Associate
What Is Partition? Partition is a legal process to divide jointly owned land. In Massachusetts either the Land Court or the Probate and Family Court have jurisdiction for partition actions.
Who Can File for Partition? Generally, any co-owner can file a partition action, except for spouses who own land as tenants by the entirety. Co-owners must have a present, possessory interest to petition to partition. For example, if a deed states that it grants a life estate to Pat, then to Alex and Jordan as joint tenants with a right of survivorship, then Alex and Jordan cannot maintain a petition to partition the land. Alex and Jordan have remainder interests that vest when Pat dies. Remainder interests in land are not present possessory.
Additionally, beneficiaries of a trust cannot bring a petition to partition land in which they have a beneficial interest, because they do not have legal title to it. Land owned by a partnership cannot be partitioned, because the law on tenancies in partnership did not bring that interest within the scope of the governing law on partitions. A wrinkle with land owned in partnership is that if the land is owned by a partnership and another individual or entity, then those named on the deed to the land may bring a partition action.
Types of Partitions: There are two types of partitions, and also a third option to resolve petition to partition actions. They are:
- Partition by Division: The land is physically divided into separate parcels, or lots, for individual ownership by each party. A court’s focus in a partition by division is to ensure division is feasible, and if so, just and equitable. This is an option only if the subject land can be physically divided without economic loss. For example, a small parcel of land with a house on it could not be divided because the house cannot be divided. Even if there were no house, division is not possible if the smaller, divided parcels would not conform with local zoning requirements. A partition by sale or a set-off can be ordered if a court finds that the land cannot be divided advantageously.
- Partition by Sale: The land is sold in its preexisting configuration, either at a public auction or through a private sale to a third party. Any proceeds from the sale are divided among the owners after accounting for reimbursements of certain costs. A private sale is more common in a partition by sale. It occurs like the normal process that owners go through when they sell land. A real estate broker is often used to market the land at a certain price. Potential purchasers may make offers, which can be accepted, rejected, or countered, if allowed by a court. The usual process for negotiating a purchase and sale agreement and then closing the purchase and sale transaction will occur under the supervision of a court, typically through a court-appointed commissioner, if an offer is accepted.
In a public auction, the land is offered to the public for sale through a public bidding process. A court or court-appointed commissioner may set the terms and procedures for the auction, but typically, the land will be offered at a starting price and then members of the public (which can include the land’s current owners) will be allowed to attend the auction and bid on the land. The highest bidder will “win” the sale and will be allowed to purchase the land.
3. Set-Off: One or more owners buy out the others’ interests to the land, becoming the sole remaining owner(s) of it. The co-owners can have an appraisal done to figure out the land’s fair market value. The purchasing co-owner(s) pays (pay) the selling co-owner(s) the amount of money their share(s) in the land is (are) worth. Co-owners may agree to a set-off before the land is sold through private sale or by auction.
The purchasing party in a set-off must come up with enough money to buy out all the selling co-owners’ interests. That may mean that the purchasing party must pay off or refinance any existing mortgage on the land to list only that party as the owner. Set-off may not be an option if the purchasing party cannot afford to buy out the other co-owners with cash or a refinanced mortgage.
Distribution of Proceeds: Proceeds from a partition by sale will be equitably distributed to the parties, after accounting for liens, costs, and reimbursements.
The proceeds of a partition by sale are used first to pay any liens on the land, such as mortgages, tax liens, and the court-approved fees and expenses of closing. Proceeds also are used to pay anyone else who was appointed by a court to help with the sale of the land (e.g., commissioners, brokers, agents, etc.).
A court will also determine which, if any, of the parties have reimbursable costs in connection with improvements to the land. A co-owner’s costs of improvements to the land or structures on it, that enhance its value, are reimbursable by contribution that does not exceed the actual amount by which the market value of the land was increased. Improvements do not include costs attributable to maintained (e.g., lawn care, snow and ice removal, and paint).
For example, staying with the earlier example of Pat having a life estate, and Alex and Jordan having a remainder interest, if Alex paid for an attached garage to be constructed at a cost of $15,000, and a court finds the costs associated with constructing the garage are reimbursable, then Alex can have those costs reimbursed in a petition to partition by sale, before any proceeds from the sale of the land are distributed. This is true whether or not Alex paid such costs while Pat was alive and using the land, or if the costs were paid after Pat died and Alex and Jordan’s interests in the land vested. Remember that , in this example, Alex or Jordan can only commence a petition to partition action after Pat passes away.
Contribution of Carrying Costs: Carrying costs of land and structures on it paid by a party are reimbursable from nonpaying parties, as a matter of equity. Carrying costs include payments on real estate taxes, mortgage debt, and insurance. Each co-owner bears their share of such costs in proportion to their ownership interests in the land. In the example of Alex and Jordan, their proportional interests are 50-50, given they own it as joint tenants with a right of survivorship. However, if they owned the land as tenants-in-common, Alex with a 60% interest, and Jordan with a 40% interest, and Alex paid all the real estate taxes, then Alex could seek 40% reimbursement of such tax payments from Jordan.
Conclusion: A co-owner of real property has a right to partition it unless it is owned by a partnership or married couple. There are three ways a partition action can be resolved by a court. A court will determine whether the land can be partitioned by division. A partition by sale or a set-off are alternative options in the event division is not feasible. Proceeds from a partition by sale are first used to pay off mortgages and liens. Then costs of the partition will be paid or reimbursed, subject to court approval. Finally, a co-owner may be reimbursed for their costs of improvements to the land and payment of carrying costs before each co-owner takes their proportional share of the remaining proceeds.
Partition is a complex legal process that requires the petitioner to timely serve legal documents and record notice of the action. Establishing which costs are reimbursable requires an understanding of the law and motion practice. It’s advisable to consult with an attorney to understand your rights and options before commencing a petition to partition action.