Legal Question in Real Estate Law in Washington
Real Property Law in Washington State
5 brothers and sisters own a piece of waterfront property as tenants in common. The property is paid for, but is encumbered by a lien of $20K + which grows at 4% per year. The property is occupied by 1 of the owners but each of the owners pays equal shares of tax. The property has fallen into great disrepair and continues to fall apart, thus diminishing its value. The current occupant does not have homeowners insurance and none of the other owners can obtain insurance due to the condition of the property. The 2 owners who wish to sell own other property which could be seized in case of a lawsuit for injury on the property, but the 3 others who do not want to sell do not own other assets which could be seized. We have obtained two market appraisals valuing the property at $550,000 to $625,000. What are our options in regard to arbitration or other legal action so that the owners who wish to sell do not have to give up their equity but wish to discharge their liability, both personal injury and/or environmental.
Thank you.
1 Answer from Attorneys
Re: Real Property Law in Washington State
Given that all the owners are family, I suggest trying to allow those who want out, to get out, and those that want to remain to buy out those who want out. The property would be refinanced, so that the ones who want to get out would be paid their proportional appreciation in market value and transfer their title to the property.
If that does not work, or other suitable arrangements cannot be made, then the only thing left to do is sue for partition of the property, in which case a court would probably order the property sold and everyone paid their proportional shares. For those who want to keep the property, they may make offers to purchase it, and go this route if there is disagreement about the fair market value of the property.
By the way, if the only concern is liability, I suggest creating a limited liability corporation, with each owner acting as a shareholder or member. That will limit liability to the corporation's assets, and protect their personal assets. Another advantage of an LLC is that you can set up corporate by-laws that provide for an orderly process in the event a shareholder wants to divest their ownership in the corporation.
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