Co-ownership of real estate in Louisiana most often arises in a marriage or following a death. Because Louisiana is a community property state, spouses are co-owners of all property purchased during their marriage unless an agreement exists stating otherwise. In addition, heirs inheriting property are co-owners of any property inherited by more than one heir. Although less common, it is also possible for unmarried parties to purchase real estate as co-owners with the intent to either occupy the property or to rent the property out to third parties for a profit.
Regardless of the manner in which co-owned property is acquired (by purchase during marriage, through inheritance, or by purchase outside of a marriage), consent of all co-owners is required in order to sell, encumber, or lease the entirety of the property.
Generally, a co-owner is free to sell, encumber, or lease his percentage of the property, but the co-owners may enter into an agreement restricting this right as well. This agreement must be in writing, and may only be for a maximum term of 15 years. Practically speaking, this means that one co-owner may not enter into a listing agreement wherein he agrees to sell the entire piece of real estate on behalf of the other co-owners. He may only agree to sell his percentage of the property, and even that right may be restricted in a written agreement. The exception to this rule is that spouses during marriage are prohibited from selling or encumbering their interest in community property during the existence of the community property regime.
Each co-owner has an equal right to the use and occupancy of the entire property without paying rent to the other co-owners. However, if one co-owner possesses the property exclusively and refuses to allow the other co-owners to use or occupy it, courts have said that rent would be owed from the first date that occupancy or use was requested and refused.
In addition, a co-owner is entitled to reimbursement from the others for expenses incurred in maintaining and preserving the property. However, if one co-owner possesses the property exclusively, his right to reimbursement is offset by the value of his enjoyment of the property. For example, if one co-owner lives in the family home that is co-owned by other heirs, he would not be able to get reimbursed for costs of maintaining the home or for property taxes and insurance because his exclusive use of the property would cancel those things out. It is also important to note that any substantial improvements or alterations are not permissible without consent of the other co-owners.
The items set forth above can sometimes lead to friction in co-ownership situations, and Louisiana law provides the remedy of partition to all co-owners. In general, any co-owner, regardless of percentage of ownership, has the right to demand partition. However, this right may be restricted for limited amounts of time. A provision in a will or a donation specifying that the property shall not be partitioned is only valid for 5 years, regardless of whether a term has been stated. Co-owners may also agree in writing not to partition the property, but such an agreement is valid only for 15 years.
Two kinds of court-ordered partitions exist: partitions in kind and partitions by licitation. A partition in kind occurs when property can be divided into lots of equal value, and the sum of the value of the lots is not significantly lower than the value of the whole. Partition by licitation occurs when partition in kind is not possible. In this instance, the property is sold at public auction and the proceeds distributed in accordance with the interest percentages of the co-owners. Courts strongly favor partition in kind. Co-owners are also free to agree between themselves to partition property, either in kind or by licitation.
