There are times when co-owners of Hawaii real property are engaged in a dispute and no longer wish to continue co-ownership of such property, or one party is no longer making payments on the mortgage and the paying party wants to remove the non-paying party from title. The question that usually follows is what are the co-owners’ options if they wish to sever such relationship.
In the event that there is no prior written agreement among the co-owners setting forth each owner’s obligations and the procedures for resolving disputes, the co-owners are basically left with two options:
(1) work out some agreement to resolve the dispute or
(2) terminate the co-owner relationship through a court supervised partition action pursuant to Hawaii Revised Statutes Chapter 668 (Hawaii’s Partition of Real Estate Statute).
The co-owners should first try to resolve their differences and come to some compromise. By reaching such a compromise, the co-owners would not need a Hawaii partition action which can be a very costly process. However, if seeking such an agreement proves to be a dead end, then a Hawaii partition action is necessary.
In a Hawaii partition action, one or more of the owners files a lawsuit against the remaining owner(s). The filing party is also required to join as a party every person having or claiming to have any legal or equitable right, title, or interest in the property described in the lawsuit.
Once a Hawaii partition action is filed, the court has the jurisdiction to partition the real property by (1) partition in kind or (2) partition by sale. A “partition in kind” occurs when the court physically divides the property and each owner ends up controlling an individual portion of the property. A “partition by sale” is accomplished by selling the entire property at a public auction and dividing the proceeds among the owners according to their respective interests in the property.
The courts tend to favor a partition in kind first, but if such a division is not feasible, then the court will proceed with a partition by sale. As you can see, terminating a co-ownership relationship of real property is not that simple and can be costly. Therefore, you should seek consultation with a Hawaii attorney experienced in resolving co-ownership disputes of Hawaii real property.