What Is an Owelty of Partition and When Would I Need One?
In a recent article, we discussed how property gets divided if one or more co-owners want out. If the co-owners can't agree on a solution, one of the co-owners can file a partition action to ask the court to divide the property fairly or order the property to be sold and the proceeds divided if the property, like a house, can't be fairly divided.
An owelty of partition is a legal document which allows one of the co-owners to buy out fellow owners' interests in the property by pledging 100 percent of the property as collateral for a loan. Without the owelty of partition, a traditional lender could not properly secure a mortgage against the whole property.
How can I get an owelty of partition?
You must be a co-tenant of property to get an owelty of partition. If you've already been to court and the court simply divested one party of property rights and vested rights in another party, you are no longer co-tenants and an owelty of partition is no longer applicable.
The result is that, while the property rights may be vested in one party, the chain of title may be too weak to satisfy a lender's requirements. The new owner may be unable to pledge the entire property as collateral and, thus, unable to get sufficient financing to pay off the former co-owners.
An owelty of partition could be issued from a partition action, or from any type of case where property must be divided, such as divorce or probate proceedings. If the case is over, but the court didn't issue an owelty of partition, the final order may need to be revised to address this issue and satisfy a potential lender's chain-of-title requirements.
Do we need an owelty deed if we have an agreement to divide property?
Owelty deeds should be part of any agreement to divide property, even if you don't think you'll need to refinance the property. One reason is that you may be wrong about not needing the owelty deed, and another reason is that, logistically speaking, it is better to get everything pertinent to the deal signed at one time, rather than trying to chase everyone down later.
Seek professional advice when dividing property
Protect your rights and avoid unseen pitfalls by consulting with an experienced property lawyer before you agree to divide property. Our Bryan-College Station, Texas real estate attorneys review your situation and guide you through the partition process. Call us at Peterson Law Group to make an appointment at 979-703-7014 today, or visit us online to request a meeting using our online contact form.