Partition of Texas Property

What is Partition?

“Partition” is the legal term referring to division of real property interests among co-owners. It may be voluntary (if all parties agree) or involuntary by means of court action. Our focus here is on what happens when universal agreement among co-owners cannot be reached.

Disagreement in such cases may be relatively amicable, with one or more co-owners politely refusing to go along, or the co-owners may literally be at each other’s throats. A spouse of a co-owner may decide to oppose the sale of an asset, perhaps preferring to save it for the children rather than liquidate it now. There are numerous reasons for a co-owner to oppose partition, including sheer spite.

Every single co-owner of an interest in the property (no matter how small) must agree in order for a voluntary partition to occur. The remedy when agreement cannot be reached is for one or more of the co-owners to seek a court-ordered division by means of a partition suit. It is also possible to file a “friendly” partition action if the parties desire a court decree that ratifies their agreement.

There are two kinds of judicially-ordered partition: partition in kind, which refers to the actual physical division of land by metes and bounds; and a judicially-ordered sale of the property, when partition in kind is not feasible or cannot be achieved fairly and equitably.

“Texas law favors partition in kind over partition by sale, and the burden is on the party seeking a sale to justify it. If the proponent carries his burden and establishes that the property is not susceptible to partition in kind, there must be a partition by sale. . . . Which option to apply is simply dependent upon the evidence presented at trial, despite the respective desires of the parties.” Rodriguez v. Rivas, 573 S.W.3d 447 (Tex.App.—Amarillo 2019, no pet.).

Note that partition is not the appropriate remedy when there is no common title or title is in dispute.

In this discussion, the terms “co-owners” and “joint owners” are used interchangeably.

The Right to Partition

Texas law will not force a reluctant joint owner of real property to maintain co-ownership with other persons if he or she does not want to—for any reason. Instead, co-owners of real property may judicially compel partition by choosing between two pathways: “Partitions may be in kind (meaning that property is divided into separate parcels and each parcel is allotted to a separate owner) or by sale (meaning that property is sold and sale proceeds are divided among the owners).” Bowman v. Stephens, 569 S.W.3d 210 (Tex.App.—Houston [1st District] 2018, no pet.).

Property Code Chapters 23, 23A, and 29, as well as Rules 756-771 of the Rules of Civil Procedure apply to partition actions. Section 23.001 et seq. states:

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.

The right to a partition is absolute so long as the petitioning party is a joint owner of the land to be partitioned and has an equal right to possess it with the other joint owners, subject to any leases. There is no effective defense to such an action that is properly brought by someone who qualifies. Spires v. Hoover, 466 S.W. 2d 344, 346 (Tex.App.—El Paso 1971, writ ref’d n.r.e.). Note, however, that the right to partition may be waived or contracted away by agreement of the parties. Dimock v. Kadane, 100 S.W.3d 622, 625 (Tex.App.—Eastland 2003, pet. denied).

Since personal as well real property is mentioned in this statute, the right to partition extends not just to the realty but also the FF&E (furniture, fixtures, and equipment) that may be located on the premises.

No statute of limitations applies to the right of partition. Pate v. Ballard, 634 S.W.3d 957 (Tex.App.—Waco, 2021, no pet.)

Partition in Kind vs. Sale and Division of Proceeds

The real fight in many partition cases is about the pro rata shares of the parties and whether or not the property should be partitioned in kind or sold. Generally speaking, the law favors partition in kind over a forced sale. “If the property can be divided in kind without materially impairing its value, a sale will not be ordered, but when dividing the land into parcels causes its value to be substantially less than its value when whole, the rights of the owners are substantially prejudiced.” Cecola v. Ruley, 12 S.W.3d 848, 855 (Tex.App.—Texarkana 2000, no pet.).

Clearly, a 500 acre farm may lend itself favorably to partition in kind while a single-family residence on a lot and block may not. One of the recognized factors for determining whether property is capable of being equitably partitioned is whether or not it can be divided into separate tracts without material impairing its value. Champion v. Robinson, 392 S.W.3d 118 (Tex.App.—Texarkana 2012, pet. denied).

Partition Litigation – Part One

“The Texas Rules of Civil Procedure provide a two-step procedure for partition of real estate. See Tex.R.Civ.P. 756 et seq. Texas Rule of Civil Procedure 760 provides that, “[u]pon 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.” Rule 761 then provides, in pertinent part, that “[t]he court shall determine before entering the decree of partition whether the property, or any part thereof, is susceptible of partition.” If the property is not partitionable in kind, the trial court orders partition by sale. See Tex.R.Civ.P. 770. However, if the court determines the land to be partitionable in kind, it then appoints commissioners to make the partition and instructs them in its decree concerning the share or interest of each party. Tex.R.Civ.P. 761.” Yturria v. Kimbro, 921 S.W.2d 338 (Tex.App.—Corpus Christi 1996, no writ).

“The threshold question in a partition suit is whether the property is ‘susceptible of partition’ or ‘incapable of partition’ because a ‘fair and equitable division’ cannot be made. . . . The determination of whether an in-kind partition is fair and equitable includes whether the property can be divided in-kind without materially impairing its value. . . . The party seeking partition by sale bears the burden of proving a partition in-kind would not be fair and equitable. . . . A party is not required to show that partition in kind is physically impossible, but that partition by sale would best serve the parties’ interest and restore or preserve the maximum value of the property.” Carter v. Harvey, 525 S.W.3d 420 (Tex.App.—Fort Worth [2nd Dist.] 2017, no pet.) and Bowman, Id.

Venue is normally in the district court of the county where the property is located. Tex. Prop. Code Sec. 23.002(a). However, in counties where district and county courts have concurrent jurisdiction in title matters (as in Harris County), county courts may also hear such cases so long as the amount in controversy is within their monetary jurisdiction. Eris v. Giannakopoulos, 369 S.W.3d 618, 620-21 (Tex.App.—Houston [1st Dist.] 2012, pet. dism’d).

Other than the specific requirements contained in Section 23.001 et seq. and Rule 756 et seq., partition cases are governed by the same rules and procedures as other civil cases, including entitlement to a jury trial. All parties with an interest in the property must be joined in the litigation.

Partition Litigation – Part Two

If it is determined that the property can be fairly and equitably divided into separate tracts, then Rule 761 states that the court shall appoint three or more “competent and disinterested persons” to act as commissioners in devising a plan to divide the land, arrive at an estimated value of each share, and allot the shares among the various owners. The commissioners are appointed by means of a “writ of partition” that is issued by the clerk of court and accompanied by the court’s order directing that the property be partitioned.

Commissioners are often local lawyers or realtors. The writ of partition may also appoint a surveyor to assist the commissioners. A commissioners’ report is then prepared and submitted for the court’s approval. Rule 771 allows the parties 30 days to file objections to the report.

If objections are filed, the court must hold what is effectively a second trial on the objections. The court then enters a judgment that may be appealed as in other civil cases, but the appellate court is directed by Rule 781 to give preference on its docket to an appeal of a partition judgment.

The Outcome

If the partition is in kind, the final judgment will result in the parties obtaining exclusive fee-simple title to their respective tracts along with the power to use or dispose of same as they see fit, without consent or involvement by previous co-owners. The judgment, however, does not create any warranties of title that did not exist before.

If the court orders that the property be sold, then sale will be conducted by the sheriff or the constable as in other executions upon judgments. Tex. R. Civ. P. 770. If the property is sold at public auction, the executing officer is required to notify the parties of the date and time of sale. Gibson v. Smith, 511 S.W.2d 327, 328 (Tex.App.—Tyler 1974, no writ). Alternatively, the court may direct that a receiver be appointed to sell the property at private or public sale. Any party to the suit may bid on the property along with other members of the public. The proceeds of the sale are returned to the court for distribution as described in the judgment.

Damages and Costs

Although a partition action does not generally contemplate monetary damages (except in the event of waste to the property), auxiliary relief such as an accounting for rents and profits may be requested. Contribution and reimbursement issues may also arise as to taxes paid, improvements made, and expenses incurred in connection with the property.

Costs in a partition action are paid by each party pro rata according to the value of that party’s partitioned share. However, the considerable expense and delay involved in meeting the procedural and substantive requirements of a partition suit are a powerful incentive for the parties to settle. If a receiver is appointed, the cost (paid for by the sales proceeds) can be substantial, even disastrous. A surveyor and appraisers are often employed as well. Additionally, since sheriff sales do not as a rule obtain the best possible price for real property, the parties should carefully consider the advisability of reaching a settlement that avoids court involvement and provides for private sale of the property at the best available price.

Caveat for Partition of Heirship Property

Texas adheres to the Uniform Partition of Heirs’ Property Act which makes partition among heirs a special case not subject to the ordinary rules. If at least 20% of the aggregate interest in property is held by persons related to one another, then Property Code Section 23A.003 et seq. will govern any attempt to force a sale. The law was designed to avoid loss of family property and homestead wealth among poor and minority communities who have been historically less likely to execute wills or do estate planning. The result could be numerous heirs holding ownership in widely varying percentages, only some of whom might live on the property. Others might be difficult or impossible to locate. Investors would take advantage of this situation by acquiring a small ownership stake and then asking a court to force a partition, resulting in a sheriff sale at a price that was usually well below market.

The UPHPA provides an opportunity for heirs to be able to buy out the interest of the cotenant who is attempting to force the sale. If this approach fails, a court may evaluate the circumstances surrounding the property and who resides there in light of relevant sentimental, cultural, and historical factors—and then determine whether partition in kind or partition by sale is the appropriate remedy. If a sale is eventually ordered, the property must be listed with a real estate broker for its fair value, rather than going to a sheriff’s sale which usually results in a fire-sale price. As a result, investors pursuing forced partition of heirship property as an investment strategy now have more hoops through which to jump and are more likely to wind up paying a sum that is closer to the property’s true market value.

Forced Sale Among Heirs for Payment of Texas

A related statute (Prop. Code 29.001 et seq.) allows an heir who has been paying taxes on heirship property (when the other heirs have not) to force a sale so long as the heir seeking the sale has paid taxes for at least three years in a five-year period, and has done so after demand on the other heirs and without reimbursement.

DISCLAIMER

Information in this article is provided for general informational and educational purposes only and is not offered as legal advice upon which anyone may rely. The law changes. Legal counsel relating to your individual needs and circumstances is advisable before taking any action that has legal consequences. Consult your tax advisor as well. This firm does not represent you unless and until it is expressly retained in writing to do so.

Copyright © 2022 by David J. Willis. All rights reserved worldwide. David J. Willis is board certified in both residential and commercial real estate law by the Texas Board of Legal Specialization. More information is available at his web site, http://www.LoneStarLandLaw.com.