When someone passes away, it is common for that person to leave property to children to co-own. However, what happens when one of the children wants to sell his or her ownership interest? Partition is a possible outcome.
Partition is a process that allows co-owners of property to separate their interests. When co-owners cannot agree to a specific division of property interests, one co-owner can file a court action for a compulsory partition.
When a partition action is filed with the court, there are typically two possible outcomes:
(1) the property is sold, with the sale proceeds divided among the co-owners—“partition by sale”;
(2) the property is divided into separate pieces for each co-owner—“partition in kind."
In Iowa, the default outcome is partition by sale, because this is typically the most efficient and accurate way to ensure that each co-owner receives his/her/its proportionate ownership interest in the property. However, a co-owner can request a partition in kind, but that co-owner must show that the partition in kind can be accomplished in a manner that is equitable and practicable. Initially, this may not appear like a substantial hurdle to jump over, but in reality, it is.
Iowa Supreme Court RulingIn 2016, the Iowa Supreme Court ruled on a case with the following fact pattern. Two siblings inherited two parcels of farm ground. Parcel 1 was 315 acres and where the siblings were raised. Parcel 2 was 163 acres. Sibling A filed a partition action. Sibling B requested a partition in kind. Sibling B made the following proposals to accomplish the partition in kind in an equitable and practicable manner: (1) Sibling B receives Parcel 2 and a portion of Parcel 1; Sibling A receives the remainder of Parcel 1; (2) sell a portion of Parcel 1 with Sibling B receiving the proceeds and Parcel 2, and Sibling A receiving the remainder of Parcel 1; or (3) Sibling B receives Parcel 1; Sibling A receives Parcel 2; and Sibling B makes an equalizing payment to Sibling A.
The court ordered a partition by sale, finding that dividing Parcel 1 would reduce the overall value of Parcel 1, and partition in kind should not occur when it cannot be done in a manner that is in the best interests of all the co-owners. Regarding the third proposal, the court would not decide which sibling should receive Parcel 1, because both siblings had emotional connections to Parcel 1.
If you co-own property or own property that will go to multiple parties upon your death, and you are concerned with the possibility of partition, consider seeking legal advice to explore possible options.
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