When co-owners of an apartment building can’t agree—whether family members or investors—the situation can escalate quickly. Disputes over management, selling, or distributions can turn a good investment into a nightmare. Understanding your options is the first step toward resolution.
A co-owner dispute over an apartment building can quickly escalate from disagreement to litigation. Understanding your legal options and alternatives is essential for protecting your investment.
Common Co-Owner Disputes Over Apartment Buildings
Family Situations
- Inherited property: Siblings inherit together but have different goals
- Generational conflict: Parents want to hold; children want to sell
- Unequal involvement: One family member manages; others feel excluded
- Distribution disagreements: Disputes over how cash flow is divided
Investor Situations
- Exit timing: One investor wants out; others want to hold
- Capital calls: Disagreement over funding improvements
- Management decisions: Conflicts over property manager, rent levels, or repairs
- Fiduciary concerns: Suspicion that managing partner isn’t acting in everyone’s interest
Legal Framework: Tenancy in Common
Most co-owned apartment buildings are held as tenants in common (TIC). Key characteristics:
- Each owner has an undivided interest in the whole property
- Owners can have unequal shares (e.g., 60/40)
- Any owner can force a sale through partition
- No right of survivorship (interest passes to heirs, not other owners)
Resolution Options
1. Negotiated Buyout
One owner buys out the other(s). This requires:
- Agreement on value
- Financing or cash for the buyout
- Willingness to negotiate
Often the cleanest solution if one party has the resources and desire to continue owning.
2. Agreed Sale
All owners agree to sell and split proceeds. This preserves relationships and maximizes value since there’s no forced-sale discount.
3. Mediation
A neutral mediator helps parties reach agreement. Less expensive and adversarial than litigation. Many disputes settle in mediation when parties understand the costs of alternatives.
4. Partition Action
Any co-owner can file a partition action to force a sale. The court appoints a referee who sells the property and distributes proceeds. This is the nuclear option—expensive, slow, and typically results in below-market sales.
The Partition Process in California
- Filing: One owner files a complaint for partition in Superior Court
- Interlocutory Judgment: Court determines ownership interests and orders sale
- Referee Appointment: Court appoints a referee (often an attorney) to manage the sale
- Sale Process: Referee lists property, reviews offers, and recommends acceptance
- Court Confirmation: Court approves the sale
- Distribution: Proceeds distributed after costs, fees, and any accounting adjustments
Costs of Partition
- Attorney fees for all parties
- Referee fees (typically a percentage of sale price)
- Court costs
- Below-market sale price (buyers know it’s a forced sale)
Total costs can easily reach 15-25% of property value. This is why negotiated solutions are almost always better.
Accounting and Offsets
In partition, the court can adjust distributions based on:
- Contributions: One owner paid more toward purchase, improvements, or expenses
- Rents received: One owner collected rents without sharing
- Ouster: One owner was excluded from the property
- Waste: One owner damaged or neglected the property
Keep detailed records of all contributions and expenses—they matter in partition accounting.
Preventing Future Disputes
If you’re entering a co-ownership arrangement, protect yourself with:
Written Agreement
A TIC agreement or LLC operating agreement should address:
- Decision-making procedures
- Capital call requirements
- Distribution policies
- Buy-sell provisions
- Dispute resolution procedures
- Exit mechanisms
Regular Communication
Hold periodic meetings to discuss property performance, plans, and concerns. Small issues addressed early don’t become big disputes.
Clear Roles
Define who handles what: property management, accounting, major decisions. Ambiguity breeds conflict.
When to Involve Professionals
Bring in help early:
- Real estate attorney: Understands partition law and can advise on options
- Mediator: Can facilitate productive conversations
- Broker: Provides objective valuation and can market the property if sale is chosen
- CPA: Advises on tax implications of various outcomes
My Experience with Co-Owner Disputes
I’ve worked with families and investors navigating difficult co-ownership situations. My role:
- Provide neutral, objective property valuation
- Communicate equally with all parties
- Market the property professionally if sale is chosen
- Maintain confidentiality about the dispute
If you’re in a co-owner dispute over an LA apartment building, contact me for a confidential consultation. Understanding your property’s true value is the first step toward resolution.
Co-owner disputes don’t have to end in litigation. A co-owner dispute over an apartment building doesn’t have to end in litigation. With professional guidance and a willingness to negotiate, most situations can be resolved in ways that work for everyone.