Massachusetts Partition Actions: Division of Sale Proceeds

Massachusetts partition actions do not always end with the court-ordered sale of the real estate in question. After a property being partitioned is sold, the proceeds of the sale must be divided between the co-owners. The law presumes that the proceeds should be divided in accordance with each owner’s respective ownership interest. For example, if there are two owners who each own 50% of the property, the law presumes that the owners should each receive 50% of the sale proceeds.

Any party to a partition action can try to rebut this presumption by proving that he or she should receive a greater share of the proceeds because he or she has paid more than his or her “fair share” of property improvements or expenses. Courts will generally, but not always, reimburse co-owners for improvements and overpayment of expenses such as taxes, insurance, and mortgage debt service. However, even when the court rules that there were overpayments by one co-owner, it will not always result in a “dollar-in, dollar-out” reimbursement. For example, in the case of improvements, a co-owner may be reimbursed for the increase in overall property value caused by the improvement, but not for the cost of the improvement itself. Thus, a 50% co-owner who spends $5,000 to build a deck that improves the value of the property by $2,000 may be reimbursed half of the $2,000 by which the property was improved, but not half of the $5,000 cost of the deck itself.

Attempting to recover for past overpayments in a partition action will often involve a formal accounting proceeding. Testimony from real estate appraisers, CPAs, and other expert witnesses may be required. The parties will have an opportunity to obtain formation from each other during the “discovery” phase of the accounting proceeding, including making requests for documents, posing written questions, and taking depositions. Ultimately, the co-owner requesting reimbursement will have the burden of proving at trial that he or she is entitled to reimbursement. The court is given wide discretion to make a decision that is fair and equitable in light of all the circumstances of each particular case. Given the costs of a partition accounting (including increased legal fees and often expert witness fees) and the time involved (often months following the sale of the property), wise co-owners should assess their reimbursement claims early, and weigh the cost of an accounting proceeding and the likelihood of success against the amount of the reimbursement being sought.

To learn more, see our articles on partition actions in general, selecting proper venue for partition actions, and methods for disposing of partitioned property.


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