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Uniform Partition of Heirs’ Property Act
The Uniform Partition of Heirs’ Property Act (UPHPA), drafted and approved by the Uniform Law Commission (ULC) in 2010, is a state law which helps to protect the interests and needs of vulnerable landowners. It has been enacted in Alabama, Georgia, Montana and Nevada.
“Heirs’ property” generally refers to family-owned land, often passed down without a will and held by descendants as “tenants in common.” Heirs’ property is typically owned by a family for many generations, with multiple owners each having an undivided interest in the land. Anyone who inherits or purchases even a small interest in the land can petition a court to force other owners to sell. These “partition sales” often occur against the wishes of many of the family members that own the property. The end result is often a sale for less than fair market value that dispossesses family members from their inherited land.
Property owners with access to trust and estate attorneys, business planners, and other professional assistance, can avoid or mitigate the harsh consequences of a forced partition sale by structuring agreements with their co-tenants to contract around the default rules of the tenancy in common. Low- to moderate-income heirs’ property owners, on the other hand, do not have access in most cases to similar professional assistance and are particularly vulnerable to predatory speculation. Most such owners are not even aware that their property is in jeopardy until a partition action is already underway.
Analysis
In “Reforming Property Law to Address Devastating Land Loss”, its author, Prof. Thomas W. Mitchell, made the following analysis:
“(…) in a global sense, the Uniform Partition of Heirs Property Act establishes a hierarchy of remedies for courts to apply in partition actions in which the property at issue may be heirs property. These remedies are designed to preserve property rights for those who own heirs property when possible and to preserve the real estate wealth of those who own heirs property
when a court determines that the only feasible remedy in a particular case is partition by sale. The Uniform Partition of Heirs Property Act prioritizes affording members of the common ownership group that want to maintain ownership of the entire property an opportunity to maintain such ownership, in cases in which at least one cotenant has petitioned a court for partition by sale. In such circumstances, these cotenants are given an opportunity to buy out, on economically fair terms, any cotenant that wants the property sold.
To the extent that the buyout provision cannot resolve the partition action for one reason or another, under the Uniform Partition of Heirs Property Act, there is a strong preference for partition in kind instead of partition by sale. The Uniform Partition of Heirs Property Act’s preference for partition in kind is quite different from the statutory preference for partition in kind in most states, a preference that has been hollowed out by common law decisions or by statute in many instances.
In these jurisdictions, courts decide whether to order partition in kind or partition by sale by considering primarily economic factors. In contrast, the Uniform Partition of Heirs Property Act provides substance to the preference for partition in kind by requiring courts to consider several economic and noneconomic factors in determining whether the preference for partition in kind may be overcome. Finally, if a court determines that partition by sale must be
ordered, the Uniform Partition of Heirs Property Act establishes a hierarchy of sales processes designed to maximize the price that property ordered sold will sell for in order to protect the real estate wealth of tenants in common.
In addition to these major goals, the Uniform Partition of Heirs Property Act seeks to address a number of other issues that often arise in partition actions that present real challenges to heirs property owners seeking to protect their property rights, including many issues that academics have not focused upon before now.
Many of the observers who work as attorneys for state and regionally-based public interest law firms and community-based organizations that serve poor and minority property owners brought these issues, which have flown under the radar for decades, to the attention of the drafting committee. This critically important unearthing of partition law issues, unknown to most of those on the drafting committee, underscores the invaluable role the observers played in helping draft the Uniform Partition of Heirs Property Act. This section provides an
analysis of many of the key sections of the Uniform Partition of Heirs Property Act.”
History Uniform Partition of Heirs Property Act
According to Thomas W. Mitchell:
“The American Bar Association’s Section of Real Property, Trust and Estate Law (RPTE), through its Property Preservation Task Force, played a major role in ultimately convincing the Uniform Law Commission to form a committee to draft a uniform act that would address concerns that many tenancy-in-common property owners have had with partition law. (…)
The PPTF and the Joint Editorial Board for Uniform Real Property Acts (JEBURPA), a very important but not widely-known organization that the Uniform Law Commission often relies upon when considering whether to approve a uniform act in the area of real property, worked
together for approximately a year and a half beginning in 2005 to establish general parameters for a uniform partition act project. (…)
The Joint Editorial Board for Uniform Real Property Acts believed that it could not support some of the “more sweeping reform of the rules governing tenancy-in-common ownership and
partition” that the PPTF initially suggested for possible consideration because such sweeping reform “would present more comprehensive enactability concerns.” After the Joint Editorial Board for Uniform Real Property Acts made this determination, the PPTF and the Joint Editorial Board for Uniform Real Property Acts worked over the course of several months “to focus the proposal more narrowly on those specific problems with partition that have exacerbated the problem of tenancy-in-common land loss.”
Conclusion
The Uniform Partition of Heirs’ Property Act establishes a number of important protections for owners of heirs’ property, while retaining flexibility for those wishing to sell their interest in the land.
Under the Act, the court appoints a disinterested real estate appraiser to assess the fair market value of the property, unless all the co-tenants agree to a different valuation method, agree on the value of the property, or the court determines that the cost of the appraisal will outweigh its evidentiary value. The Act provides the procedural timeline for determining the fair market value. After the court determines the value of the property, the Act provides all of the co-tenants who did not request partition by sale with a right to buy out all of the interests of those who have done so, at a price equal to the court-determined value of the property multiplied by the fractional interest of the cotenant that will be bought out. If the buy-out does not resolve the matter, the Act provides courts with a clear set of protocols and considerations for determining whether and how to proceed with partition in kind or by sale for this important subset of property.
The Uniform Partition of Heirs Property Act provides an important addition to states’ laws governing partition for heirs’ property, and provides heirs’ property owners with significant protections against unexpected and often devastating predatory speculation. The Act will assist heirs’ property owners, particularly (but not exclusively) low- to moderate-income heirs owners, with preserving the integrity and value of property that has both economic and strong familial significance.