What is a Partition? A Beginner’s Guide

What is a Partition Lawsuit in Texas? A Beginners Guide

As the title suggests, this blog post will give a brief overview of what a partition lawsuit is, what the partition process looks like, and the key legal terms you need to understand in order to protect yourself. Partition Texas writes this article because we believe that knowledge is power. In order to help feel in control you must first understand what a partition is and what to expect throughout the process. As you read this article, you likely will come to the realization that this process is rather complicated and requires someone with experience to properly navigate and to protect your rights. Please schedule your free consultation with Partition Texas to see how we can best help you.

What is a Partition?

A partition is an absolute right to sever your interest with another individual(s) that you own property with. A partition can be done by agreement or, more often than not, through judicial intervention. The rules dictating the process of a partition of real property under Texas law can be found in Rule 756 through 771 of the Texas Rules of Civil procedure and Chapters 23 and 23A of the Texas Property Code.

What to do before filing a partition lawsuit in Texas

Before initiating a partition lawsuit, it is highly advised that you speak with the joint owners of the property to see if a mutual agreement can be reached before necessitating court intervention and large expenditures of money on attorneys. Instead, joint owners can enter into a written agreement commonly known as a “partition agreement” or sometimes simply a “settlement agreement.” A partition agreement can incorporate any terms that the joint owners wish and is the most flexible option available to partitioning real property. Generally, it is best to have an attorney draft the partition agreement for all joint owners to review and sign due to the complexities of real property law and to ensure that the agreement is truly binding on all joint owners. 

However, if you are reading this article, all negotiations have likely failed. If so, then you will need to seek judicial intervention by exercising your absolute right to a partition by filing a lawsuit against the other joint owners. 

What are the steps of a partition lawsuit? 

A partition lawsuit is made up of two trials. The first trial is to determine 1) the ownership interests in the property 2) whether the property can be partitioned in kind or by sale and 3) any legal or equitable offsets that a joint owner might be entitled to. After the first trial, the court will appoint three (3) commissioners to carry forth the Court’s order in the event that the Court orders a partition in kind. If the Court believes the property is not susceptible to division, then the Court will appoint a receiver to list the property for sale. The second trial focuses solely on challenging the commissioners report on how they suggest dividing the property in kind. Each trial is considered “final” and appealable under Texas law and may be appealed by any of the joint owners.

In Kind v. Sale

A partition of real property can only occur in two ways: in kind or by sale. A court is required to consider whether a property may be divided before it can consider a sale of the whole property. The exception to this rule is if all joint owners request that the property be partitioned by sale. Dividing the real property into separate tracts is referred to as a “partition in kind.” For example, if the property consists of 100 acres and there are four joint owners of the property, then each joint owner will get 25 acres of land. However, most properties that are subject to a partition are not so easily divided, in which case the court must partition a property by forcing it to be judicially sold. The most common case would be a house in a city that sits on too small of a lot to practically divide. 

Ownership Interest

It is relatively easy and undisputed who owns a piece of property and in what percentage. A majority of properties are purchased together with the other joint owner(s), so there is little surprise who the other joint owners are. Alternatively, it is extremely common for a piece of property to be inherited in which all of the joint owners obviously know their siblings, parents, nieces/nephews, etc. This portion of a partition lawsuit generally does not take much time, but can be complicated for several reasons. See the “Ownership Interest” blog to explore factors that may effect you. Such complications can include family land that has not been properly and legally divided in several generations. This complicates the process because there may be a dozen or more joint owners who can trace their ownership interest from the title holders of the property. In order to have a hearing to partition the property, all joint owners must be served with notice. In situations where a joint owner may have to locate and serve a second cousin that they have not talked to in decades, this can really add complications and slow the process down.

Legal and Equitable Offsets

A partition lawsuit is generally speaking rather straightforward, however, “legal and equitable offsets” can make the lawsuit cumbersome, tricky, and confusing. A court may consider any requested offset by a joint owner. A legal offset is generally defined by an expense incurred and paid for by one joint owner that the other joint tenants are legally required to pay in accordance with their proportionate ownership interest in the property. Such expenses include, but are not limited to, property taxes, mortgage payments, insurance premiums, and safekeeping of the property. 

The more difficult offset for a Court to deal with are the equitable offsets. Equitable offsets are generally subjective in nature and left to the finder of fact to decide on what is considered “fair.” One equitable offset can be improvements to a property. An improvement to a property could be as small as replacing windows on a house, putting up a fence, or simply paving a road (though, depending on the size of the property, these improvements could quickly become large). Alternatively, the offset could be as large as building a house on a piece of property. Establishing a homestead on a piece of property is likely the largest equitable argument that could be made in a court. Otherwise, any argument that does not fit within the legal offset can be raised as an equitable offset for the Court to consider.

Commissioners

Upon entering an order at the first trial determining that the real property can be partitioned in kind, the Court will appoint 3 disinterested commissioners to fairly divide the property between the joint owners. Commissioners are local real estate professionals such as realtors, brokers, appraisers, etc. that the Court has vetted and considers an expert in the matters of real estate. In order to divide the property fairly, Commissioner will request that the Court also appoint a surveyor. The Suryveyor will give a new legal description for each new parcel that the commissioners create for each joint owners—this generally will also include an access easement for joint owners that would otherwise be landlocked. The Commissioner will present their report to the Court to approve. Each joint owner has an opportunity to object to this report within 30 days from the date that the report is filed with the Court. In order to gather a better understanding of how to challenge a commissioner report please see the “Commisioners” blog.

Receiver

Alternatively, if a property was ordered to be sold, then the Court will appoint a receiver to list the property for sale. A receiver more often than not will be a local attorney but can be real estate agents or brokers as well. Their sole responsibility is to list the property for sale. This process is not any different than hiring a real estate agent to list your property for sale. Once the property is sold, the receiver will report the sale back to the Court and deposit the sale proceeds with the Court registry. The typical rate for a receiver is 5% of the property’s fair market value, which will be paid from the sale proceeds in the Court registry. 

Once the Property has been Partitioned by Sale, How do I get my Money?

Once the receiver has reported the sale to the Court, you will have to file a motion with the court to withdraw the funds from the Court registry. Once you have a signed order from the Court stating the amount that the court registry shall pay to you, you can go to the court house to collect your portion of the sale proceeds.