Family Lawsuits Over Real Property: 4 Things To Keep In Mind
Real estate litigation often involves family lawsuits. Brothers suing brothers. Sisters suing sisters. And even children suing their parents. In a real estate context the lawsuits are usually for partition. Partition is appropriate where the family members are co-owners of real property and one of the siblings wants to force a sale of the property. Another potential cause of action in a family lawsuit is a resulting trust claim. Resulting trust is appropriate when one family member has contributed money towards the purchase of a piece of property but is not on title to the property. The resulting trust lawsuit seeks to claim an ownership in a property even though one party is not on title.
More important than the legal causes of action in a family lawsuit is the emotional component. Family members fight each other because of deep-seated emotional issues, and legal causes of action are merely the means through which the fight is conducted. Family disputes are rarely governed by rational and logical thought or a cost-benefit analysis. With all of this in mind, here are 4 things to keep in mind when you get into a family lawsuit.
1. Hire A Real Estate Litigation Attorney: Not all attorneys are alike. Some attorneys have experience in partition, resulting trust and other real estate litigation. Many do not. Some lawyers have been to trial, some have not. While every attorney can learn the basics of real estate litigation, it is likely that you and your family will pay for that education. The experienced real estate litigation attorney, while potentially more expensive, may end up charging less because he or she is more efficient and can make better decisions about how to conduct the litigation.
2. Ask For An Analysis Of The Case: Ask your lawyer to prepare an analysis of the case and a suggested strategy for dealing with the case right at the beginning. Also ask for a budget. While no attorney can pinpoint the exact cost of litigation, they can give you a pretty good estimate of how much it will cost to take depositions, file motions, answer discovery and engage in litigation. You might not talk such a tough game once you learn that litigation can cost $50,000 or $100,000. And, knowing that the litigation will cost that much, you can make a much better cost-benefit analysis of the litigation and potential settlement.
3. Listen to Reason! The hardest aspect of family lawsuits is the mental intransigence. “I’ll never pay a dime”, “This is extortion”, “My sister is so unreasonable”. Ask your attorney for his or her recommendations as a third party neutral. Listen to the mediator’s analysis of your case. Putting aside your personal emotions, does the recommended settlement or strategy make sense? It does not make sense to pay $1,000,000 for a property that is worth $750,000, even with sentimental value. It does not make sense to pay an attorney $100,000 to take a case to trial when you are only$25,000 apart in settlement proposals.
4. Buy Or Sell Offers: Sometimes a member of the family will simply refuse to accept any price or settlement offer that the other family member puts forward. In a partition lawsuit, when the parties are negotiating the buy-out of someone’s interest in the property, consider making a buy-sell offer. This means that if you have established a value for your sibling’s interest, set that value and offer to either buy the sibling out at that value or, conversely, have the sibling buy you out at that value. It is much more difficult for a party to complain about the fairness of an offer if both options are on the table. If the price is too high, they should accept the offer. If the price is too low, then they will get a good deal by buying out the other interest.
Any real estate attorney will tell you that litigation among family members can be drawn out, stressful and expensive. You should also take into account the opportunity costs that accompany litigation—you could be spending your time on more productive things and you could spend your money on more valuable things. If you keep in mind these four suggestions, you may not settle your case but you will know that you are making an informed decision with good advice and good advisors.