Uniform Partition of Heirs’ Property Act - What Families Should Know about Co-Owned, Inherited Property in Texas
Uniform Partition of Heirs’ Property Act – What Families should know about Co-Owned Inherited Property
The Uniform Partition of Heirs’ Property Act was promulgated in September of 2017 to address a real concern facing Texas families—what if I do not want to sell the property that I inherited? What if I want to keep the family land in the family? The Uniform Partition of Heirs’ Property Act includes additional protections and rights to give families the opportunity to keep family land in the hand of those who inherited the land. This Article focuses on providing families with a basic understanding of what their enhanced rights look like with Heir property.
When does the Uniform Partition of Heirs’ Property Act Apply to You?
Chapter 23A of the Texas Property Code applies to a property that is jointly owned by two or more people who fit within the following parameters:
20 percent or more of the ownership interests are held by cotenants who are relatives;
20 percent or more of the interests are held by an individual who acquired title from a relative, whether living or deceased; or
20 percent or more of the cotenants are relatives
In other words, there could be five cotenants of the property, but so long as one of the individuals received the property from a “relative,” then the Uniform Partition of Heirs’ Property Act will apply to the partition lawsuit.
What is a “relative” anyways? A relative, as defined under Section 23A.002 is an ascendant, descendant, or collateral or an individual otherwise related to another individual by blood, marriage, adoption, or laws or this state other than this chapter. So, what does this mean for you? This means that a whole lot more property is subject to the Uniform Partition of Heirs Property Act than simply inheriting the property. This could be property gifted to you from a grandparent, aunt/uncle, child, or anyone that you are related to by marriage. In other words, anyone conveyance from one family member to another, so long as they are related to you by blood or marriage, means that the property is now subject to the Chapter 23A of the Texas Property Code.
How does the Uniform Partition of Heirs Property Act effect an individual in a Partition Lawsuit in Texas?
Plainly, it provides you with enhanced protections and rights that simply are not available to you otherwise. Such enhanced rights includes a right to buy out the interests of other cotenants in the property, a right to have the property divided in kind instead of being sold, an enhance process for partition by sale.
What is a Cotenant Buyout?
One of the largest changes between a typical partition and a partition subject to the Uniform Partition of Heirs’ Property Act is that there is a buyout option. Under a traditional partition, the only time that that a buy out is possible is by agreement between the cotenant. However, if the cotenant cannot reach an agreement, the Court will either partition the property in kind or by sale. However, so long as the property being partitioned falls within the broad definition of “heir property” as stated above, a cotenant buyout is an absolute right.
Determining that the Property is Heir Property
In order to initiate a cotenant buyout, the Court must first set a hearing to determine that the property in fact does fit within the definition of Heir Property as described above. Upon determining that the property is in fact Heir Property and at least one joint owner has elected a partition by sale, the Court will move on to analyzing whether there be a cotenant buyout.
Which Cotenants have a Right to Elect a buyout?
Upon determining that the Property is subject to a partition under Section 23A.007 of the Texas Property Code, the individual who files the partition lawsuit is not permitted to participate or elect to buy out the other joint owners. This is a misconception that many attorneys fail to understand when advising their clients to file the partition of Heir Property. The only individuals permitted to elect the buyout are the responding/defending cotenants to the partition lawsuit.
What is the process of a Cotenant Buyout?
The steps to a partition are all the same as a normal partition. See Partition Lawsuit a Beginners Guide. However, before moving to the first trial, the Court must allow the non-filing cotenants a chance to elect a buyout through the following process.
a. Determination of Fair Market Value
Upon determining that the property is in fact Heir Property, the Court must determine the fair market value of the property in accordance with Section 23A.006 of the Texas Property Code. The Court will appoint a disinterested appraiser if the cotenants have not already agreed to a value of the property. Once the appraisal of the property is returned to the Court, the Court will send out notice and the appraisal to each cotenant owner. The Court will then set a hearing to determine the value of the property 30 or more days after the date that the last cotenant received notice.
b. Electing Cotenant Buyout
Upon determining the fair market value of the Property, the Court will send out notice to each cotenant (that did not file the partition lawsuit) notifying them of the determined value and right to elect a cotenant buyout of the property. Within 45 days of receiving the notice in accordance with Section 23A.007 of the Texas Property Code, each cotenant that wishes to buy out the other cotenants must file their election with the Court.
i. If only One Cotenant Elects a Buyout
If only one Cotenant Elects a buyout of the other co-tenants, then the Court will notify all other cotenants of who elected and what amount they must pay to the Court. The electing cotenant must deposit the determined value for each of the non-electing cotenants with the court within 60 days from the date that the notice is sent out by the Court. Upon receiving payment the court will then enter an order giving the property to that Cotenant and releasing the funds to all former cotenants of the property.
ii. If more than One Cotenant Elects a Buyout
If more than one cotenant wishes to buy out the interests, then the court shall allocate the right to buy those interests among the electing cotenants based on each electing cotenant’s existing fractional ownership of the entire parcel divide by the total existing fractional ownership of all cotenants electing to buy. The Court will then send an additional notice to all cotenants informing them who is buying the property and what price each is paying. Each electing cotenant will then have sixty (60) days to from the date that the notice was sent to pay the apportioned price into the court’s registry.
iii. What if an Electing Cotenant(s) does not pay?
Failure to pay by one or more cotenant by the 60th day will result in the other electing cotenant to elect to purchase the rest of the interest that was not paid for within twenty (20) days of receiving notice from the Court that they have the right to do so.
iv. What if No one Elects a Cotenant Buyout?
If no cotenant elects a cotenant buyout or if all electing cotenants fail to pay, then the Court will send notice stating as much and then the partition will continue as normal.
Partition Alternatives to Heirs Property
What happens if none of the cotenants elect the buyout provisions? In Texas, the Court must consider the pleadings of the other cotenants before they may proceed to a partition by sale of Heirs property. If at least one Cotenant has elected for the property to be partition in kind, the Court must attempt to partition the property in kind, unless the court, after considering the factors under Section 23A.009, determines that a partition in kind will result in substantial prejudice to the cotenants as a group. The factors that the court must consider under Section 23A.009(a) of the Texas Property Code are as follows:
Whether the heirs’ property practically can be divided among the cotenants;
Whether partition in kin would apportion the property in such a way that the aggregate fair market value of the parcels resulting from the division would be materially less than the value of the property if the property were sold as a whole, taking into account the condition under which a court-ordered sale likely would occur;
Evidence of the collective duration of ownership or possession of the property by a cotenant and one or more predecessors in title or predecessors in possession to the cotenant who are or were relatives of the cotenant or each other;
A cotenants sentimental attachment to the property, including any attachment arising because the property has ancestral or other unique or special value to the cotenant;
The lawful use being made of the property by a cotenant and the degree to which the cotenant would be harmed if the cotenant could not continue the same use of the property;
The degree to which the cotenants have contributed the cotenants’ pro rate share of the property taxes, insurance, and other expenses associated with maintaining ownership of the property or have contributed to the physical improvement, maintenance, or upkeep of the property; and
Any other relevant factor
A court may not consider any one factor to be dispositive without weighting the totality of all relevant factors and circumstances together. However, if two or more cotenants elect for a property to be partitioned in kind, then the court shall divide a portion of the property off and aggregate that portion for those electing the partition in kind to not be subject to the partition for sale of the rest of the property.
Partition by Sale: Enhanced Rights and Insight
If the Cotenants all seek a partition by sale or the Court finds that a request for a partition partition in Kind would substantially prejudice the cotenants as a group, then the Court will order the property to be sold. The following are all distinctly unique benefits to a sale of Heir property:
The Court appoints a Broker rather than a Receiver
The Broker must seek permission from the Court to sell for a lower value than Fair Market Value
The Cotenant are permitted to weigh in throughout the process of listing the property for sale
The Cotenants can request the broker and the court to consider private, sealed bids from disinterested parties
The Cotenants can ask for the broker to be removed for failing to act within a reasonable amount of time
The Cotenants can request that the Heir Property be sold at an auction
How can Partition Texas Help You Resolve issues with Heirs Property?
Partition Texas can guide you through this long, arduous process. Even better, Partition Texas can help you at no cost to you! Moreover, Partition Texas has assisted dozens of clients in actually being able to buyout their fellow cotenants, which is not an option that any attorney can offer you! Schedule your free consultation now to see how Partition Texas can best help you take back what is yours!
