Understanding Tenants in Common Agreements and the Pitfalls of Partition

Colorado homeowners who co-own property without a Tenants in Common Agreement are essentially embarking on a complex journey without a map. While the general legal principles may seem straightforward, they often fail to address the numerous errors that can be effectively prevented through expert legal guidance.

GLO specializes in drafting Tenants in Common Agreements that ensure a smooth, legally compliant, and successful co-owned property.

Partition is the Legal Remedy Without a Tenants in Common Agreement

In Colorado, when individuals jointly own property without specifying their ownership structure, they are typically presumed to be tenants in common. As tenants in common, the law assumes that each owner shares an equal interest in the entire property, regardless of their ownership percentage. This arrangement enables each co-owner to access and utilize the entire property, rather than just their individual share. While this approach may appear equitable, it lacks a mechanism for managing daily tasks, dividing expenses, or resolving substantial disputes regarding property usage or maintenance.

A partition action is the legal method by which any co-owner can terminate the co-ownership, meaning the division or sale of the property. There are two main types of partition: “partition in kind,” where the court physically divides the property (though this rarely happens with homes or developed commercial properties), or “partition by sale,” where the court orders the property to be sold, usually through a sheriff’s auction, and the proceeds are divided among the owners. Courts have broad authority in partition proceedings, and the outcomes are usually uncertain and don’t satisfy everyone, which reduces the value of the shared investment. Having a skillful attorney by your side can ensure your Tenants in Common Agreement is smoothly tailored for your circumstance.

Tenants in Common Agreement Allows You to Avoid the Uncertainty, Costs, and Frustration of a Partition Lawsuit

Aside from the existential risk of partition, the everyday reality of co-ownership must be affirmatively addressed. Ask the practical questions: How will you split property taxes, insurance premiums, routine maintenance, and utility bills? What if one co-owner encounters unforeseen financial difficulty and is unable or refuses to contribute their agreed share? What if one co-owner wishes to make a significant renovation or improvement, yet another strongly objects, possibly due to disagreements over aesthetics or financial priorities? Read our blog, A Tenants in Common Agreement: Clarity and Protection for Co-Ownership of Real Property, for more information on addressing these questions.

As a Co-Owner, it’s crucial to have a well-thought-out plan for exiting the partnership. Life changes frequently, with relationships evolving, financial circumstances fluctuating, and personal needs leading to new living arrangements. For instance, what if one Co-Owner wants to sell their interest and relocate, but the others can’t afford to purchase them out? Or, what if one Co-Owner passes away, and their interest passes to heirs who have no interest in continuing as Co-Owners? Determining the value of each Co-Owner’s financial contributions (mortgage payments, repairs) and non-financial contributions (time spent managing the property) is essential when negotiating buyout terms. A knowledgeable lawyer can help address these concerns proactively, establish clear guidelines for decision-making, and provide fair methods for ending co-ownership. This approach safeguards each homeowner’s investment and maintains strong relationships. 

How GLO Can Help

At GLO, our experienced Colorado real estate attorneys specialize in drafting tailored agreements to suit the unique conditions of your co-ownership arrangement. If you're considering initiating a new co-ownership, have inherited property with others, or are already in a co-ownership that should be formalized, GLO can assist. We thoughtfully prepare Tenants in Common Agreements that clearly establish each owner's percentage of ownership, define financial responsibilities for expenses and improvements, and provide equitable methods for making decisions regarding the property. Significantly, we build in comprehensive exit strategies, such as buyout provisions, rights of first refusal, and well-defined guidelines for terminating co-ownership, saving you the costly and distressing experience of a partition lawsuit. If you're experiencing difficulties in a co-ownership arrangement, GLO can also assist you in achieving an equitable and efficient resolution, using our expertise to resolve disagreements and preserve your property value. With GLO, you receive the clarity, protection, and peace of mind essential to making your co-ownership experience a success. To learn more about how GLO can help visit, Tenants in common/co-habitation agreements and Partition Buyout Agreements.

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GLO has prepared this blog to provide general information on legal issues that may be of interest. This blog does not provide legal advice for any specific situation and this does not create an attorney-client relationship between any reader and GLO or its attorneys. GLO engages clients only through specific signed fee agreements. GLO does not guarantee any results