What are my legal rights. I am 1/2 owner of property and want to cash out.

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What are my legal rights. I am 1/2 owner of property and want to cash out.

My partner and i bought land together to run a business, we had a falling out some 20 years ago, I walked away from the business because of his dishonesty. He has used the property since, I have not paid any property taxes in like 15 years, he has. Am I still entitled to 1/2 of the worth of the land and structures that were part of the original business, he owns 5 acres adjacent to business land.

Asked on September 22, 2017 under Real Estate Law, New York

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

If and when the land is sold, as a half owner, you are entitled to 1/2 the equity (if any; i.e. what is left after paying any mortgage, etc.) after paying the costs of sale. However, there are several hitches to bear in mind:
1) First, you can't make him buy you out unless you had a buy-out agreement in place. Otherwise, as stated, you'd only get any money after the property is sold.
2) If he will not agree to sell, there is a type of legal action (traditionally called an action "for partition") you can bring to force him to sell the property, but such an action would be very difficult for a non-attorney to bring, and if you hired a lawyer, expect that it could (at a reasonable guess) cost $5,000 - $10,000 for attorney's fees and take months or even a year or two.
3) If he has paid the property taxes, there is a reasonable chance the court would give him a credit for the taxes he, and not you, paid.
Therefore, for example, say the property is worth $200k but over the last 15 years, the property taxes he paid have been $90,000. Say you spend $8,000 on the legal action to force a sale, and the realtor commission is 5%; say there are another $5k of costs involved in selling (fixing anything up, hiring a lawyer for the close, etc.). In this example, you'd take the $10k in commissions and $5k in costs off the top, leaving $185k; he'd get his $90k reimbursement for taxes, leaving $95k; that $95k would be split, so you'd get around $47,500, out of which you paid $8k for an attorney, leaving $39,500.
Obviously, this is just for the sake of illustration, but as you can see, if the land's value is low, or your former partner paid lots of taxes, or there is a mortgage (not even considered in the above), you might not get much; you need to decide if this is worthwhile.
Of course, he might settle the matter by voluntarily buying you out--if you and he agree to that, it is legal. But you can't force a buyout; all you can force is a sale.


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