Did you inherit a Michigan property and seek a partition action?
Not to worry, you’re not alone. Whether you want to get rid of it for any reason or prefer to keep the property, this asset-splitting process is inevitable for all interested parties. So, you should be prepared, and what better way than to understand the process and types of partition action.
Without further ado, we’ll get into what it means, situations where it occurs, and different types you’ll encounter.
What is A Partition Action
A partition action is a legal proceeding to divide property amongst a duo or more owners. It is common when it’s an inherited property or one acquired through probate.
Regardless of the property’s acquisition mode, partitioning involves splitting real estate either physically in parcels or through sales proceeds.
However, only sure owners can rightfully call for a partition action in Michigan and in the right situation. For instance, couples with joint real estate ownership may only split their property through divorce settlements. Also, if you’re a partner in an LLC business, you can’t file for a partition action out of the blue.
Types of Ownership That Warrant Partition Action
The following are ownership types where you can call for a partition action. In some partnerships, you have the right to call splits whenever you please, while a divorce could also trigger one.
Joint tenancy, a.k.a rights of survivorship, is when you and other people share equal rights to a property. If your partner dies, you’ll receive half of the property without probate — validating a will. However, courts can transfer all of it to heirs if they fail.
Indeed, a partnership such as joint tenancy by right of survivorship requires clarity to all parties. As a result, courts require precise wording in documents used to create a joint tenancy title. The icing on the cake is boldly written atop the page reading ” Tenancy by Survivorship.”
That said, it’s your right as a joint tenant to file partition action. You can decide to call things split for personal reasons or without conflict with your partner(s).
Tenancy by Entirety
I call this the ownership for lovebirds.
Only two owners exist in a tenancy by the entirety, and they must be married couples. With such an arrangement, you can’t split the property until you’re lawfully separated from your spouse.
And like a joint tenancy, if your co-tenant dies, their share is automatically transferred to you, the surviving spouse.
Be that as it may, calling a partition action in a tenancy by entirety has a divorce trigger clause. However, if it comes to this, the tenancy of entirety becomes a tenancy in common. In other words, each spouse receives only their share of the property.
Tenancy in Common
Like a joint tenancy, an estate with tenancy in common is owned by two or more individuals. But they are different, perhaps solar opposites.
If one of the owners dies, the property passes on to the deceased’s heirs while the surviving owners keep their share. A tenancy in common doesn’t transfer to two or more married people or in a joint tenancy.
Let’s use this an example:
Say, your father, Spencer, owns a property with three of your uncles, Jack, Jon, and Jesse, as tenants in common. If he dies, his 1/4 share of the property becomes yours without probate, and your uncles will keep their share. So, if anything happens, their share goes to your cousins or your uncle’s respective heirs.
Tenancy in Severalty
This last ownership type isn’t exactly a partnership. Essentially, you’re the sole owner of a property with tenancy in severalty.
If you die, your property is transferred according to your wishes — if you wrote a will or trust— or the state’s laws. It’s also possible to convert your ownership into a joint tenancy or tenancy in common by deeding the property to yourself and the other guy.
Types of Partition Action
Courts settle property disputes using the suitable partition action for the case. Here are the three possible types of partition you can encounter.
Partition by Appraisal
A case involving a small property that can’t be split almost always ends up being sold. In a partition by appraisal, one party buys the other party’s interest at the value of a court-ordered appraisal.
Alternatively, a partition by appraisal occurs when a co-owner is bent on retaining a property. So they agree to buy out the other party’s share, using the valuation from an independent appraiser. Again, it’s cheaper and faster than the first option, an open market sale.
Here’s a real-life example:
After several years of jointly owning a cottage on Saint Joseph River, Rudy Silch Jr filed for a partition against John Rogers. The old cottage had been in the family since 1960 when John’s father built it with some help from Rudy Snr — and its ownership has since been passed around in the family.
Anyhow, the trial court ordered the sale of the property, then Rudy bought the cottage at the auction. And then John received seventy-five percent of the proceeds, minus attorney commissioner expenses and other expenses. You can tell Mr. John wasn’t happy, but that case isn’t useful here.
The point is that the co-owner who prefers to keep the property can buy during this period. In the absence of a bid, the property is sold and the proceeds divided fairly amongst owners.
Partition by Judgement
This type of partition action forces the sale of a property despite the unwillingness of a co-owner(s).
A partner is entitled to partition their share of a property and force a sale for its realization at any time.
It may seem unfair, but it’s the law. Imagine partners in a multimillion-dollar investment (without waivers) who think it’s wise to hold on to a property, but one thinks it’s time to back out. Sadly, the latter can force a sale of the property.
In the real-life case of Ballard vs Wilson, a trio who bought a two-family building transferred the deed to new owners after five years. Unfortunately, the new owners decided they couldn’t live under the same roof. And then submitted a bill wanting the court to divide the property and share it according to their rights and interests. In the end, the court sold the property in a public action because the actual division wasn’t possible.
Partition by Kind (Physical Division)
Partition in kind splits the property into parcels between the owners.
All things equal, a partition in kind is the go-to unless the parties agree otherwise. This method of partition is, in a way, medieval. And since it involves dividing land into parcels, it won’t work unless the property in dispute is an undeveloped land — no buildings.
Winning A Partition Action
Winning a partition action isn’t one-way traffic. It depends on your goal and quickly seeking expert help from a bright legal practitioner. I’m a DIY person, but I’ll never advise you to file a partition yourself. If all things go to plan, your trust litigation attorney might settle the case with counsel, saving you the cost and time of a court trial.
Nonetheless, ensure you negotiate with your co-owner to exhaustion before considering partition action.