Joint Owners of Real Estate Can Go Their Separate Ways

                        
                            Trey Wilson Attorney San Antonio                         
                    

Right to Partition

When Joint Owners of Real Property in Texas determine that they can no longer co-exist or “co-own” property, they may invoke the power of the Court to sever their ownership interests.

The law will not force a reluctant joint owner of real property to maintain a joint ownership. Instead, joint owners of real property “may compel a partition of the interest or the property among the joint owners.” TEX. PROP. CODE § 23.001.

This severance remedy is known as “Partition” and is available under Chapter 23 of the Texas Property Code.

Section 23.001 states:

Sec. 23.001. PARTITION. A joint owner or claimant of real property or an interest in real property or a joint owner of personal property may compel a partition of the interest or the property among the joint owners or claimants under this chapter and the Texas Rules of Civil Procedure.

Notably, when the property to be partitioned is Heirs’ Property, the partition proceeding is governed by Chapter 23A of the Texas Property Code.

“Heirs’ property” means real property held in tenancy in common that satisfies all of the following requirements as of the filing of a partition action:

(A) there is no agreement in a record binding all the cotenants that governs the partition of the property;

(B) one or more of the cotenants acquired title from a relative, whether living or deceased; and

(C) any of the following applies:

(i) 20 percent or more of the interests are held by cotenants who are relatives;

(ii) 20 percent or more of the interests are held by an individual who acquired title from a relative, whether living or deceased; or

(iii) 20 percent or more of the cotenants are relatives.

It is important to distinguish whether Chapter 23 or 23A will govern the partition action.

Venue for Partition Lawsuits

Partition suits are properly filed in the district court of the county “in which any part of the property is located.”  If a property is located in more than one county, venue is proper in any county in which any portion of the property lies.

Types of Partition – “In Kind” or “By Sale”

There are two ways off dividing co-owned land:  By ordering a sale with the proceeds to be divided equally, or “in-Kind.” Where an”In Kind” partition occurs, the property is divided into separate parcels and each parcel is allotted to a separate owner. The key objective in “In Kind” partitions is achieving a division of the property that is “fair and equitable.”

Whether a piece of land can fairly be partitioned in kind is a question of fact for the court or jury to decide. Texas law favors partition in kind over partition by sale. ; Jimmie Luecke Children P’ship, Ltd. v. Pruncutz,No. 03-03-00388-CV, 2005 WL 910144, at *2 (Tex. App.-Austin Apr. 21, 2005, pet. denied) (mem. op.). Therefore, at trial the burden of proof falls on the party opposing partitioning in kind and seeking a partition by sale.

The language in Texas Rule of Civil Procedure 770 requiring a showing that the land is incapable of partition in kind does not mean incapable in a physical sense.  “Land could be divided into microscopic fractional pieces, but the court must look to determine if a partition in kind would be impracticable, given the small size of some interests, whether the divided interest would have an equal interest relevant to its percentage of the whole, and whether the value of the share of each would not be materially less than his share of the money equivalent that would be obtained for the whole.” Cecola v. Ruley, 12 S.W.3d 848, 855 (Tex. App.-Texarkana 2000, no pet.)

If the property can be divided in kind without materially impairing its value, a sale will not be ordered. Substantial economic loss is one of the significant factors that would warrant a sale in lieu of a partition in kind. See Adams v. Adams, 205 S.W.2d 801, 803 (Tex.Civ.App.-Waco 1947, no writ).

“A Persian rug divided into halves and separated would render the two halves of little or no value. Such a partition could not be considered fair and equitable. The same principle is applicable to land.” Cecola v. Ruley, 12 S.W.3d 848, 855 (Tex. App.-Texarkana 2000, no pet.)

Two Stages of a Partition Lawsuit

The Texas “Rules of Civil Procedure set forth a two-stage process for the partition of real estate,” and each stage leads to a final, appealable judgment. Bowman v. Stephens, 569 S.W.3d 210, 221 (Tex. App.-Houston [1st Dist.] 2018, no pet.); see TEX. R. CIV. P. 756-771.

Stage I

In the first stage, the trial court’s judgment determines whether the property is susceptible to partition in kind, decides the fractional interest of each joint owner, resolves all questions of law or equity affecting title, and determines the value of improvements to provide for the adjustment of equities between the parties. See TEX. R. CIV. P. 761;  Yturria v. Kimbro, 921 S.W.2d 338, 342-44 (Tex. App.-Corpus Christi 1996, no writ).

RULE 760. COURT SHALL DETERMINE, WHAT

Upon the hearing of the cause, the court shall determine the share or interest of each of the joint owners or claimants in the real estate sought to be divided, and all questions of law or equity affecting the title to such land which may arise.

As a result, arguments about the existence and value of improvements or equitable claims that a particular party should receive a particular tract are resolved in the first stage of the proceedings. Yturria, 921 S.W.2d at 342-44.

RULE 770. PROPERTY INCAPABLE OF DIVISION

Should the court be of the opinion that a fair and equitable division of the real estate, or any part thereof, cannot be made, it shall order a sale of so much as is incapable of partition, which sale shall be for cash, or upon such other terms as the court may direct, and shall be made as under execution or by private or public sale through a receiver, if the court so order, and the proceeds thereof shall be returned into court and be partitioned among the persons entitled thereto, according to their respective interests.

If the trial court determines that the property is susceptible to partition in kind, then it may appoint commissioners to divide the property in accordance with the trial court’s equitable and legal determinations. Id. at 342.

RULE 761. APPOINTMENT OF COMMISSIONERS

The court shall determine before entering the decree of partition whether the property, or any part thereof, is susceptible of partition; and, if the court determines that the whole, or any part of such property is susceptible of partition, then the court for that part of such property held to be susceptible of partition shall enter a decree directing the partition of such real estate, describing the same, to be made in accordance with the respective shares or interests of each of such parties entitled thereto, specify in such decree the share or interest of each party, and shall appoint three or more competent and disinterested persons as commissioners to make such partition in accordance with such decree and the law, a majority of which commissioners may act.

Stage II

“In the second stage, the commissioners consider the property’s characteristics and evaluate objective considerations for dividing the property to retain the partitioned tracts’ highest value.” Bowman, 569 S.W.3d at 222.

The commissioners determine the “exact manner of valuing the real property” and the appropriate method of “dividing that property into shares among the parties.” Yturria, 921 S.W.2d at 342. Because the commissioners lack judicial powers, they must rely on the trial court’s instructions, and legal and equitable determinations from the first stage, in making their decisions. Id.

RULE 766. SHALL PROCEED TO PARTITION

The commissioners, or a majority of them, shall proceed to partition the real estate described in the decree of the court, in accordance with the directions contained in such decree and with the provisions of law and these rules.

RULE 767. MAY CAUSE SURVEY

If the commissioners deem it necessary, they may cause to be surveyed the real estate to be partitioned into several tracts or parcels.

RULE 768. SHALL DIVIDE REAL ESTATE

The commissioners shall divide the real estate to be partitioned into as many shares as there are persons entitled thereto, as determined by the court, each share to contain one or more tracts or parcels, as the commissioners may think proper, having due regard in the division to the situation, quantity and advantages of each share, so that the shares may be equal in value, as nearly as may be, in proportion to the respective interests of the parties entitled. The commissioners shall then proceed by lot to set apart to each of the parties entitled one of said shares, determined by the decrees of the court.

Once the commissioners have made their decisions, they submit a report, under oath, to the trial court, stating their recommendations for the actual property partition. TEX. R. CIV. P. 766, 769.

RULE 769. REPORT OF COMMISSIONERS

When the commissioners have completed the partition, they shall report the same in writing and under oath to the court, which report shall show:

(a)  The property divided, describing the same.

(b)  The several tracts or parcels into which the same was divided by them, describing each particularly.

(c) The number of shares and the land which constitutes each share, and the estimated value of each share.

(d)  The allotment of each share.

(e)  The report shall be accompanied by such field notes and maps as may be necessary to make the same intelligible.

The clerk shall immediately mail written notice of the filing of the report to all parties.

Objections to Commissioners’ Report

Any party objecting to the commissioners’ report must file their objections within thirty days, and the trial court shall hold a trial on the objections. TEX. R. CIV. P. 771.

The party objecting to the report has the burden of  proving that it is materially erroneous or that it is an unequal or unjust division of the property. Ellis v. First City Nat’l Bank, 864 S.W.2d 555, 557 (Tex. App.-Tyler 1993, no writ).

If the trial court overrules the objections to the commissioners’ report, if any, and the report is otherwise materially correct, the trial court may approve the report in a second judgment. See Bowman, 569 S.W.3d at 222. That said, the trial court’s judgment must reject the report and appoint new commissioners if the trial court sustains an objection to it, finding it to be “erroneous in any material respect, or unequal or unjust.” TEX. R. CIV. P. 771.

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Important Note:  This post does not relate to divorce proceedings, marital property divisions or disposing of community property. Those circumstances are regulated by the Texas Family Code.