Selling Estates Where Multiple Parties Are Involved: A Guide for Real Estate Agents

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Selling estates where multiple parties are involved is very common. The multiple parties involved in real estate transactions vary from couples and families, to trusts or deceased estates where multiple beneficiaries wish to sell a co-owned property.

The most common types of multiple-party property ownership are Joint Tenancy or Tenancy by Entirety. Joint ownership occurs when parties own the property jointly and equally and, if one owner dies, the other party is entitled to the whole estate as a right of survivorship. Tenancy by Entirety is a form of ownership limited to married couples, which prohibits the sale of property without the consent of both parties. 

Laws vary by state.  For example, California doesn’t recognize Tenancy by Entirety, and purchases by married couples are considered simply joint ownership.

Due to the increasing housing affordability issues in California, another form of multiple home ownership is also gaining popularity. Many people are turning to Tenancy in Common as a viable form of ownership. This involves multiple parties purchasing a property together, each owning a percentage of the property. Each party doesn’t necessarily have to have equal ownership — generally, ownership relates to how much each party puts into the property. The right of survivorship does not apply to Tenancy in Common arrangements;  when a party dies, their share goes to their beneficiaries in their will, not the other parties to the property. 

So, what are the risks of dealing with properties owned by multiple parties? And, what can you do to minimize those risks and protect yourself against any potential liabilities and lawsuits? Here’s what to watch out for, along with some strategies to keep you and your real estate business safe.

The Risks

Dealing with multiple parties who own a property is not without its challenges. When more parties are involved, there’s an increased chance that one of the parties will not agree to the terms of the sale. In some cases, one or more parties don’t want to sell at all, which makes the sale of a property anything but easy. 

Issues can arise, particularly with deceased estates, where several parties have been left a property in the will of a loved one. It’s not uncommon for parties to disagree about what should be done with the property.  There could be potential to renovate, for one or more of the parties to live in the property, or for the sale of the property where the proceeds would be divided among the parties. 

Problems can also arise in a trust-owned property. More about an uncooperative co-owner of a trust-owned property. 

As a listing agent, you must:

  1. Understand the structure of ownership of the property.  
  2. Know who the parties are, and ensure you have the appropriate authorizations before listing the property. 
  3. Verify there’s agreement among all of the parties to list and sell the home, prior to starting any listing or marketing activities.

If the parties to the property do not agree about the listing, they must communicate and agree on a course of action before proceeding with a sale. Where an agreement cannot be reached, any party to the property can file a partition seeking a physical division (where feasible) or sale of the property. 

If there is ambiguity about ownership, and you’ve listed a property without the appropriate authorizations (even inadvertently), you could face a lawsuit.  That could result in potentially significant financial penalties and damage to your business and reputation. 

Protecting Against Liabilities

Getting the Right Approvals
To make sure you’re protected in your real estate business, ensure you’re aware if a property is co-owned. This information is available on the property deed. Each co-owner must consent to the listing of the property. If they don’t, the house cannot be listed, unless there’s been a determination by the courts that there should be a division or sale of the property. You’ll need to obtain signatures from each party on the sale agreement as well.

Documenting All Communications
Keeping an accurate record of all communications to the joint owners/multiple parties of a property is essential, so if there is a lawsuit situation, you have documentation to back up your claims in court. That means ensuring all approvals are in writing and signed where necessary.  Keep this documentation in a safe place where you can retrieve it easily if needed for legal proceedings.

Get Legal Advice Where Necessary
The best way to protect your business from a lawsuit is preventing one in the first place. It’s recommended that you get legal advice if you have any questions about contracts for a multiple-party-owned property.  

This is available free with CRES E&O + ClaimPrevent® policies. Through the CRES legal assistance hotline, you’ll have access to experienced and qualified attorneys who specialize in litigation in the real estate industry. 


Insure Yourself in Case of Lawsuits
Do you have adequate real estate errors and omissions insurance?  Many real estate offices have “bare bones” policies designed for other industries — and may not cover you for Open House and Showings, and other everyday real estate activities.

Get your E&O insurance check-up today by calling the CRES team on 800-880-2747 for a confidential discussion. We can tailor an insurance package to meet your specific needs as an individual, or for your real estate office. CRES has been one of California’s leading real estate insurers for more than 20 years. 

This blog/website is made available by CRES Insurance Services for educational purposes to give you general information and understanding of legal risks and insurance options, not to provide specific legal advice. This blog/website should not be used as a substitute for competent legal advice from a licensed professional attorney in your state. Claims examples are for illustrative purposes only. Read your policy for a complete description of what is covered and excluded.

Originally Published October 30, 2019

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