In Florida, property disputes involving multiple owners—known as cotenants—are often resolved through partition actions, especially when owners cannot agree on the future of the property. Partition cases allow the property to either be divided among the owners or sold, with the proceeds split according to each owner’s share. An important aspect of these cases is the “cotenant buyout,” covered under Florida Statute 64.207, which gives certain cotenants the opportunity to purchase the shares of others before a forced sale.
What is a Cotenant Buyout?
A cotenant buyout is a process that occurs when one or more cotenants want to sell their share of the property but others prefer to keep it. If a cotenant requests a partition by sale, Florida law provides a mechanism for the remaining cotenants to purchase the selling cotenant’s share before the property is sold on the open market.
Determination of Value
In partition cases, where multiple cotenants share ownership of a piece of property, determining the property’s value is a critical step in the process. Florida Statute 64.206 outlines the procedure for establishing the fair market value of the property in these cases, ensuring that all parties have a clear understanding of what the property is worth before proceeding with buyouts or sales.
64.206 Determination of value.—
(1) Except as otherwise provided in subsections (2) and (3), if the court determines that the property that is the subject of a partition action is heirs property, the court shall determine the fair market value of the property by ordering an appraisal pursuant to subsection (4).
(2) If all cotenants have agreed to the value of the property or to another method of valuation, the court shall adopt that value or the value produced by the agreed method of valuation.
(3) If the court determines that the evidentiary value of an appraisal is outweighed by the cost of the appraisal, the court, after an evidentiary hearing, shall determine the fair market value of the property and send notice to the parties of the value.
(4) If the court orders an appraisal, the court shall appoint a disinterested real estate appraiser licensed in this state to determine the fair market value of the property assuming sole ownership of the fee simple estate. On completion of the appraisal, the appraiser shall file a sworn or verified appraisal with the court.
(5) If an appraisal is conducted pursuant to subsection (4), not later than 10 days after the appraisal is filed, the court shall send notice to each party with a known address, stating:
(a) The appraised fair market value of the property.
(b) That the appraisal is available at the clerk’s office.
(c) That a party may file with the court an objection to the appraisal not later than 30 days after the notice is sent, stating the grounds for the objection.
(6) If an appraisal is filed with the court pursuant to subsection (4), the court shall conduct a hearing to determine the fair market value of the property not sooner than 31 days after a copy of the notice of the appraisal is sent to each party under subsection (5), whether or not an objection to the appraisal is filed under paragraph (5)(c). In addition to the court-ordered appraisal, the court may consider any other evidence of value offered by a party.
(7) After a hearing under subsection (6), but before considering the merits of the partition action, the court shall determine the fair market value of the property and send notice to the parties of the value.
In addition to a determination of value under this section, the court shall determine the amount of the equitable accounting upon the request of any cotenant and shall appropriately adjust any price, purchase price, apportioned price, buyout, judgment, or partition granted under this part based on the results of the equitable accounting.
History.—s. 2, ch. 2020-55.
Key Provisions of Florida Statute 64.206
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When is the Property’s Value Determined?
The court must determine the fair market value of the property whenever it identifies that the subject of a partition action is “heirs property”—property that has been passed down through family members and jointly owned. However, if the cotenants agree on a value or on an alternative method for valuation, the court will accept that agreement instead of ordering an appraisal.
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Appraisal Process
When cotenants cannot agree on the value, the court will usually order an appraisal. A disinterested real estate appraiser, licensed in Florida, is appointed to determine the fair market value of the property.
The appraisal is a crucial step in ensuring a fair valuation, especially in cases where the property’s worth is contested. The appointed appraiser is expected to be neutral, and their evaluation helps provide an unbiased view of the property’s value.
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Notification and Objections
After the appraisal is filed, the court must notify all the cotenants (with known addresses) within 10 days. The notice will include the appraised value and instructions for how parties can access the appraisal at the clerk’s office. Importantly, any party that disagrees with the appraised value has 30 days to file an objection, outlining specific reasons for their dispute.
This mechanism ensures that all parties have the opportunity to voice concerns or disagreements with the appraisal. By allowing for objections, the statute ensures that no party is forced to accept a valuation without having a chance to present their side of the argument.
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Court Hearings and Additional Evidence
If an appraisal has been filed and the notice has been sent, the court will schedule a hearing at least 31 days after notifying the parties. Whether or not any objections were filed, the court holds this hearing to determine the property’s final fair market value. At the hearing, the court can consider the appraisal and any additional evidence of value offered by the parties.
This step is essential in maintaining fairness, as it provides all parties with the chance to present their evidence, whether it’s another appraisal or comparable property sales, which may influence the court’s final determination.
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Final Determination of Value
After the hearing, the court makes a final decision on the property’s fair market value. This value becomes the foundation for all subsequent actions, such as cotenant buyouts or partition sales. The court will notify all parties of this final value, which is crucial because it directly impacts any sale or division of the property.
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Equitable Accounting Adjustments
In addition to determining the property’s value, the statute also allows for what’s known as “equitable accounting.” Upon request from any cotenant, the court will review and adjust amounts relating to buyouts, purchase prices, or judgments to ensure fairness. This could involve adjustments based on the contributions each cotenant has made toward property expenses or improvements.
Equitable accounting ensures that parties are fairly compensated, especially if one cotenant has contributed more to maintaining the property or covering costs such as taxes or mortgage payments. This adjustment is essential in ensuring that each cotenant receives a fair share of the proceeds from a sale or a fair purchase price during a buyout.
ELECTION TO PURCHASE INTERESTS PER FLORIDA STATUTE 64.207
If an interested party wishes to buy out the Property and the Property is “heirs property” then the Court must afford the ability to purchase. Fla. Stat. 64.207 provides:
64.207 Cotenant buyout.—
(1) If any cotenant requested partition by sale, after the determination of value under s. 64.206, the court shall send notice to the parties that any cotenant except a cotenant that requested partition by sale may buy all the interests of the cotenants that requested partition by sale.
(2) Not later than 45 days after the notice is sent under subsection (1), any cotenant, except a cotenant that requested partition by sale, may give notice to the court that it elects to buy all the interests of the cotenants that requested partition by sale.
(3) The purchase price for each of the interests of a cotenant that requested partition by sale is the value of the entire parcel determined under s. 64.206 multiplied by the cotenant’s fractional ownership of the entire parcel.
(4) After expiration of the period in subsection (2), the following rules apply:
(a) If only one cotenant elects to buy all the interests of the cotenants that requested partition by sale, the court shall notify all the parties of that fact.
(b) If more than one cotenant elects to buy all the interests of the cotenants that requested partition by sale, the court shall allocate the right to buy those interests among the electing cotenants based on each electing cotenant’s existing fractional ownership of the entire parcel divided by the total existing fractional ownership of all cotenants electing to buy and send notice to all the parties of that fact and of the price to be paid by each electing cotenant.
(c) If no cotenant elects to buy all the interests of the cotenants that requested partition by sale, the court shall send notice to all the parties of that fact and resolve the partition action under s. 64.208(1) and (2).
(5) If the court sends notice to the parties under paragraph (4)(a) or paragraph (4)(b), the court shall set a date, not sooner than 60 days after the date the notice was sent, by which electing cotenants must pay their apportioned price into the court. After this date, the following rules apply:
(a) If all electing cotenants timely pay their apportioned price into the court, the court shall issue a judgment of partition reallocating all the interests of the cotenants, disburse the amounts held by the court to the persons entitled to them, and direct the clerk of the court to record the judgment in the official records of the county where the property is located.
(b) If no electing cotenant timely pays its apportioned price, the court shall resolve the partition action under s. 64.208(1) and (2) as if the interests of the cotenants that requested partition by sale were not purchased.
(c) If one or more but not all of the electing cotenants fail to pay their apportioned price on time, the court shall give notice to the electing cotenants that paid their apportioned price of the interest remaining and the price for all that interest.
(6) Not later than 20 days after the court gives notice pursuant to paragraph (5)(c), any cotenant that paid may elect to purchase all of the remaining interest by paying the entire price into the court. After the 20-day period, the following rules apply:
(a) If only one cotenant pays the entire price for the remaining interest, the court shall issue a judgment of partition reallocating the remaining interest to that cotenant and reallocating the interests of all of the cotenants. The court shall also disburse the amounts held by the court to the persons entitled to them and direct the clerk of the court to record such judgment in the official records of the county where the property is located.
(b) If no cotenant pays the entire price for the remaining interest, the court shall resolve the partition action under s. 64.208(1) and (2) as if the interests of the cotenants that requested partition by sale were not purchased.
(c) If more than one cotenant pays the entire price for the remaining interest, the court shall reapportion the remaining interest among those paying cotenants, based on each paying cotenant’s original fractional ownership of the entire parcel divided by the total original fractional ownership of all cotenants that paid the entire price for the remaining interest. The court shall issue promptly a judgment of partition reallocating all of the cotenants’ interests, disburse the amounts held by the court to the persons entitled to them, promptly refund any excess payment held by the court, and direct the clerk of the court to record the judgment in the official records of the county where the property is located.
(7) Not later than 45 days after the court sends notice to the parties pursuant to subsection (1), any cotenant entitled to buy an interest under this section may request the court to authorize the sale as part of the pending action of the interests of cotenants named as defendants and served with the complaint but that did not appear in the action.
(8) If the court receives a timely request under subsection (7), the court, after hearing, may deny the request or authorize the requested additional sale on such terms as the court determines are fair and reasonable, provided the court ensures the due process rights of the nonappearing cotenants, subject to the following limitations:
(a) A sale authorized under this subsection may occur only after the purchase prices for all interests subject to sale under subsections (1) through (6) have been paid into court and those interests have been reallocated among the cotenants as provided in those subsections.
(b) The purchase price for the interest of a nonappearing cotenant is based on the court’s determination of value under s. 64.206.
History.—s. 2, ch. 2020-55.
Key Steps in the Buyout Process
- Notification: Once a value for the property has been determined (per Florida Statute 64.206), the court will notify the parties that any cotenant, except those requesting the sale, can buy the interests of the cotenants seeking the sale. This ensures that those wanting to retain the property have the first option to buy out the selling cotenants.
- Election to Buy: Cotenants interested in buying the selling party’s share must notify the court within 45 days of receiving the court’s notice. This is crucial because failure to act within this period could result in the property being sold.
- Purchase Price Calculation: The purchase price for each selling cotenant’s share is calculated based on the value of the entire property, multiplied by the fractional ownership interest of the cotenant requesting the sale. For example, if a cotenant owns 25% of the property and the court values the property at $400,000, the purchase price for that share would be $100,000.
- Finalization: The purchasing cotenants must pay their allocated amounts to the court within a specified timeframe, usually set for at least 60 days after notice. If all payments are made, the court will issue a judgment of partition, reallocating ownership among the remaining cotenants and formally documenting the changes in the county records.
What Happens if No One Buys?
If no cotenants elect to buy the shares, or if the electing cotenants fail to pay the purchase price, the Court will proceed with a sale of the property. The sale may happen through a public auction, and the proceeds will be distributed according to each cotenant’s share. Alternatively, the Court may appoint a special magistrate or allow the parties to select a realtor to sell the Property.
Special Considerations for Nonappearing Cotenants
In some cases, cotenants who were named in the partition action may not respond or appear in court. Under subsection (7) of the statute, any cotenant entitled to buy a share can request that the court authorize the sale of these nonappearing cotenants’ interests. After a hearing, the court may allow this sale if it deems it fair and reasonable, ensuring that the nonappearing cotenants’ due process rights are protected.
If you’re facing a partition action, it’s important to be aware of these rights and act swiftly when the opportunity arises. If you have questions about anything contained in this article or other issues related to Florida Real Estate litigation we would love to hear from you. Our attorneys litigate cases throughout the state of Florida and we offer free, no obligation consultations.
Brice Zoecklein, Esq.
813-501-5071
Disclaimer: The information contained in this blog/website is for informational purposes only and provides general information about the law but not specific advice. This information should not be used as a substitute for advice from competent legal counsel as laws change and the facts in your specific case need to be analyzed.
