Partition of Heir Property by S. Craig Panter

Heir Property

Partition of Heir Property

Effective July 1, 2020, Mississippi adopted the Uniform Partition of Heir Property Act (the “Act”). The effect of the Act is to give a court (and parties appearing before the court) very specific guidelines for having property partitioned.

There are two types of partition – – by sale and in kind. Partition by sale means the land is sold and the proceeds divided among the owners.

Partition in kind results in the land being divided into smaller parcels and given to each owner in accordance with his or her interest.

The Act has many provisions, and discussing them all is beyond the scope of this blog post. Instead, I will address some of the more significant ones.

Definition of Heir Property.

“Heir property” means real property held in tenancy in common and that meets all of the following requirements:

(A) There is no agreement in a record binding all the cotenants that governs the partition of the property;

(B) One or more of the cotenants acquired title from a relative, whether living or deceased; and

(C) Any of the following applies:

(i) 20% or more of the interests are held by cotenants who are relatives;

(ii) 20% or more of the interests are held by an individual who acquired title from a relative,   whether living or deceased; or

(iii) 20% or more of the cotenants are relatives.

Thus, land can be “heir property” even if all of the cotenants are not related.

The effect of one or more cotenants filing a partition action.

If a cotenant files a partition action, the court must first determine if the property is “heir property” under the Act.

If it is, the court must partition the land unless all of the cotenants otherwise agree in a record.

Valuation.

The next step is for the court to determine the fair market value of the land. It can do so in several ways.

First, if all cotenants agree to either a specific value (or a method of valuation), the court must use that value.

Second, if all cotenants do not agree, the court will order an appraisal from a disinterested real estate appraiser. There is a detailed description in the Act as to how the appraisal will be used by the court.

Third, if the court determines that the evidentiary value of an appraisal is outweighed by the cost of the appraisal, the court, after an evidentiary hearing, shall determine the fair market value of the property and send notice to the parties of the value.

Buying out another cotenant.

If any cotenant(s) requested partition by sale, then after the determination of valuation, any cotenant (except a cotenant that requested partition by sale) may buy the interest of the cotenant(s) who requested partition by sale.

There is a very detailed method of purchase set forth in the Act.

What happens if the other cotenants do not purchase all of the interests of cotenants who requested partition by sale?

If the interests of all cotenants that requested partition by sale are not purchased by other cotenants, or if after conclusion of the buyout, a cotenant remains who has requested partition in kind, the court shall order partition in kind unless the court, after consideration of multiple factors listed in the Act, finds that partition in kind will result in manifest prejudice to the cotenants as a group.

What if the court orders a sale?

If the court orders a sale of heir property, the sale must be an open-market sale unless the court finds that a sale by sealed bids or an auction would be more economically advantageous and in the best interest of the cotenants as a group.

If the court orders an open-market sale, the parties may agree on a real estate broker to offer the property for sale. If they do, the court will appoint the broker and establish a reasonable commission.

If the parties do not agree on a broker, the court will appoint a disinterested real estate broker and will establish a reasonable commission.

The broker must offer the property for sale in a commercially reasonable manner at a price no lower than the determination of value and on the terms and conditions established by the court.

What about Miss. Code Ann. Sections 11-21-1, et seq.?

Those statutes previously governed partition actions, and they still remain in effect and are supplemented by the new Act.

But, if the new Act and the older statutes are in conflict, the new Act controls.

Panter Law Firm, PLLC, 7736 Old Canton Road, Suite B, Madison, MS 39110

601-607-3156

www.craigpanterlaw.com