A House Divided — Maryland’s Partition of Property Act

By:  Elizabeth J. McInturff, Esq. and Jesse D. Stein, Esq.

Shared ownership of real property can serve many worthwhile purposes. It may provide a strategic investment opportunity for those pooling resources, a practical way to enter a competitive housing market, or a means of preserving family legacy by passing real property through generations. But co-ownership can also lead to tension, especially when multiple owners disagree on how to manage or dispose of the asset.

There is a way that co-owners of real property can resolve their differences in these situations — a legal mechanism that may allow the property to be divided rather than sold. In some cases, this approach can accommodate the co-owners’ differing priorities and long-term interests, offering a path forward without forcing the loss of the property altogether.

A Common Scenario

An owner of a large farm in a growing Maryland community passes away, leaving the land to several children. One wants to keep the farm intact for future family gatherings, recalling fond childhood memories. Another sees an opportunity to carve out a piece and build a dream home. Their goals, and even their emotions, clash.

A sale seems like the logical solution in these instances, but what happens when one co-owner is unwilling to sell, or all owners cannot agree on a sales price and division of proceeds? Historically, even parties wishing to keep the property were compelled to sell their interest on the open market if the property could not be physically divided, as an open market sale was the only way to terminate shared ownership.

That changed in 2022 when the Maryland General Assembly enacted the “Maryland Partition of Property Act” (the “Act”).

The Two Options

The Act gives plaintiffs two options when seeking to divide jointly owned property: partition by sale or partition in kind. The Act also assists owners who want to keep their interest in a shared property but are facing a partition action by creating a statutory right to purchase the property before the court may order a sale.

A partition by sale occurs where the property is sold pursuant to a court-order and the proceeds distributed amongst the owners. In a partition in kind action, the owner asks the court to physically divide the property and distribute it amongst the owners into separately titled parcels. Owners can even elect to partition some but not all of the jointly owned parcels of property. This type of action is appropriate where the property at issue is a parcel of land or a multi-unit apartment complex.

When a Sale May Fall Short 

When a plaintiff invokes the partition by sale provision, the court will first conduct a valuation hearing before ordering a sale. Once value is established, the non-selling owner has 45 days to decide whether to purchase the plaintiff’s interest at that price. If they elect to purchase the property, the court will then set a deadline for completing the purchase at the value determined during the valuation hearing. If no co-owner elects to buy the plaintiff’s interest, the property is sold on the market.

The problem for the plaintiff is obvious: the Court may establish a below market price, which in some cases means that the non-selling parties are getting a bargain while the selling party is receiving less than full value. In the case of a parcel of land which can be developed or has commercial value, the differences can equate to a windfall to the non-selling parties, especially if they decide to sell the property for development after they buy the selling party’s interest at the Court-established under-market rate.

Preserving Ownership Through Partition in Kind

To avoid that dilemma, the Act allows, as does the common law, the plaintiff to seek a partition in kind. If the plaintiff invokes the Act’s partition in kind provisions, the Court will determine whether the property can and should be physically divided. The Court makes this determination by considering several statutory factors, including whether a physical division of the property is feasible and whether such a division would fairly account for the interests of all co-owners. If the property cannot or should not be divided, the Court will order the property sold on the open market with the proceeds divided among the owners. The valuation sets the sale floor.

Notably, in a partition in kind action, the court may not necessarily distribute the property into equal pieces. Rather, the court may consider a range of factors to make an equitable division such as location of existing structures, access to roads, easements or natural features of the land. This protects one owner from receiving a less valuable portion of the property, and from another owner receiving a windfall.

What this Means for Co-Owners with Shared Interests

The Maryland Partition of Property Act marks a significant shift in favor of co-owners who seek to preserve their interest in jointly owned property. No longer is a co-owner automatically forced to sell their interest in the property being partitioned. Instead, the Act provides them with a powerful tool: the right to purchase the property at the court-established value before it ever reaches the open market.

If you would like to speak with an attorney about how the Maryland Partition of Property Act may impact your ownership rights or options, please contact Elizabeth McInturff at emcinturff@sgrwlaw.com or Jesse Stein at jstein@sgrwlaw.com.