What is a Partition?
Partition is a legal process to consolidate multiple ownership’s in a piece of land into separate tracts or the right to share in the proceeds from the sale of the land.
A Partition Action can be used even if one party with an ownership interest does not want to sell or deal.
Why Partition Necessary?
Often individuals acquire an interest in land through inheritances. Imagine an owner with 4 kids granting each an interest so we have 4 interest owners. Suppose these children each have 4 kids and grant each an interest; now there are 16 owners. Another similar generation will yield 64 interest owners.
Private Partition Agreement:
Court proceedings are costly and the parties quickly can lose control over the outcome. It is the landowners’ best interest to try to find a private solution rather than going to court. Sometimes mediation is a good answer. One solution may involve drawing boundaries. It could also mean buying out or leasing the other owners’ interests. Any such agreement should be in writing and filed with the County Clerk “Recorder of Deeds”.
So Abram said to Lot, “Let’s not have any quarreling between you and me, or between your herders and mine, for we are close relatives. Is not the whole land before you? Let’s part company. If you go to the left, I’ll go to the right; if you go to the right, I’ll go to the left.”
When is a Partition Necessary?
Sometimes there are often holdouts who refuse to deal. There may be owners who are minors or incapacitated and therefore unable make legally binding decisions. Finally, there may untraceable owners who have disappeared. In these cases, a partition may be the only solution.
Who Can Seek to Have Land Partitioned?
Anybody with an undivided ownership interest in the property can seek partition. This may be:
Tenants in Common (Tenancy in Common)
Joint Tenancy (Joint Tenants)
Heir to Property
Undivided means that they received an interest in the whole property. For example, a will or trust grant property to “my children in equal shares”. This creates a “tenancy in common” each owner is entitled to use the property but cannot exclude others. If there is no will or trust, then share are determined by intestacy statutes.
How does the Partition Process Work?
This article relates to Oklahoma procedures. An owner of a portion of the property can sue for partition. This person is called the “plaintiff”. Each interest owner is given notice of the lawsuit. The lawsuit identifies each of the owners and the plaintiff describes their ownership interest. The summons instructs them to file an answer.
Commissioners / Appraisers
Once all of the land owners are in the case the Court appoints Commissioners. Their job is to determine whether the land can be Partitioned in Kind or should be Partitioned by Sale.
Partition in Kind:
The law presumes that each party should keep a lot in proportion to their interest. This is done by the Commissioners drawing new boundaries on the land and awarding each owner a lot. There is also a remedy known as owelty. Owelty is used when one party receives a more valuable portion of land. He may be required to compensate the parties with cash or a larger share of land.
Partition by Sale:
Sometimes there is not a fair way divide the property. The next tool is “Partition by Sale”. The Commissioners become appraisers and value for the property. After the Commissioners report on the value any owner may elect to pay the commissioners’ price and become owners of the entire property.
Here are three examples of what may occur:
Fact Pattern: Owner A owns ½, Owners B & C own ¼ each. The property is valued at $100,000.
Owner A accepts the price and pays $100,000 into the court. After fees and costs are deducted he is returned ½ of what is left over and B & C each get ¼ of that amount.
Example 2: Two or more owners elect to pay the commissioners’ valuation. This causes a deadlock and the property will be sold at a public Sheriff’s sale.
Example 3: Nobody elects to accept the valuation. Then the property goes to a public Sheriff’s sale.
Sheriff’s Sale (Partition Sale):
Where there is a deadlock by two or more owners offering to pay the Commissioners’ value or where nobody elects to accept it the property is sold at a Sheriff’s sale. This is a public auction conducted in the same manner as a foreclosure sale. The property is offered and bidding begins at 2/3rds of the Commissioners’ appraisal. Anybody, including the landowners, can bid. The Court then confirms the sale and orders a deed to made to the successful bidder. The money from the sale is first used to pay the costs including attorney’s fees. The remaining monies are paid to the interest owners.
I got served with a Partition Lawsuit Petition and Summons, What Should I Do?
It is important to answer the summons. In this way your rights are protected. There may be errors in the lawsuit petition. For instance, the petition may incorrectly state your interest. If you fail to object then you may be bound. There are a number of procedural and equitable defenses that you may wish to use. There are also strategies that you may want to undertake. In any event, it is a complicated matter and the assistance of an attorney is vital to protect your interests.
Is There a Tax Advantage of Partition in Kind over a Partition by Sale?
From a tax standpoint it may be more advantageous to have a Partition in Kind. If the property is sold at public sale there may be capital gains due.
Mineral Interests, Oil and Gas
While beyond the limited scope of this article. Mineral interest can be partitioned.
Estate Planning and Family Business Succession Planning may help prevent the need for a partition in the future.
Oklahoma’s Partition Procedure is found at 12 Okla.Stat. §1501.1 et seq.