Published in Real Estate on January 11, 2018
Many people end up in co-ownership or joint ownership situations where they are not satisfied. Oftentimes, this happens in the context of receiving an inheritance, either by a beneficiary deed (a deed which avoids probate and becomes effective at death) or other deed, or a distribution from an estate or trust. Sometimes, it may be in the context of co-habitants of a residence that part ways, or co-owners on a farm or commercial property where a relationship has changed or eroded. Regardless of how someone ends up in a dissatisfying co-ownership situation, there is a way in Missouri to force a termination of the arrangement. This termination of owning part of a given property is called a partition of real estate which is a lawsuit that one or more of the co-owners file to force the division or sale of the property. There are two ways to partition real estate. One is a partition in-kind which divides up a given tract of land into two or more parcels to divide the property equitably between the co-owners. This method is favored by courts where it can be done fairly and without prejudice to any of the co-owners. The other way to partition is a partition by sale. Where the property in question is not susceptible to a fair division, this is the only option. Most situations we’ve encountered over the years involve this scenario. Obviously a house or residence cannot be chopped in half or otherwise fairly divided, so having a sale and dividing the proceeds is the only way to divide the property.
It is important to note that you don’t have to have a majority of ownership to force the sale or division of the real estate in this manner. A co-owner could have a relatively small fractional interest in real estate and can still force a sale or division so long as there are no enforceable restrictions against partition in place on the subject property.
Keep in mind that a partition case can be settled by the co-owners at any time prior to the sale of the real estate. However, oftentimes a partition case needs to be filed to get another co-owner’s attention. For example, it is not uncommon in the context of an inheritance for one of the heirs or beneficiaries of real estate to be residing on the property inherited. That co-owner is often understandably quite content with the arrangement of living in the property rent-free and contemplating having the use of the property into the foreseeable future. However, that arrangement doesn’t work well for the other co-owners which often leads to the filing of a partition lawsuit.
In a partition in-kind, the court will generally appoint a group of special commissioners to determine a fair division of the property, taking into consideration whether each owner has property that is comparable to the other co-owner(s). Again, this tends to be relatively rare since one party can generally successfully argue against a partition in-kind because of improvements (such as a house or barn) not being divisible, or that one tract would have more of the creek, the woods, the pasture land, the tillable land, etc. In a partition by sale, the court will generally appoint a single special commissioner to advertise and conduct the sale. The court determines the fee to be received by special commissioners, whether the partition is in-kind or by sale.
The court will approve the attorney fees for the plaintiff (the co-owner that filed the case) which then gets assessed to the co-owners in proportion to their ownership interest. So in the context of a partition sale if the plaintiff is a 25% owner, the attorney fees awarded by the court will be paid out of the proceeds of the sale with each co-owner bearing that cost in proportion to their ownership interest. The court has broad discretion in awarding attorney fees and the attorney fees awarded by the court may or may not cover the attorney fees incurred by the plaintiff. Similarly the costs for publication, the court filing fee, and other expenses relating to the sale, are approved by the court and borne by the parties in proportion to their respective ownership interest.
While some parties have a dislike for the right of a single co-owner (which may be a minority owner) to partition real estate, the right of a joint owner to force a sale or division of real estate serves a very important protection for joint land owners. As parties use beneficiary deeds more and more to avoid probate, the need for partitions is unlikely to subside anytime soon.