A partition action is a legal process by which co-owners of property (typically tenants in common or joint tenants) can divide or sell the property when they no longer wish to jointly own it. This action is often used when co-owners cannot agree on how to manage or sell the property. In Florida, as in many other states, partition actions are governed by statutory law.
How Partition Actions Work
1. Filing the Complaint: One or more co-owners can initiate a partition action by filing a lawsuit in court, requesting that the court either physically divide the property (partition in kind) or, if that is not feasible, order the sale of the entire property (partition by sale). Partition by sale is more common, especially when the property cannot easily be divided without losing value.
a. Physical Partition (Partition in Kind): If the property is large enough or divisible (like farmland), the court may decide to divide the property among the co-owners. Each owner would then receive a portion of the land equivalent to their share. However, this option is not always practical, especially for residential or urban properties.
b. Forced Sale (Partition by Sale): In most cases, particularly when the property cannot be divided fairly or practically, the court will order a sale of the property. The sale is usually conducted through an auction, and the proceeds are divided among the co-owners according to their ownership interests.
2. Fair Division of Proceeds: After the sale, any expenses (e.g., court fees, costs associated with maintaining the property) are deducted, and the remaining proceeds are distributed to the co-owners based on their fractional interests in the property.
Florida’s Uniform Partition of Heirs Property Act (UPHPA) and its Impact on Partition Actions
Before enacting the Uniform Partition of Heirs Property Act (UPHPA) in Florida, real estate investors could exploit partition actions to acquire entire properties at below-market prices. By purchasing a small share from one heir, an investor could force a partition sale, leading to a loss of family property that had been passed down for generations.
Under the UPHPA, partition actions involving heirs’ property (family-owned property passed down without a will) now have additional protections:
A. Notice and Appraisal: Co-owners must be notified of a proposed sale and have the property appraised at fair market value.
B. Right of First Refusal: The remaining heirs have the opportunity to buy out the interest of the co-owner seeking the sale at the appraised value.
C. Court-Supervised Sale: If a sale is unavoidable, it must be conducted under court supervision, ensuring the property sells at a reasonable market price.
These protections are designed to prevent speculators from forcing sales that harm families who inherit property.
Example of a Partition Action Let’s assume an investor buys a 10% interest in a property from one of several heirs. Without the protections of the UPHPA, the investor could file a partition action, forcing the sale of the entire property, potentially at a price below its actual market value, especially if sold at auction. However, under the UPHPA, the other heirs would first be given the chance to buy out the investor’s 10% share at a fair market price. If the heirs cannot afford to buy out the investor, the property would be sold through a court-supervised process, ensuring the best possible sale price for the entire property. The UPHPA helps prevent heirs from losing inherited property to predatory investors, thus preserving family wealth and property rights.
If you’re a real estate investor thinking of buying partial interests in real estate as a part of your profit strategy, we advise that you can do so inside of a Florida land trust to keep your or your company’s name out of the public Official Records and the pleadings in the partition action.
Joseph E. Seagle, Esq.
Aspire Legal Solutions PLLC
1901 W Colonial Drive, Orlando, FL 32804
www.aspirelegal.com
