NOTE
TO LEGISLATIVE DRAFTSMAN: This Act is likely to be an additional chapter,
subchapter or subpart of the State’s existing partition statute.
UNIFORM
PARTITION OF HEIRS PROPERTY ACT
SECTION 1. SHORT TITLE.
This [act] may be
cited as the Uniform Partition of Heirs Property Act.
SECTION 2. DEFINITIONS.
In this [act]:
(1) “Determination
of Value” means anthe order of athe
court, required
byunder section 6(d) [or 6(e)], determining the real
property’s fair market value of the heirs property.
(2) “Heirs property”
means real property that is held in tenancy in common thatand
satisfies all of the following requirements:
(A) Tthere
is no agreement in a record among all the cotenants that governs the rights and obligations of the cotenants with respect
to the ownership of the property.; and
(B) Oone
or more of the cotenants acquired title from a biological or an adoptive
ascendant [living or deceased ancestor];
and
(C) Eitherany
of the following is true:
(i) 20 percent or more
of the interests are held by cotenants whocotenants that
are related by blood, marriage, or adoption;
(ii) 20 percent or more
of the interests are held by an one or more individuals
who acquired title from an anscendantcestor;
or
(ii) 0 percent or more of the cotenants are
related by blood, marriage, or adoption.
(3) “Open- market sale”
means a partition by sale which is not limited to the cotenants and in
which the heirs property is listed and offered for sale on the
open market in a commercially reasonable manner by
a disinterested
licensed
real estate broker.
(4) “Partition by sale” means a
court-ordered sale of the whole or any part of the heirs property,
whether by public sale or by open- market sale.
(5) “Partition in kind” means the division
of heirs property into physically distinct and separately titled parcels.
(6) “Public sale” means [a publicn
auction or other][a] sale conducted in the same manner
authorized by [insert reference to either the general partition statute or to
the state mortgage foreclosure statute].
(7)“Real estate broker” means a broker who
negotiates contracts of sale and other agreements between buyers and sellers of
real property and who is licensed in the states where they conduct business.
(8) “Record”, used as a noun, means information
that is inscribed on a tangible medium or that is stored in an electronic or
other medium and is retrievable in perceivable form.
Comment
1. Section
2(2) Heirs property is defined in this act to include only a subset of tenancy
in common property. Specifically the act
applies only to certain tenancy in common properties which are not governed by
any agreement in a record among the cotenants provided that one or more of the
cotenants acquired their ownership interest from an older relative. In contrast, heirs property is defined in the
act in such a way that the act does not
apply to tenancy in common property governed by an agreement among the owners
whether or not the agreement addresses the manner in which the tenancy in
common property may be partitioned.
Furthermore the act does not apply to “first generation” tenancy in
common property that the cotenants elect to establish under the default rules
even if there is no agreement in a record among the cotenants governing the
ownership of the property to the extent that none of the cotenants acquired
their interest from an older relative.
2. Joint
tenancy property is not covered by this act.
In order for any real property that was initially owned by two or more
individuals as joint tenancy property to be covered by this act, one or more of
the joint tenants must sever the joint tenancy in accordance with the
requirements of state law. Once a joint
tenancy is severed, this act may apply if the property is determined to be heirs
property under this act even if two or more individuals who had formerly been
joint tenants prior to severance of the joint tenancy and who did not take any
action to sever the joint tenancy remain joint tenants with one another after
severance with respect to a particular interest in the tenancy in common. See
7-51 Richard R. Powell, Powell on Real
Property § 51.04(1)(a) (Michael Allen Wolf ed., 2009). See also
Carmack v. Place, 535 P.2d 197 (Co. 1975).
3. Section 2(2)(A): If tenants in common
acquire their interests through a deed or a will that does not establish the
duties and responsibilities of the tenants in common with respect to the
ownership of the property, the deed or will alone shall not be construed to be
an agreement in a record among all the tenants in common that governs the
ownership of the property within the meaning of Section 2(b)(1).
4. Section 2(2)(B): Common usage defines ancestor as “one from
whom a person lineally descended.” Wills v. Le Munyon, 107 A. 159, 161 (N.J.
Ch. 1919). However, statutes of descent narrow the term to “any one from whom
an estate is inherited.” Id. Thus,
use of the term ancestor would exclude property acquired from a living person.
In contrast, ascendant encompasses anyone who precedes a person in lineage, for
example a parent or grandparent. Black’s
Law Dictionary 129 (9th ed. 2009).
The term ascendant is used in a number
of statutes encompassing many different subject matter areas. See,
e.g., Ark. Code Ann. §
28-9-202 (2009); Conn. Gen. Stat.
§ 45a-755 (2010); Iowa Code §
428A.2 (2010); Fla. Stat. §
732.403 (2009); La. Civ. Code Ann.
art. 1301 (2009); Miss. Code Ann.
§ 93-13-253; P.R. Laws Ann. Tit. 31
§ 2413 (209); Tex. Estates Code Ann. §
676 (Vernon 2009). Due to the fact that ascendants can be living or
dead, the term does not need modifying language. Cf.,
In re Estate of Thiemann, 992 S.W.2d 255, 256-257 (Mo. Ct. App. 1999).
5. Section 2(3): Under an open-market sale, the buyer and seller negotiate at arm’s
length and the sales price is not influenced by any particular exigency of
either the buyer or the seller. See Dennis v. County of Santa Clara, 263
Cal. Rptr. 887, 892 (Cal. Ct. App. 1989).
In Minnesota, for example, a court may order real property that is to be
sold under an order to partition by sale to be sold by open-market sale or
private sale as this type of sale is referred to in Minnesota and in other
states. See Minn. Stat. §
588.17 (2009) (providing that a court may order property subject to a partition
by sale to be sold at a private sale instead of at a public auction). See
also Wilson v. Skogerboe, 414 N.W.2d 521 (Minn. Ct. App. (1987)
(court-appointed referee sold property under a private sale after showing the
property to numerous prospective buyers).
6. Section 2(8): The definition of
“record” is identical to the definition of “record” in Section 1-103(29) of the
Uniform Common Interest Ownership Act (2008).
Information that constitutes a “record” under this Act need not be recorded.
SECTION 3. APPLICABILITY.
(a) Heirs property may be partitioned only as provided in this
[act]
unless all of the parties agree to utilize some other procedure [method] to partition the
property. This [act]
supplements the provisions of [insert reference to general partition statute]
and, if an action is governed by this [act], replaces provisions of the [insert
reference to general partition statute] that are inconsistent with this [act].
(b) As soon as practical after commencement of an action pursuant to [insert reference to
general partition statute], the court shall determine whether the property is heirs
property.
[In an action to
partition real property under [insert reference to general
partition statute] the court shall determine whether the property is heirs property
under this [act]. If the court
determines that the property is heirs property, the property must be
partitioned under this [act].
Comment
1.
A final order of a court partitioning any real property
held under a tenancy in common is subject to challenge if the court failed to
determine whether the real property in question is heirs property under this
[act].
SECTION
4. NOTICE BY POSTING. This [act] does not limit or affect the
method by which service of [the complaint][process by publication or otherwise]
may be made, but a plaintiff in an action governed by this [act] also shall,
not
later than within 10 days after [filing the
complaint][service of process by
publication or otherwise], erect [and maintain] while the
action is pending, a conspicuous sign
on the property that is the subject of the action, stating that
the action has been commenced and identifying the names of the plaintiffs, the
known defendants, and [the name and address of the
court][ in which the action is pending]. The sign shall remain on the property
throughout the duration of the action.
SECTION 5. COMMISSIONERS. If the court appoints commissioners
pursuant [insert reference to general partition statute], each commissioner
must, in addition to the requirements and disqualifications applicable to
commissioners in [insert reference to general partition statute] be
disinterested and impartial and neither a party nor a participant in the
action.
SECTION 6. DETERMINATION
OF FAIR MARKET VALUE.
(a) Promptly afterIf the court
determines that the real property which is the subject of the
partition action is heirs property, the court also promptly shall
determine theits fair market
value of
the property by appraisal pursuant to subsection (b), unless:
(1) all of the cotenants have agreed to the [value of the property] [price
at which the property is to be offered for sale], or
(2) the court determines that the cost of the appraisal will
exceed its evidentiary value to the court [in which
case the court shall determine the fair market value of the heirs property
pursuant to subsection (fill in the blank)].
(b) If the court orders an appraisal, the court shall appoint a
disinterested person, licensed state-certified real estate appraiser in
good standing with [insert the name of the state regulatory board, department, or agency that
certifies appraisers]to appraise real property, to
determine the property’s fair market value assuming sole or unitary
ownership of the fee simple estate[, reduced, if appropriate, adjusted by
the value of all any [covenants,]
liens and [other] encumbrances
against the property].
Upon completion of the appraisal, the appraiser shall file a sworn or
verified appraisal report with the court, stating that
the appraisal was prepared in accordance with the requirements of this
subsection and other applicable law.
(c) If an appraisal is conducted pursuant to subsection
(b), not later than Within 10
days after the appraisal report is filed, the clerk of the
court shall senddeliver to each
party
(1) a copy of the appraisal report,
and
(2) notice that a party
may object to the appraisal report not later thanwithin 30 days after the notice was sent,
stating the grounds for the objection.
(d) If After the appraisal report is an appraisal
is filed with the court pursuant to subsection (b), the court
shall conduct a hearing to determine the fair market value of the property not sooner
than 30 days after a copy of the appraisal is delivered to each party,
whether or not an objection to the appraisal is has been filed by the expiration of
the period for stating an objection. In addition to the court-ordered appraisal, the
court may consider A party may offer any other valuation another of the propertyappraisal
that
is offered as evidence by any partyprepared by
a [licensed] appraiser. After the hearing, but before considering the
merits of the partition action, the court shall issue a(i) determineation of
the property’s fair market value, and (ii) notify the [parties]
[cotenants] both of that value and of the procedures for possible cotenant
buyouts in Section 9 of this [act].
(e) [How will a court determine the fair market value of the heirs
property if the court does not order an appraisal?]
Comment
1. Section 6(a): Some states require that
any property that may be subject to partition by sale shall first be appraised
before a court decides whether to order partition in kind or partition by
sale. See, e.g., N.M. Stat. §
42-5-7 (2009). Other states
require that real property that is to be sold under an order or a judgment of a
court first must be appraised in most instances by certain disinterested
persons. See, e.g., Ky. Rev. Stat.
Ann. § 426.520 (2010)
2. Section 6(b): Some states require that
property that is to be sold by partition by sale be appraised by one or more
disinterested persons under certain circumstances. See, e.g., Minn. Stat. § 558.17 (2009) (providing
that the court order property subject to partition by sale to be appraised by
two or more disinterested persons before the property is sold if the court orders
the property sold at a private sale instead of at a public auction). Other states require the person who is to
appraise real property under certain statutes to be state-certified and in good
standing with the state appraisal authorities.
See, e.g., Okla. Stat. tit. 52, § 318.5 (2009).
3. Section 6(b): State statutes and case
law typically refer to one person’s ownership of property as “sole
ownership.” See, e.g., Cal. Civ. Code
§ 681 (2010) (The ownership of property by a single person is designated as a
sole or several ownership); Fla. Stat.
§ 711.502 (2009) (“Only individuals whose registration of a security shows sole
ownership by one individual . . . may obtain registration in beneficiary
form”); Mont. Code Ann. 70-1-305 (2009);
S.D. Codified Laws § 43-2-10
(2009) (“The ownership of property by a single person is designated as a sole
or several ownership.”). See also In re Robertson, 203 F.3d 855, 860
(5th Cir. 2000) (when partitioning former community property, the assets are
divided between the former spouses and “the assets of which each former spouse
acquires sole ownership is reclassified by law as the separate, exclusive
property of that former spouse.”).
4. Section 6(b): As utilized in this Section,
encumbrance is defined to include, among other property interests, a covenant running with the land, an
easement, and a reservation of a right-of-way. See 20
Am. Jur. 2d Covenants, Conditions, and
Restrictions § 95 (2010) (easements and covenants running with the land
are encumbrances within the meaning of a covenant against encumbrances). See
also, Blissett v. Riley, 667 So. 2d 1335, 1337 (Ala. 1995) (quoting
Colonial Capital Corp. v. Smith, 367 So. 2d 490, 491-92 (Ala. Civ. App. 1979))
(a covenant restricting the size and materials of structures built on the
property is an encumbrance because it is an “‘outstanding right[ ] or interest
[in] the estate conveyed that will diminish the value, but which [is]
consistent with the passage of the fee.”); Fraser v. Bentel, 119 P. 509, 511
(Cal. 1911) (a covenant running with the land and restricting the use of the
property is an encumbrance); Evans v. Faught, 42 Cal. Rptr. 133, 137 (Cal. Ct.
App. 1965) (listing several types of encumbrances including covenants,
easements, and reservations of right-of-way).
Cf. Brewer v. Peatross, 595
P.2d 866, 868 (Utah 1979) (“An encumbrance may be said to be any right that a
third person holds in land which constitutes a burden or limitation upon the
rights of the fee title holder”).
SECTION 7. PARTITION
ALTERNATIVES.
(a) Following the court’s notice of
its determination of the value of the property and of the procedures
for possible cotenant buyouts in Section 9, eligible cotenants
may purchase, in the manner described in Section
9, all of the available interests of any cotenants the parties who
either
(i) requested partition by sale or (ii) offer
their interests for sale in the manner described in
Section 9(a).
(b) Otherwise, whether the
requested relief in a partition action is for partition in kind or partition by
sale, if all the cotenants’ interests that
become available for purchase as described in Section 7(a) are not purchased by
other cotenants pursuant to Section 9, the court must order
partition of the whole property in kind unless
the court finds, pursuant to Section 8, that a partition in
kind will result in [great] [substantial] prejudice
to [substantially] all the cotenants. In
considering whether to the practicality of a partition
in kind, the court shall approve any request by two or more parties to
have their individual interests considered as one aggregated group
interest.
(c) If partition in kind of the whole of the property is
not ordered pursuant to either subsection (b), the
court shall order partition by sale, pursuant to Section 10 or,
if no
cotenant requested partition by sale, the court shall dismiss the action.
(d) Under this [act] a court may order the whole
property partitioned in kind or partitioned by sale but
it may not order partition in kind of part of the property and partition by
sale of the remainder.
[(e) In ordering a partition in kind, the court may
also, on motion and after hearing, require that one or more cotenants pay one
or more other cotenants such sums as may be necessary in order that the
payments, taken together with the value of the in-kind distributions to the cotenants,
will make the value of each cotenant’s interest after partition substantially
proportionate to the cotenant’s undivided interest in the heirs property before
partition.]
Comment
1. Section 7(d): In many states, a court
may order a partition in kind of part of the property and a partition by sale
of the remainder. See, e.g., Cal. Civ. Pro.
§ 872.830 (West 2010); Neb. Rev. Stat.
§ 25-21,103 (2009). However, in other
states a court may only order either a partition in kind or a partition by sale
of the whole property. See, e.g., Fernandes v. Rodriguez, 761
A.2d 1283, 1289 (Conn. 2000).
2. Section 7(e): This subsection provides
for the remedy of “owelty” which is an equitable remedy. See,
e.g., Code of Ala. § 35-6-24
(2010); Cal. Civ. Pro. § 873.250 (West
2009). Courts order owelty payments when
it is not reasonable to physically divide an estate into equal shares, but the
difference can be compensated by monetary payments. Dewrell v. Lawrence, 58 P.3d 223, 227 (Okla.
Civ. App. 2002). In recent decades,
courts have tended to underutilize the remedy of owelty which has resulted in
property being sold by partition by sale in many instances in which partition
in kind could have been ordered. See, e.g., John G. Casagrande Jr., Note,
Acquiring Property through Partitioning
Sales: Abuses and Remedies, 27 B.C. L.
Rev. 755, 778 (1986); Faith Rivers, Inequity
in Equity: The Tragedy of Tenancy in Common for Heirs Property Owners Facing
Partition in Equity, 17 Temp. Pol.
& Civ. Rts. L. Rev. 1, 76 (2007) (noting
that heirs property owners could obtain fair and equitable divisions of
property if courts stopped taking the easy option by ordering partitions sales
and utilized tools such as owelty payments).
SECTION 8. CONSIDERATIONS FOR PARTITION IN KIND.
(a) In consideringdetermining
whether a
partition in kind would result in [great][substantial] prejudice
to [substantially] all of the cotenants, the court shall consider the
following:
(1) whether the property practicably may be divided amongbetween
the parties seeking a partition by sale and those seeking to
maintain ownership of part of the property;
(2) whether partition in kind 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 wereas sold based upon
a valuation that takes into account the type of sale conditions
under which the court-ordered sale would occur;
(3) evidence of the length of longstanding ownership
or possession of the property by any cotenant orand
any
period
of time during which any person who was either a predecessor
in title or a predecessor in possession
to a cotenant and who is or
was such cotenant is or was related by
blood, marriage, or adoption to thatany such
cotenantwas a predecessor
in
title to the propertywho owned an
interest in the property;
(4) any cotenant’s particular sentimental links with or
attachment to the property, including any attachments arising out of the fact
that the property has ancestral or other unique or special value to one or more
of the cotenants;
(5) the use being made of the property by any cotenant and
the degree to which that the cotenant would
be harmed if the cotenant he or she could
not continue to the same use of the
property
for these purposes;
(6) the degree to which the cotenants have contributed
their pro rata share of the property taxes, insurance, and other carrying charges
or
expenses associated with maintaining ownership of the property;
(7) the degree to which the cotenantsparties
have contributed to or failed to contribute to the
physical improvement, maintenance, or the upkeep of the
property; and
(8) any other relevant factors.
(b) In considering the factors set forth in
subsection (a), the court mayshall not consider
any single factor to be dispositive, standing alone, but shall instead
weigh the totality of all relevant factors and circumstances.
Comment
1.
Under this section, a court in a partition case must consider
the totality of the circumstances, including a number of economic and
non-economic factors, in deciding whether to order partition in kind or
partition by sale. In partition cases, a
number of courts have utilized such a totality of the circumstances approach in
deciding whether to order partition in kind or partition by sale. See,
e.g., Delfino v. Vealencis, 436 A.2d 27, 33 (Conn. 1980) (“It is the
interests of all of the tenants in common that the court must consider; and not
merely the economic gain of one tenant, or a group of tenants.); Schnell v.
Schnell, 346 N.W.2d 713, 716 (N.D. 1984) (holding that economic and
non-economic factors, including sentimental value, should be weighed by a court
in a partition action); Eli v. Eli, 557 N.W.2d 405, 409-411 (S.D. 1997) (citations
omitted) (in explicitly adopting a totality of the circumstances test, the Supreme
Court of South Dakota stated that “[o]ne's land possesses more than mere
economic utility; it ‘means the full range of the benefit the parties may be
expected to derive from their ownership of their respective shares.’ Such value
must be weighed for its effect upon all parties involved, not just those
advocating a sale.”); Ark Land Co. v. Harper, 599 S.E.2d. 754, 761 (W. Va.
2004) (holding that “in a partition proceeding in which a
party opposes the sale of property, the economic value of the property is not
the exclusive test for deciding whether to partition in kind or by sale. Evidence
of longstanding ownership, coupled with sentimental or emotional interests in
the property, may also be considered in deciding whether the interests of the
party opposing the sale will be prejudiced by the property's sale. ”).
2.
Section 8(a)(2)
requires the court to conduct an economic analysis to determine whether the
cotenants would receive a greater economic benefit from a sale of the whole
property due to possible economies of scale that would result from selling the
whole property that could not be captured from partition in kind of the
property. In conducting this economic
analysis, a court must take into consideration the type of sales conditions
under which any court-ordered sale would occur as property that is sold at a
forced sale such as a sale upon execution or a foreclosure sale typically results
in property being sold at prices that are twenty percent or more below the fair
market value of the property. Such a
resulting discount from the fair market value of the property due to the forced
sale conditions may render partition in kind to be as or more economically
beneficial to the cotenants than partition by sale of the whole property
despite the fact that economies of scale could be realized if the property were
to sold instead under fair market value conditions. See
generally, Thomas W. Mitchell, Stephen Malpezzi, & Richard K. Green, Forced Sale Risk: Class, Race, and The
“Double Discount”, 37 Fla. St. U. L.
Rev. (forthcoming 2010).
3.
Section 8(a)(3) permits consideration of longstanding
possession of the property by any cotenant or any predecessor in possession who
is or was related to that cotenant. Adverse
possession, for example, raises this issue.
Adverse possession statutes require possession over the course of
multiple years before a person may actually take title to the property. See,
e.g., 735 Ill. Comp. Stat.
5/13-101 (2009) (requiring twenty years of adverse possession); Wis. Stat. §§ 893.25, 893.26 (2008)
(requiring twenty years or ten years if color of title). Thus, because many states allow tacking of
possession, it is possible that a cotenant may have acquired possession of the
property from an ascendant that had been in possession of the property for many
years despite the fact that the statute of limitations for adverse possession
had not run thereby preventing the ascendant in prior possession from obtaining
valid title to the property.
4.
Section 8(4): For many families or communities, real
property ownership has important ancestral or historical meaning. See,
e.g., Chuck v. Gomes, 532 P.2d 657, 662 (Haw. 1975) (Richardson, C.J.,
dissenting):
“[T]here
are interests other than financial
expediency which I recognize as essential to our Hawaiian way of life.
Foremost is the individual's right to retain ancestral land in order to
perpetuate the concept of the family homestead. Such right is derived from our
proud cultural heritage. . . . [W]e must not lose sight of the cultural
traditions which attach fundamental importance to keeping ancestral land in a
particular family line.”
See also Thomas W. Mitchell, From
Reconstruction to Deconstruction: Undermining Black Landownership, Political
Independence, and Community Through Partition Sales of Tenancies in Common,
95 Nw. U. L. Rev.505, 523-526 (2001).
SECTION 9. PROCEDURES
FOR COTENANT BUYOUT.
(a) Within
15 days after the court notifies the [parties] [cotenants] pursuant to Section 6(d) [and/or
6(e)] of its determination of value and of the procedures
for possible cotenant buyouts described in this section, any cotenant other
than a cotenant thatwho requested partition by sale is eligible to
give notice to the court [and to the other (parties)(cotenants] that the
eligible cotenant’s entire interest is available for purchase under this
section. If all eligible cotenants offer
their interests as available for purchase by giving proper notice, the court
shall order the property sold pursuant to Section 10.
(b) Within 15 days after the deadline by which any
eligible cotenant may offer its interest for purchase, any cotenant thatwho
did not request partition by sale and did not offer its entire interest for
purchase as described in subsection (a) may notify the court that it has
elected to purchase the available interests of other cotenants described in
Section 7(a). An eligible cotenant may
elect to purchase another cotenant’s interest as provided in this section even
if a default judgment has been entered against that cotenant. The purchase price for all interests
available under section 7(a) shall be equal to the fractional interest to be
purchased multiplied by the fair market value of the real property that is the
subject of the partition action as determined by the court pursuant to Section
6. If more than one eligible cotenant elects to
purchase interests under this section, each electing cotenant shall be entitled
to purchase a portion of the aggregate interests that are available for
purchase equal to the electing cotenant’s existing percentage ownership divided
by the total percentage ownership of all cotenants electing to purchase.
(c) The court shall notify each electing cotenant
of the interests it is entitled to purchase and the associated purchase price
within 15 days after the deadline by which an eligible cotenant may elect to
purchase the available interests of cotenants. If none of the eligible cotenants timely
exercises its purchase right, the court shall proceed to consider whether it
should order partition in kind or partition by sale of the property pursuant to
Section 7(b) and 7(c).
(d) No later than 45 days after the court has
notified an electing cotenant, pursuant to subsection (c), of the percentage of
the available interests it is entitled to purchase and the corresponding
purchase price, that cotenant shall pay into the court fifty percent (50%) of
the price set as the value for its percentage of the interests to be purchased,
unless for good cause shown the court extends the time in which a cotenant may
pay into the court the initial fifty percent (50%) of the purchase price. Upon payment into court of the initial fifty
percent (50%) of the purchase price by all cotenants electing to purchase the
available interests, the court promptly shall schedule a time for closing, at which time the remaining
fifty percent (50%) of the purchase price will be due and payable into
court. At closing the court shall issue
an order reallocating all of the cotenants’ interests in the property to
reflect the buyout.
(e) If none of the cotenants whocotenants that elected to
purchase the available interests timely pays into the court its percentage of
the purchase price for the interests being purchased, the court shall proceed
under Section 7(b) and 7(c) as if all the available interests of cotenants had
not been purchased.
(f) If one or more but not all of the cotenants whocotenants that elected to
purchase the available interests described in section 7(a) fails to timely pay
into the court the entire purchase price for the interests it offered to
purchase, the court shall within 10 days, notify each cotenant whocotenants that timely
elected to purchase and paid its purchase price of that failure and of the
aggregate percentages of interests remaining available for purchase and the
corresponding purchase price.
Thereafter, each of the cotenants whocotenants that qualified
for notice under this subsecton may, within the next 20 days, or any extended
time granted for good cause by the court, purchase all of the remaining
available interests by paying into the court the corresponding purchase
price. If more than one of those
qualified cotenants seeks to purchase all the remaining interests, each such
qualified cotenant shall be permitted to buy a portion of the remaining
available interests equal to that qualifying cotenant’s original percentage
ownership divided by the total original percentage interest of all qualifying
cotenants, and the court shall promptly refund any excess payments at closing.
(g) If none of the cotenants whocotenants that qualified
for notice under subsection (f) timely pays the full purchase price for all of
the remaining available interests, the court shall proceed under Section 7(b)
and 7(c) as if all the available interests of cotenants had not been purchased.
(a) Before
the court may consider the request of any cotenant to partition in kind or
partition by sale the whole of the property, it shall
provide any cotenants who had not requested partition by sale the opportunity
to purchase the entire interest of any cotenant who either requested partition
by sale or timely gave notice that its interest is available for purchase under
this section. A cotenant who did not
request partition by sale may give notice to the court within 15 days after the
court’s determination of the real property’s value pursuant to Section 6(d) [or
Section 6(e)] that the cotenant’s entire interest is available for purchase
under this section. If every cotenant
who had not requested partition by sale gives notice that its entire interest
is available for purchase under this section, the court shall order the
property sold pursuant to Section 10.
The purchase price for interests under this section shall be equal to
the fractional interest to be purchased multiplied by the fair market value of
the real property that is the subject of the partition action.
(b) Any
cotenant who did not request partition by sale or did not give notice that its
entire interest is available for purchase may notify the court of its intention
to exercise the purchase right under this section, in any case no later than 30
days after the court’s determination of the real property’s value. Such a cotenant may purchase another
cotenant’s interest as provided in this section even if a default judgment has
been entered against that cotenant. If
more than one cotenant elects to exercise the right to purchase interests under
this section, each of those cotenants shall be entitled to purchase the portion
of the aggregate interests that are available for purchase equal to its
existing percentage ownership divided by the total percentage ownership of all
cotenants electing to purchase. The
court shall notify each electing cotenant of the interests it is entitled to
purchase and the associated purchase price no later than 45 days after the
court has determined the fair market value of the real property. If none of the eligible cotenants timely
exercises its purchase right, the court shall proceed to consider whether it
should order a partition in kind or a partition by
sale of the property pursuant to Section 7(b)-(c).
(c) No later than 45 days after the court has
notified a cotenant, pursuant to subsection (b), of the percentage of the
interests it is entitled to purchase and the corresponding purchase price, such
cotenant shall pay into the court 50% of the price set as the value for its
percentage of the interests to be purchased, unless for good cause shown the court
extends the time in which a cotenant may pay into the court the initial 50% of
the purchase price. Upon payment into
court of the initial 50% of the purchase price by all cotenants participating
in the purchase, the court shall schedule a prompt time for closing, at which
time the remaining 50% of the purchase price will be due and payable into
court. At closing the court shall issue
an order reallocating all of the cotenants’ interests in the property to reflect
the buyout. If none of the cotenants who
exercised the purchase right timely pays into the court its percentage of the
purchase price for the interests being purchased as provided in this
subsection, the court shall proceed as if none of the eligible cotenants had
exercised the purchase right pursuant to subsection (b).
(d) If one or more but not all of the cotenants who
exercised the purchase right under
subsection
(b) fails to timely pay into the court the purchase price for the interests it
is purchasing, whether the initial 50% or the second 50% at closing, the court
shall within 10 days, notify each
cotenant who timely exercised the purchase right and paid its purchase price of
that failure and of the aggregate percentages of interests remaining available
for purchase and the corresponding purchase price. Thereafter, each of the remaining cotenants
who timely exercised the purchase right and paid into the court the purchase
price, may, within the next 20 days, unless for good cause shown the court extends
the time, purchase all of the remaining interests not purchased by the
defaulting cotenants by paying into the court the corresponding purchase
price. If more than one cotenant seeks
to purchase these remaining interests, each such cotenant shall be permitted to
buy a fraction of the remaining interests equal to that cotenant’s original
percentage ownership divided by the total original percentage interest of all
cotenants who actually paid in the purchase price for the remaining interests,
and the court shall promptly refund any excess payments at closing.
(e) If none of the remaining cotenants who timely
exercised the purchase right and paid the purchase price into the court timely
pays the full purchase price for all of the remaining interests of the
defaulting cotenants, the court shall proceed as if none of the eligible
cotenants had exercised the purchase right pursuant to subsection (b).
SECTION 9. PROCEDURES
FOR CO-TENANT BUY-OUT.
(a) Before the
court may order partition in kind or partition by sale of the whole of the
property, it shall provide any cotenants who had not requested partition by
sale the opportunity to purchase the entire interest of any cotenant who
requested partition by sale or who timely gave notice that their interest is
available for purchase under this section.
A party who did not request partition by sale of
the whole of the property may give notice to the court within 15 days after the
court’s determination of value that the party’s interest is available for
purchase under this section. A
party who did not request partition by sale may give notice to the court within
15 days after the court’s determination of value that the party’s interest is
available for purchase under this section.
If every party [who had not requested partition by sale of the
whole of the property] gives notice that his or her interest is
available for purchase under this section, the court shall order the whole
property sold pursuant to Section 10.
(b) Any party who didhad not
requested partition by sale of the whole of the property or did [and
does not give notice that his or her interest is available for purchase] may
notify the court no later than 30 days after the court’s
determination of value of his or her intention to exercise the purchase right
under this section. Such a A cotenant
[who had not requested partition by sale] may purchase another party’s interest
as provided in this section even if a default judgment has been entered against
that cotenant. If more than one party
elects to exercise the right to purchase interests under this section, each of
those parties shall be entitled to purchase a portion of the aggregate
interests that are available for purchase in proportion to his or
her existing percentage ownership divided by the total percentage ownership of
all cotenants electing toparticipating in the
purchase. The court
shall notify each electing cotenant of the interests it is entitled to purchase
and the associated purchase price no later than 45 days after the court has
determined the fair market value of the real property.
(c) No later than 475 days after
the court
has notified a cotenant, pursuant to subsection (b), of the percentage of
the interests it is entitled to purchase and the corresponding
purchase price, such cotenant shall pay into the court the price set as the
value for its percentage of the
interests to be purchasedcourt’s determination of value, unless for
good cause shown the court extends the time in which a
party may pay into the court his or her
portion of the purchase price. each
party who exercised the purchase right shall pay into the court by cash,
certified check or electronic transfer the value of the interests being purchased, calculated in each
instance by multiplying the court=s determination of value by
the percentages of ownership in the property being purchased. Upon full payment of the purchase price by
all of the cotenants participating in the purchase, the court shall issue an
order reallocating all of the cotenants’ interests in the property. If none of the cotenants who exercised the
purchase right timely pay into the court s
his or
herthe percentage of the
purchase price for value of
the interests being purchased as provided in this
subsection, within 75 days after the court’s determination of
value, the court shall proceed as if none of the cotenants had offered to
purchase any interests pursuant to section 6(a).
(d) If one or more but not all of the cotenants who
exercised the purchase right under
subsection
(c) fail to timely pay into the court the value of the interests being
purchased, the court
shall within 10 days notify all cotenants who exercised the
purchase right and paid his or her percentage of the purchase
price of that failure and of the percentages of interests
remaining available for purchase.
Thereafter, each of the remaining cotenants who timely exercised the
purchase right and paid into the court his or her
percentage of the price, may, within the next 20 days, unless for
good cause shown the court extends the time, purchase all
of the remaining interests not
purchased by the defaulting cotenants by paying into the
court the value of all of the remaining interests
being purchased. If more than
one cotenant seeks to purchase these remaining interests, each such cotenant
shall be permitted to buy a fraction of the remaining interests equal to
that cotenant’s original percentage ownership divided by the total original
percentage interest of all cotenants who actually pay in the purchase price for
the remaining interests, and the court shall promptly
refund any excess payments.
(e) If the
remaining cotenants who timely exercised the purchase right and paid the
purchase price into the court pursuant to subsection (c) do not timely pay the
full price of the interests to be bought out pursuant to subsection (d), the
court shall proceed as if none of the remaining interests of the cotenants
described in subsection (d) had been available for purchase pursuant to section
6(a).
SECTION 10. SALE BY
PUBLIC SALE OR OPEN- MARKET SALE OR PUBLIC
SALE.
(a) If the court orders a sale of the property, the sale mustshall be
an open- market
sale unless the court finds that a public sale would be economically more economically advantageous
and in the best interest of all the cotenants.
(b) If the court orders an open- market
sale and the parties, stipulate, within not later
than 10 days after the court’s order, agree on the identity
of a real estate broker to offer the
property for sale, the court shall appoint that broker;.
oOtherwise,
the court shall appoint a disinterested real estate broker
to offer the property for sale and shall establish a reasonable
commission. The broker shall offer the
property for sale at a price no lower than the court’s determination
of value and on the terms and conditions established by the court.
(c) If the broker, within a reasonable period, does not timely
procure a person willing obtain an offer to purchase the
property for at least the court’s determination of value, the
court, after hearing, may:
(1) approve the highest outstanding offer, if any;
(2) redetermine the value of the property and order that the
property continue to be offered for an additional period; or
(3) order that the property be sold at a public sale.
(d) If the court orders a public sale, the court shall set the
terms and conditions of the sale, which also mustshall
be conducted in the manner prescribed in [insert reference to general partition
statute or, if there isare none, insert
reference to foreclosure sale].
(e) If athe purchaser is a cotenant
or otherwise owns an interest in the property and thereby is
entitled to a share of the proceeds of the sale, the purchaser mustshall
receive a credit against the price in an amount equal to the purchaser’s
share of the proceedsvalue of the interest.
Comment
1.
Courts
which have utilized an open-market sale to sell property ordered sold under a
partition by sale have determined that an open-market sale would yield a better
sales price that the sales prices that could be expected if the property were
sold at a public auction. See, e.g., Orgain v. Butler, 496 S.E.2d
433, 435 (Va. 1998) (reversing chancellor’s order that property be sold at a
public auction given commissioner’s report that recommended that property be
sold on the open market by a real estate broker because such a sale would yield
the best price obtainable).
2.
Section
10(b): Courts which have utilized such
an open-market sale in partition actions have often required the property to be
marketed by a real estate broker under commercially reasonable conditions. See,
e.g., McCorison v. Warner, 859
A.2d 609, 614 (Conn. Super. Ct.
2004) (In McCorison, the court
referred to an open-market sale as defined in this act as a private sale and
ordered that the property be listed by a real estate broker for up to two years
provided that at least twenty-five percent (25%) of the parties agreed to
continue to have the property listed by a broker after the first year if the
property had not been sold by that time).
SECTION 11. REPORT OF SALE.
(a) Unless required to do so within a shorter period of time by
[insert reference to general partition statute], the broker or other person
authorized to offerhave offered the
property for sale shall file his or her a report
not
later thanwithin 15 days after receiving anthe
offer to
purchase the property for at least the determination of valuefor sale. The report mustshall contain the following information:
(1) a description of the property to be sold to each buyer;
(2) the name of each buyer;
(3) the proposed sales price;
(4) the terms and conditions of the proposed sale, including the
terms of any owner financing;
(5) the amounts, if any, to be paid to lienholders;
(6) a statement as to contractual or other arrangements or
conditions as to agents’ commissions; and
(7) other material facts relevant to the sale and the
confirmation proceeding.
(b) Not later thanWithin 30 days after a of the filing of the report
of sale
is filed, the court shall confirm the sale if made in compliance
with this [act].
SECTION 12. AWARD OF ATTORNEY’S
FEES. 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. If a partition action
is uncontested, the court may in its equitable
discretion order that reasonable attorney’s fees expended by
any party for the common benefit of all of the cotenants be paid by the cotenants in
proportion to their respective interests in the heirs property. Each party
to an action under this [act] shall be responsible for payment of his or
her attorney=s fees.
Comment
1.
Many states provide that attorney’s fees may not be
awarded in a contested partition action.
See, e.g., La. C.C.P. Art.
4613 (2010). See also Osborne v.
Eslinger, 58 N.E. 439, 444 (Ind. 1900) (“Where
parties appear by counsel, and contest a petition for partition, they should
not be required to pay the fees of the attorneys of their adversary.”); Dailey
v. Houston, 151 So. 2d 919, 927 (Miss. 1963) “Where there is a real controversy,
and it is proper for defendants to be represented by counsel of their own
choosing, the fee permitted by section 975, to be taxed as a common charge upon
all of the interests, should not be allowed.”; Cary v. Armbrust, 70 N.W.2d 427,
431 (Neb. 1955); Novy v. Novy, 188 A. 328, 330 (Pa. 1936) (“The act makes
reasonable counsel fees part of the costs in these proceedings, and the courts
have followed the practice of allowing them since its passage. The fees
contemplated were only such as would compensate counsel in a reasonable amount
for services rendered in the actual partition and for the common benefit of the
parties in interest. When, however, partition is contested in good faith, or
when the services rendered are adverse to the other parties, the petitioner
cannot recover as costs counsel fees earned by his attorney in litigating his
right to partition.”); Port v. Elson, 321 N.W.2d 363 (Wis. Ct. App. 1982) (“It
has been widely recognized that if a partition proceeding is adversary in
character, the proceeding is not for the common benefit of all the parties, and
therefore the payment of attorney’s fees from the proceeds of the sale should
not be allowed.”).
SECTION 13. TRANSITION.
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