applicable City of Wilmington ordinance, found in Section 18-576, sets out that political signs, which are non-illuminated and do not exceed twelve square feet in sign area, are permitted in all districts, and must be removed within thirty days after the applicable election.   

Contact an attorney if you are uncertain whether your Declaration complies with N.C.G.S. § 47F-3-121, or if you have questions about the extent to which your community association can regulate the display of political signs.  

 

North Carolina General Statutes allow a homeowners’ association to file a claim of lien against property located within its neighborhood when a homeowner does not pay assessments as required by the restrictive covenants.  Once a lien is filed it is a cloud on the title to the property and the owner may not sell the property free and clear of the lien without paying the homeowners’ association.  The claim of lien remains on record for three (3) years.  If the owner does not pay, the homeowners’ association can foreclose on the claim of lien in the same manner as a bank foreclosure.  The process is governed by the restrictive covenants of the homeowners’ association and N.C. Gen. Stat. § 47C/F-3-116.

Process of Homeowners' Associations Foreclosure on a Claim of Lien

First, the board of directors must vote to proceed with foreclosure of the claim of lien.  This can be done by an affirmative vote by the percentage required for board action by the governing documents at a board meeting with the required quorum or by unanimous consent without a meeting.  Written proof of the vote by either minutes from the meeting or a signed resolution must be provided to the clerk of court as part of the foreclosure file.  Next the board of directors must appoint a trustee to file the foreclosure. The attorney hired by the board for collection matters may be appointed as the trustee.  North Carolina law requires the trustee to act in a neutral role, so if the foreclosure becomes contested, the attorney can appoint a substitute trustee and act solely as the attorney for the homeowners’ association.

The foreclosure is generally filed with the clerk of court; however, there are certain exceptions to this such as when the money owed consists solely of fines. The Notice of Foreclosure Hearing is served by sheriff, FedEx, and/or certified mail.  If the owner cannot be located, the Notice of Foreclosure Hearing is also posted at the property at least 20 days before the hearing.

At the hearing, if the clerk finds that there is a valid debt, a default, and proper notice of the hearing was provided, the clerk will enter an order authorizing the sale of the property.  The property can then be sold at public auction to the highest bidder.  Prior to the sale, a Notice of Foreclosure Sale must be mailed to the owner, posted at the courthouse, and published in the newspaper.

At the foreclosure sale, the highest bidder will be required to give a cash deposit of $750.00 or 5% of the amount of the bid, whichever is greater.  The trustee will then file a Report of Foreclosure sale with the clerk.  That bid will be held open for ten (10) days for upset bids.  If an upset bid is filed, the ten (10) upset bid period continues until there are no more bidders.  Once the upset bid period expires with no upset bids, the highest bidder will be required to pay the remaining amount of the bid and the property will be transferred by deed to him or her.

Restrictions and Rights of the Property Owner

The owner of the property can stop the foreclosure by paying in full, including costs and attorney fees, at any time up to when the upset bid period expires.  An uncontested foreclosure will generally take a minimum of 90 days to complete depending on the hearing date and cost approximately $2,250 though that can vary depending on the county and number of owners.

Most homeowners will not allow the association’s claim of lien to be foreclosed if there is equity in the property, and will generally pay what is owed before the foreclosure is completed.  However, if the property is foreclosed, the property will be sold subject to any superior liens.  Therefore, if the association has the first or only lien on the property, the property will likely be sold and the association will recover the money owed.

Why Homeowners' Associations Foreclose on a Claim of Lien

In most cases, however, there is a superior bank lien on the property.  Often the property is “underwater” and there is no equity.  For example, if the property is worth $200,000 and there is a first deed of trust to a bank for $225,000 there is no equity in the property.  If the homeowners’ association files foreclosure on the claim of lien, the property would pass to the highest bidder subject to the $225,000 bank lien.  In most cases, no one is going to bid on the property.  If that happens, the homeowners’ association spent money to foreclose and will recover nothing.

If this is the case, why do homeowners’ associations ever foreclose on a claim of lien?  It can be a good way to get the owner’s attention when a lien did not.  Ideally the foreclosure will be stopped before it ever gets to the sale because the owner will respond and pay in full or work out a payment arrangement with the homeowners’ association.  Unfortunately this is not always the case.  If the owner has abandoned property, they are not likely to respond to a threat of foreclosure  The board of directors of the homeowners’ association needs to be prepared for this scenario before beginning the foreclosure process.  If a homeowners’ association begins the foreclosure process in an attempt to get the attention of the homeowner and then  chooses to not complete the sale the association will have spent money and time trying to collect on the account and will not accomplish anything.

Another option for the homeowners’ association is to hold the sale and place a bid on the property.  No money is actually exchanged and the property is transferred to the homeowners’ association subject to the superior lien(s).  This does not mean the homeowners’ association is liable for the money owed to the bank or superior lien holders (with the exception of property taxes).  Rather, the homeowners’ association will hold title until the first lien holder eventually forecloses.  The homeowners’ association can lease the property to recover some or all of the money owed while waiting for the bank to foreclose.  This, however, does require the homeowners’ association to act as a landlord and take responsibility for the property including maintenance, taxes, and insurance.  There is also a risk that the superior lien holder will foreclose quickly and the property is never leased or is not leased long enough to recover the costs of the foreclosure.  For some boards of directors this is not worth the risk and they do not want to take the responsibility of holding title to the property.

Foreclosure on a Claim of Lien as a Last Option

Prior to filing foreclosure, the board of directors of a homeowners’ association needs to carefully consider the possible scenarios.  Some of the factors the board should consider:  Is the property occupied?  Is there equity in the property?  Why is the owner not paying?  For example, if the property is an empty lot with no equity, there are not likely to be any bidders and if the homeowners’ association does take title, the property cannot be leased.  It can “stop the bleeding” and sometimes cause the first lien holder to move forward with foreclosure more quickly but this is not always the case.  Generally the first lien holder does not base the decision to foreclose on the actions of the second lien holder so this should not be the sole motivation for filing foreclosure. On the other hand, if the property is occupied by either the owner or a tenant, they are more likely to respond because they do not want to lose the property.

Foreclosure can be a very useful tool for collection of assessments for homeowners’ associations, but it is a serious remedy that should only be done after considering all of the options and possible outcomes.  A homeowners’ association should speak with an attorney before proceeding with a foreclosure to discuss the association’s different options and the possible consequences of a foreclosure.

If you find yourself in a claim of lien situation and have more questions, please feel free to give us a call at (910) 815-0085. As experts in property law, we are the Wilmington, NC attorneys to call when you have questions.

 

In North Carolina, there are several different forms of real property.  Most people are familiar with a traditional single family home that sits on a defined lot in either a planned development or on a private tract of land.  Other people desire to live in a home with fewer maintenance requirements.  This can be either a townhouse or a condominium.

Town-homes are similar to free-standing single family homes but they are generally located side by side and sometimes include a small yard or patio.  Town-home owners also own the land beneath the townhouse which is sometimes referred to as the “footprint.”  There is almost always a homeowners association law that maintains the common area shared by all the town-home owners in the neighborhood.  The association may also provide insurance and/or maintenance for the outside of the buildings.  The assessments will vary depending on the services being provided and it is important for the owner to understand the details which will be spelled out in the restrictive covenants and bylaws for the association.

Condominiums are a relatively new form of real property ownership which were first built in the 1960s.  They often resemble town-homes from the outside but they are different in many ways.  Instead of owning the land, a condominium owner has an interest their individual space which was quite a revolutionary idea fifty years ago.  As opposed to owning the land beneath the building, the owner of a condominium owns an air space.  The specific ownership interest is defined in the governing documents and is generally from the finished interior surfaces and in.  The rest of the property, including the outside of the buildings, the land, and any amenities are considered common area and are owned jointly by every condominium owner in the development.  The assessments for condominium owners go toward maintenance of the common area.  Because the condominium association maintains much more property than an association in a typical planned community with single family homes, the assessments are often much higher.  On the other hand, the condominium owner’s personal household expenses can be much less than those for an owner of a single family home since the association maintains the building and provides insurance.  Again, it is important for the owner to carefully review the association’s governing documents to fully understand their rights and obligations.

The vast majority of homeowners use financing to purchase their home. In North Carolina, when a homeowner finances the purchase of their property a deed of trust is recorded with the county register of deeds. The deed of trust grants the lender an interest in the property as collateral for the loan and gives the lender the right to foreclose if the owner does not pay the loan.

North Carolina Homeowners's Association Rights

North Carolina also gives homeowners’ associations the right to file a claim of lien against the property when an owner does not pay the assessments owed pursuant to the association’s governing documents. The association also has the right to foreclose the claim of lien, just like a bank. By law, the association’s lien is subordinate to most bank liens. Simply put, if the bank forecloses, the association’s lien in extinguished and the property passes free and clear of the association’s lien. When this happens, the association no longer has a remedy in the property itself.  

Who is Responsible for Assessments Before, During, & After Foreclosure

It is common for a bank foreclosure to take many months or sometimes even years. The new owner is responsible for the assessments that accumulate after the foreclosure, but not the earlier delinquency.  Under the 2013 changes to N.C. Gen. Stat. § 47C/F-3-116(j), the new owner’s responsibility for the assessments begins when the upset bid period expires which is generally 10 days after the foreclosure sale. The association’s only remedy for the assessments owed before that is to seek recovery from the previous owner by filing a lawsuit against him or her. In neighborhoods with a high percentage of second homes and investment properties, the kind more likely to be foreclosed, this can result in a significant burden on the remaining owners.

Real Property is often owned by more than one person. Joint ownership can occur as a result of a joint purchase of real property or as a result of inheritance. In both cases, the joint owner has an undivided interest which means that although the joint owner owns a one- half interest in the property, they cannot point to the specific portion of the property that they own.

Often, issues arise between joint owners of property over how to use the property, who pays the taxes, who pays for repairs or a new roof on the property, or whether to sell the property. When the property owners cannot agree, a joint owner has the right to initiate a Partition proceeding.

A Partition proceeding is a lawsuit filed by a joint tenant or tenant in common owner of property to force the division or sale of real property. Partition actions start with a petition and are Special Proceedings brought before the Clerk of Court. A Partition action must be instituted in the County where the land lies. There are two types of Partition proceedings, Partition in kind and Partition by sale.

Partition action in kind is possible only when the property can be physically divided in a manner that each joint owner receives their share. For example, one hundred acres could be physically divided to allow for two joint tenants each owning a fifty percent interest to receive fifty acres. Of course, who has road frontage, access and the condition of the land must be considered as well. In Partition in kind proceedings, the Clerk of Court appoints three  commissioners to oversee the division of the property. The law says Courts favor Partition in kind rather than Partition by sale.

Partition by sale occurs when the property is unable to be physically divided or cannot be divided equally. For example, a single one-half acre lot with a house constructed in the middle of the lot cannot be divided in a manner that would allow each joint owner to receive their interest. In Partition by sale proceedings, the Clerk of Court appoints a Commissioner to oversee the sale of the property. The proceeds of the sale are deposited with the Clerk of  Court. A hearing is held before the Clerk of Court to divide the proceeds.

Partition proceedings are the law’s answer when joint property owners cannot agree. Disagreements regarding the sale, use, or costs of property may be resolved by retaining an attorney to initiate a Partition proceeding or to work out an agreement between joint owners.

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