Legal-Ease: Rights as co-owner
Many people own real estate with one or more other people. This often happens when a group of people buy a property together or inherit a property together.
Co-ownership of real estate is generally “undivided,” which means that even if a piece of property has two owners and includes only two acres, no acre is specifically owned by either of the co-owners. . While there are different types of real estate co-ownership, there are specific and unique laws that govern most types of undivided real estate co-ownership.
First, when several people are co-owners of an undivided asset, any one of these persons is legally entitled to own the entire asset, almost on a “first come, first served” basis. However, if a co-owner uses all of the condominium property, that user co-owner is required to fairly pay proportional rent to the other co-owners. This means that any co-owner can also lease (to non-owners) the condominium property provided that the tenant co-owner proportionately shares the rent with the other co-owners.
For example, if I own an undivided third of a certain agricultural field, I can farm that field, but I have to pay two-thirds of the fair market rent to the other two co-owners.
Likewise, if I am not a farmer but own an undivided third party of a certain agricultural field, I will probably be able to lease that field to a tenant (and effectively prevent other co-owners from doing so) as long as I pay both. third of the rent at fair market value to other co-owners.
Second, the undivided interests in real estate can be legally sold or transferred, if a buyer can actually be found. So if I inherit a seventh interest in a house, I can usually sell or transfer that seventh interest to almost anyone else, and the co-owners have no ability to stop or prevent this transfer.
Third, any co-owner of a property can file a specific type of appeal for the property to be divided into shares proportional to the co-ownership. In this lawsuit, if it is determined that the property cannot be divided equally in proportion to the property (as is the case with a house that cannot be “divided”), a co-owner can force a sale to the owners. public auction of the property.
The unique rules regarding the co-ownership of real estate are sometimes incompatible with the hopes and wishes of the co-owners or others who created the co-ownership. For example, a parent may give property to more than one of their children with the expectation that the children will not sell their interests or subdivide their interests in the real estate.
Usually, the easiest way to create a real estate condominium while changing or eliminating the condominium rules and mechanisms explained above is for the co-owners to own an entity (like an LLC) that owns the real estate. The LLC’s operating agreement may then prohibit the subdivision of the real estate and may limit or prohibit the sale of the undivided interests. The LLC’s operating contract may also regulate and organize the access and use of the property by the co-owners.
Lee R. Schroeder
Lee R. Schroeder is a Licensed Ohio Lawyer with Schroeder Law LLC in Putnam County. He limits his practice to business, real estate, estate planning, and agriculture in Northwestern Ohio. He can be reached at [email protected] or 419-659-2058. This article is not intended to serve as legal advice, and specific advice should be sought from the licensed lawyer of your choice based on the specific facts and circumstances you are facing.