D R A F T
FOR DISCUSSION ONLY
PARTITION OF TENANCY-IN-COMMON
REAL PROPERTY ACT
NATIONAL CONFERENCE OF COMMISSIONERS
ON UNIFORM STATE LAWS
For
Without Prefatory Notes and With Comments
Copyright 82008
By
NATIONAL CONFERENCE OF COMMISSIONERS
ON UNIFORM STATE LAWS
____________________________________________________________________________________________
The ideas and conclusions
set forth in this draft, including the proposed statutory language and any
comments or reporter=s notes, have not been passed upon by the National
Conference of Commissioners on
DRAFTING COMMITTEE ON PARTITION OF TENANCY-IN-COMMON REAL PROPERTY ACT
The Committee appointed by and
representing the National Conference of Commissioners on Uniform State Laws in
preparing this Act consists of the following individuals:
ROBERT L. MCCURLEY, JR., Alabama Law Institute,
GEORGE H. BUXTON,
III,
LANI LIU EWART,
CARL H. LISMAN,
MARIAN P. OPALA, State
Capitol, Room 238,
RODNEY W.
SATTERWHITE,
NATHANIEL
M. GAY TAYLOR – JONES, Office of Legislative Research & General Counsel, Utah State Capitol Complex, W210 House Bldg, Salt Lake City, UT 84114-5210
THOMAS W. MITCHELL, University of Wisconsin Law School, 975 Bascom Mall, Madison, WI 53706, Reporter
EX OFFICIO
MARTHA LEE
WALTERS,
WILLIAM R. BREETZ, JR.,
AMERICAN BAR ASSOCIATION ADVISOR
PHYLISS CRAIG-TAYLOR,
STEVEN J. EAGLE, George Mason University School of Law, 3301 Fairfax Dr., Arlington, VA 22201-4426, ABA Section Advisor
EXECUTIVE DIRECTOR
JOHN A. SEBERT,
Copies of this Act may be obtained from:
NATIONAL CONFERENCE OF COMMISSIONERS
ON UNIFORM STATE LAWS
312/450-6600
www.nccusl.org
PARTITION OF
TENANCY-IN-COMMON REAL PROPERTY ACT
TABLE OF CONTENTS
DEFINITIONS AND OTHER GENERAL
PROVISIONS
SECTION 1-103.
UNKNOWN OR UNLOCATABLE PARTIES; SERVICE BY PUBLICATION
PARTITION BY DIVISION AND PARTITION
SALE
SECTION 2-201.
ACTION FOR PARTITION BY DIVISION AUTHORIZED – WHO
MAY BRING
SECTION 2-203.
PARTIAL DIVISION AND SALE
SECTION 2-204.
SALE OF PART OR WHOLE OF PROPERTY; APPRAISAL
SECTION 2-205.
APPOINTMENT OF COMMISSIONERS
SECTION 4-401.
PUBLIC SALES OR PUBLIC AUCTIONS.
SECTION 4-402.
PERSONS INELIGIBLE TO PURCHASE AT SALE
SECTION 4-403.
COMMISSIONERS’ REPORT OF SALE
SECTION 4-404.
MOTION TO CONFIRM OR SET ASIDE SALE
SECTION 4-405.
HEARING ON MOTION
SECTION 4-406.
INCREASED OFFERS
SECTION 4-407.
PURCHASE BY ENCUMBRANCER OR PARTY ENTITLED
TO SHARE
SECTION 5-501.
COURT COSTS AND FEES
PARTITION OF
TENANCY-IN-COMMON REAL PROPERTY ACT
SECTION 1-101. SHORT TITLE. This [Act] may be cited as the Partition of Tenancy-In-Common Real Property Act.
SECTION 1-102.
DEFINITIONS. In this section:
(a) HEIRS’ PROPERTY:
Reporter’s Note: We only received one response from those who proposed
limiting the act to some category of property called “Heirs’ Property” or
“Heirship Property.” I disagree with the
proposed definition because I think it is significantly under inclusive of the
range of property owners who have been negatively impacted by the default rules
on partition. This definition would define
“Heirship Property” as property that has the following attributes:
·
Property
that has passed by intestate succession with one possible extension to include
property that has passed from an original intestate heir to the current owner
by one or more gifts or testamentary transfers
·
The land
is agricultural or residential property with inherited business property
excluded with the possible exception that family farms be included if there is
a cap placed upon the value of the real property that would be covered by the
Act.
We will have to revisit this issue of defining a subcategory of tenancy in common property and see if we can agree upon some parameters that will satisfy a significant number of people on the drafting committee.
(b) NEWSPAPER OF GENERAL CIRCULATION: A “newspaper of general circulation” means a publication that:
(1) is published in newspaper format;
(2) is distributed at least once a week for at least 50 weeks each year within the judicial district, excluding a period when publication is interrupted by a labor dispute or by a natural disaster or other casualty that the publisher cannot control; and has a total paid circulation or paid distribution of at least 500 copies, or 10 percent of the total population of the judicial district, whichever is less; in this subparagraph, "judicial district" means the judicial district where the place of sale is located;
(3) holds a second class mailing permit from the United States Postal Service;
(4) is not published primarily to distribute advertising; and
(5) is not intended primarily for a particular professional or occupational group.
(c)
PRIVATE
(d) PUBLIC SALE: A public sale means a sale not confined to the parties that is conducted under fair market value conditions and in which the property is listed by a licensed real estate broker or is listed as “for sale by owner” at a price that is no lower than the court-approved appraised price for a period not to exceed six months or the average market time then prevailing for real property in the relevant market whichever is longer.
Comment
Section
1-102(b): See
SECTION 1-103. UNKNOWN OR UNLOCATABLE PARTIES; SERVICE BY PUBLICATION. In a partition proceeding, any person having a claim, interest or concern so as to be a necessary or proper party, who the plaintiff, after exercising due diligence, is unable to locate or is unable to identify by name thereby remaining unknown, may be made party to the action, provided:
(a) No plaintiff shall be permitted to use, and no court shall authorize, service by publication for the purpose of notifying parties in interest who do not reside within the State but whose whereabouts are known or are capable of being known by a plaintiff exercising due diligence.
(b) In order for a court to order that a defendant be served by publication, the plaintiff must specifically allege in an affidavit the facts showing what due diligence the plaintiff exercised in attempting to locate unknown or unlocatable owners. The affidavit required by this paragraph shall set forth facts based upon the personal knowledge of the affiant concerning the methods, means, and attempts made to locate and to effect personal service on the unknown or unlocatable defendants, including the efforts made to utilize, review, or otherwise draw upon sources of information readily available to the plaintiff.
(c) In addition to other requirements provided elsewhere, where the court orders service by publication, such order shall be subject to the following conditions:
(1) The plaintiff shall post, not later than ten (10) days after the date the order is made, a copy of the summons and complaint in a conspicuous place on the real property that is the subject of the action and this summons and complaint shall remain posted on the subject property throughout the remaining duration of the partition action;
(2) The plaintiff shall record, if not already recorded, a notice of the pendency of the action.
(3) Publishing notice in a newspaper of general circulation that is published nearest to the court in which the partition action was filed [nearest to the county in which the real property is located] for the number of times and within the timeframe required for the sale of real property upon execution. Said notice shall contain the street address or other common designation for the property, the number of acres, a legal description of the property, a description of any improvements, the title of the court, the title of the case, the names of the first named plaintiff and the first named defendant, the number of the case, the names of the parties to be served by publication, a command that the defendant appear and answer as in ordinary cases, and the date on or after which default may be entered against such party.
(4) Nothing herein contained limits or affects the right to serve any process in any other manner now or hereafter provided by law or rule of court.
Comment
A number of state statutes require the plaintiff to
exercise due diligence to locate or identify parties who may have a claim,
interest, or concern with respect to certain litigation before the court will
authorize service by publication. See, e.g.,
Ala. Code. §§ 35-6-25 & 35-6-44;
The requirement that the plaintiff document the due
diligence taken in attempting to locate unlocatable or unknown parties is found
in a number of statutes. See, e.g.,
Ala. Code. §§ 35-6-25 & 35-6-44 (“the facts showing just what diligence the
petitioner has exercised must be specifically alleged in the bill”); Ga. Code
Ann. §
“Sources of readily available information” includes
information that may be contained in governmental offices, may be located on
governmental or non-governmental sites on the internet, may be possessed by
persons likely to know the defendant, or may otherwise be readily available to
the plaintiff.
Section 1-103(c)(1): See
Section 1-103(c)(2): See
Section 1-103( c)(3):
Alaska Stat. § 09.35.140 with respect to the language addressing newspaper of
general circulation that is published nearest to the place of sale.
Section 1-103(c)(4): HRS § 634-23
(5)
SECTION 2-201. ACTION FOR PARTITION BY DIVISION AUTHORIZED – WHO MAY BRING. When two or more persons are interested, as tenants in common, in real property in which one or more of them have an estate of inheritance or for life or years, an action may be brought by one or more of such persons against the others for a partition by division thereof according to the respective rights and interests of the parties interested therein, or for a sale of such property, or a part thereof, if it appears that a partition by division cannot be had without great prejudice to the parties.
Comment
SECTION 2-202.
PARTITION
(a) whether the property is able to be divided between the party or parties seeking a division in kind and those seeking to remain tenants in common as well as the practicality of dividing the property;
(b) whether a partition by division
would apportion the property in such a way that the fair market value of the
parcels resulting from the division, in the aggregate, would be materially less
than the value of the property if it was sold as a whole based upon a valuation
that takes into account the type of sale conditions under which the
court-ordered sale would occur.
(c) evidence of longstanding ownership
by any individual cotenant as supplemented by the period of time that any
ancestor or ancestors of such an existing cotenant owned an interest in the
property;
(d) any cotenant’s particular sentimental links with or attachment to the property, including any attachments arising out of the fact that the property has historical or other unique or special value to one or more of the co-owners;
(e) the use being made of the property by any of the tenants in common and the degree to which this tenant in common would be harmed if he or she could not continue to use the property for these purposes, especially as it pertains to residential or business uses; and
(f) the degree to which the parties have contributed their pro rata share of the property taxes, insurance, and other carrying charges associated with maintaining ownership of the real property as well as the degree to which the parties have contributed to the physical upkeep or improvement of the property.
Comment
This language only permits a partition sale to be ordered
if a party actually petitions for a partition sale. In many cases, those who have owned real
property who have sought a partition by division when it appeared to them that
a partition by division could be easily ordered, were surprised that a court
using an “economics only” analysis ended up ordering a partition sale which
they did not seek and did not want as this was the worst option in their
opinion.
Section 2-202(b): See
N.C. Gen. Stat. § 46-22(b).
Courts in
Section 2-202(c): See
Delfino v. Vealencis, 436 A.2d 27, 33 (
Section 2-202(d):
Section 2-202(e): See
Delfino v. Vealencis, 436 A.2d 27, 33 (
SECTION 2-203.
PARTIAL DIVISION AND
Comment
See,
e.g., Cal. Code Civ. Proc. § 872.830;
N.C. Gen. Stat. § 46-16; W. Va. Code § 37-4-3.
SECTION 2-204.
(a) Should the court be of the opinion that a partition of the real property by division thereof cannot be made of the whole or a part of the property without great prejudice to the owners of the same, the court shall appoint a disinterested appraiser to perform an appraisal of the property to be sold. The appraiser who is appointed must be state-licensed or state-certified to appraise the type of property that is to be sold at the partition sale [or designated a Member of the Appraisal Institute (MAI) and otherwise qualified to appraise the type of property that is to be sold at the partition sale]. After taking an oath to appraise the property at its fair market value, the property must be appraised based upon its highest and best use assuming sole or unitary ownership of the fee simple estate but with deductions made for the amount of all liens and encumbrances against such real estate. Upon its completion, the appraisal shall be filed with the court.
(b) Within ten (10) days after the report of the appraisers is filed, the clerk of the court shall forward to each attorney of record, each party, and interested party of record, a copy of the report of the appraisers and a notice stating the time limits for filing an exception provided that any party must be given at least thirty (30) days from the receipt of the appraisal report to file such an exception. Any party to the action who shall have been adjudged by the court to have an interest in the real estate appraised, may contest said appraisal by filing an affidavit setting forth wherein said appraisal is incorrect and may also file with the court an appraisal paid for by themselves, provided such appraisal is conducted by an appraiser who possesses the requisite qualifications set forth under this section for a court-appointed appraiser. An evidentiary hearing limited to the proposed valuation of the property shall be conducted. In determining the value of the real estate, the court may use its discretion in deciding upon how much weight to give to any appraisal that was filed with the court and may also exercise its discretion to order a new appraisal that it will consider before the court determine the property’s value.
Comment
Parts
of this section are drawn from N.M. Stat. § 42-5-7. Disinterested appraiser language drawn from
Section 2-204(a): The alternative that makes a someone a
Member of the Appraisal Institute a qualified appraiser has been provided as an
option for those states that may not have a licensing or certification system
in place for appraisers.
Should we include time limits for the appointment of the
appraiser and the filing of the report?
Section 2-204(b): Language from 52 Okl.
SECTION 2-205.
APPOINTMENT OF COMMISSIONERS.
(a) The court [in its discretion or on the motion of any interested party may] [shall] appoint three or more disinterested persons commissioners to divide or sell the property as ordered by the court. The clerk of the court shall forthwith notify the commissioners of their appointment, and shall deliver to one of them a certified copy of the judgment of partition.
(b) The court in its discretion may appoint commissioners for a partition by division and commissioners for sale if both of these remedies are ordered, or the court may appoint the same commissioners for a sale and division if both remedies are ordered by the court.
(c) None of the following persons shall be appointed a commissioner under this title:
(1) A clerk or deputy clerk of the court.
(2) A former or present partner or employee of the judge.
(3) A relative within the third degree of the judge or the judge's spouse or the spouse of such a relative.
(4) An owner of any interest in the property that is the subject of the action together with any relative of any owner within the third degree.
(5) Any person who participates in the partition action on behalf of any party whether as legal counsel, expert witness or otherwise.
(d) The court may appoint as commissioners under this title any person or persons to whose appointment all parties have consented. In the case of a minor party or a party for whom a conservator of the estate has been appointed, the guardian or conservator of the estate of the party may so consent.
(e) The commissioners shall be sworn
by a magistrate, the sheriff or any deputy sheriff of the county, or any other
person authorized to administer oaths, to do justice among the tenants in
common in respect to such partition action, according to their best skill and
ability.
Comment
The drafting committee should decide whether to make
appointment of commissioners mandatory or discretionary. The states are split on this matter.
Section 2-205(a):
Section 2-205(c):
Section 2-205(e): See N.C. Gen. Stat. § 46-8.
SECTION 3-301. BUYOUT. Where the court has determined that the real property, or any portion of it, may not be partitioned by division without great prejudice to all of the owners under Section 2-202, any one or more of the parties may inform the court within a time so fixed by the court of their desire to purchase the property or the separate portion of it that could not be partitioned by division without great prejudice to all of the owners.
(a) If any one or more of the parties
inform the court of their desire to purchase the property within the time fixed
by the court, and there are no parties in opposition to each other, the court
shall give these parties at least forty-five (45) days to pay into the court
the fair market value of the property as determined by the court under Section
2-204. If a party who is given the
opportunity to purchase the property to be sold under the provisions of this
section fails to pay into the court the fair market value of the property
within the time fixed by the court, the property will then be sold at a public
sale or at public auction as the court determines.
(b) If two or more parties, in opposition to each other, inform the court of their desire to purchase the property within the time fixed by the court, the court shall exercise its discretion to decide whether to award one of the parties the opportunity to purchase the property as provided in this section. Without limiting the factors that the court may consider, the court shall consider the factors set forth in Section 2-202(c)-(f), as well as the degree to which the parties own significantly unequal shares in the property. If a party who is given the opportunity to purchase the property to be sold under the provisions of this section fails to pay into the court the fair market value of the property within the time fixed by the court, the court shall use its discretion to decide whether to allow any other party who had expressed an interest in purchasing the property an opportunity to purchase the property.
(c) If under subsection (b) the court determines that the equities do not favor giving one party the opportunity to purchase the property to the exclusion of any other party who has expressed an interest, the court shall have the discretion to order a private sale that will be limited to the parties. Such a private sale between the parties shall be conducted upon the terms established by the court provided that the court shall establish a reserve price that is no lower than the court-approved appraisal price for the property.
(d) If there is no party that is given the right to purchase the property under this section that pays into the court the purchase price within the time fixed by the court or if a private sale does not take place under subsection (c) either because the court chooses not to exercise its discretion to order a private sale or because no party chooses to participate in any such court-ordered private sale then the property shall be sold under the procedures set forth in Article 4 of this Act.
Comment
See Kansas Stat. Ann. § 60-1103(c)(4) for requirement that
the court first determine that partition by division cannot be made without
great prejudice.
Section 3-301(b): See
Wilk v. Wilk, 173
Should the court have discretion to deny the buyout right
altogether in cases in which two or more parties in opposition to each other
express an interest in exercising the buyout right or should the courts be
required to conduct a private sale if two or more parties express an interest
in purchasing the property?
SECTION 4-401.
PUBLIC SALES OR PUBLIC AUCTIONS.
(a) If a court orders a sale under
this part whether of a part of the real property or of the whole, the court
should order that the property be sold at a public sale unless the court sets
forth reasons that establish that a sale at a public auction would be more
just, fair, and commercially reasonable under the circumstances. If the property does not sell for at least
the appraised price within the time period provided for a public sale, the
court upon further hearing may either revalue the property and approve the
sale, or order that the property continued to be listed for a period not to
exceed three months, or order that the property be sold at a public auction
within sixty (60) days of the hearing.
(b) If the court orders that any part of the real property or the whole is to be sold at a public auction, the court shall set the terms and conditions of the sale. The court shall set a reserve price that may not be less than eighty-five (85) percent of the court-approved appraised value of the property that is to be sold. If it appears to the court that any of the premises will not sell for eighty-five percent of the amount of the valuation thereof, the court upon further hearing may either revalue the property and approve the sale or order a new sale.
Comment
This preference for public sales draws upon the strong
international trend as seen in countries such as
Section4-401(a):
See § 735 ILCS 5/17-105.
Section 4-401(b):
See § 735 ILCS 5/17-105.
SECTION 4-402. PERSONS INELIGIBLE
TO PURCHASE AT
(a) The following persons shall not purchase property sold in the action directly or indirectly:
(1) The commissioners and any court-appointed appraiser who participates in the partition proceedings.
(2) The attorney of a party.
(3) A guardian or conservator of a party, unless for the benefit of the ward or conservatee.
(b) All sales contrary to this section are void except that a sale to a bona fide purchaser following a sale contrary to this section shall not be disturbed.
Comment
SECTION 4-403. COMMISSIONERS’
REPORT OF
(a) Upon making a sale of property, the commissioners shall report the sale to the court.
(b) The commissioner’s report shall contain, in addition to such other information as may be appropriate, all of the following information:
(1) A description of the property sold to each purchaser.
(2) The name of the purchaser.
(3) The sales price.
(4) The terms and conditions of the sale and the security, if any, taken.
(5) Any amounts payable to lienholders.
(6) A statement as to contractual or other arrangements or conditions as to agents' commissions.
(7) Any determination and recommendation as to opening and closing public and private ways, roads, streets, and easements.
(8) Other material facts relevant to the sale and the confirmation proceeding.
Comment
SECTION 4-404. MOTION TO CONFIRM
OR SET ASIDE
(a) A purchaser, the commissioners, or any party may move the court to confirm or set aside the sale.
(b) The moving party shall give not less than 10 days' notice of motion to:
(1) The purchaser if the purchaser is not the moving party; and
(2) All other parties who have appeared in the action.
Comment
SECTION 4-405. HEARING ON MOTION.
(a) At the hearing, the court shall examine the report and witnesses in relation to the report.
(b) The court may confirm the sale notwithstanding a variance from the prescribed terms of sale if to do so will be beneficial to the parties and will not result in substantial prejudice to persons interested in the sale.
(c) The court may vacate the sale and direct that a new sale be made if it determines any of the following:
(1) The proceedings were unfair or notice of sale was not properly given. If there is no finding at the hearing of unfairness or improper notice, the sale may thereafter not be attacked on such grounds.
(2) If the property was sold at a public sale or public auction, the sales price is disproportionate to the value of the property.
(3) If with respect to a public sale or a public auction that had been conducted, it appears that a new sale will yield a sum that exceeds the sales price by at least five (5) percent, determined after a reasonable allowance for the expenses of a new sale.
Comment
The California statute has language that allows a court
to vacate a sale if the following condition is met: “It appears that a new sale will yield a sum
that exceeds the sale price by at least 10 percent on the first ten thousand
dollars ($10,000) and 5 percent on the amount in excess thereof, determined
after a reasonable allowance for the expenses of a new sale.” However, the
SECTION 4-406. INCREASED OFFERS.
(a) If at the hearing under Section 4-405 a responsible bidder makes a written increased offer that exceeds the sales price generated from a public sale or a private by 5 percent, the court in its discretion may do either of the following:
(1) Vacate the sale and direct that a new sale be made.
(2) Vacate the sale, accept the increased offer, and confirm the sale to the offerer.
(b) Except as provided in subdivision (c), the amount by which an increased offer exceeds the sale price is determined on the basis of the gross amount of the increased offer including any commission on the increased offer to which an agent may be entitled.
(c) Where in advance of sale the court has so ordered or the parties have so agreed, if an increased offer is made by a party to the action who is not represented by an agent, the amount by which an increased offer of a nonparty exceeds the sale price is determined on the basis of the net amount of the increased offer excluding any commission on the increased offer to which an agent may be entitled.
Comment
SECTION 4-407. PURCHASE BY ENCUMBRANCER OR PARTY ENTITLED TO SHARE. When a party entitled to a share of the property, or an encumbrancer entitled to have the lien of the encumbrancer paid out of the sale, becomes a purchaser, the commissioners may take a receipt for so much of the proceeds of the sale as belongs to the party or the encumbrancer.
Comment
Modeled after Oregon Rev. Stat. § 105.365. Other states such as
SECTION 5-501.
COURT COSTS AND FEES.
(a) In the event partition by division of the cotenancy is made, the costs of partition shall be apportioned by the court among all the cotenants. The proportion of the costs assessed against each cotenant shall be a lien upon the share of the cotenancy assigned by the court to the cotenant. If partition by division of the whole or a part of the property cannot be made without great prejudice to the cotenants and a sale of entire estate or any part thereof is ordered, the court shall apportion the costs of sale among all the cotenants. The court shall deduct and withhold from the distributive share of the proceeds of the sale assigned to each cotenant the proportion of the costs assessed against each cotenant.
(b) As used in this section "costs" includes expenses incurred by commissioners, costs of survey, costs of appraisers, expenses incurred by agents or masters appointed by the court to conduct a sale, and other costs incurred in partition by division or in sale which to the court seem just and proper.
(c) The reasonable attorney fees of any party to an action for partition of real property owned under a tenancy in common may be awarded in the court's equitable discretion if these fees were incurred for the common benefit of all of the tenants in common. The reasonableness of an attorney fee award cannot be based in any way on an arbitrary percentage of the value, and the court shall require evidence to be presented of the reasonableness of the fees sought prior to awarding any such fees and the manner in which these fees were incurred for the common benefit of all of the parties. No portion of any attorney’s fees may be assessed against any party who contests the partition proceeding whether by appearing by court-appointed or privately retained counsel or by appearing pro se.
Comment
Section 5-501(a): N.M. Stat. § 42-5-8.
Section 5-501(b): See
N.M. Stat. Ann. § 42-5-8(B).
Section 5-501(c): Common benefit language picked from
N.D. Stat. § 32-16-45.
The last sentence is largely drawn from La. C.C.P. Art.
4613 with the additional provision that a contested action includes an action
in which a party is represented pro se.
Other states have statutes that include language that reads: “When,
however, a litigation arises between some of the parties only, the court may
require the expense of such litigation to be paid by the parties thereto, or
any of them.”