Daily Development for
Tuesday, November 18, 1997
by: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law
CONCURRENT OWNERSHIP; PARTITION: Unless great prejudice is shown, a partition in kind of jointly owned property is favored by the law as opposed to a sale of property and subsequent division of proceeds.
Eli v. Eli, 557 N.W.2d 405 (S.D. 1997).
Two of three co-tenants desired to sell jointly owned property. They demonstrated that the land would sell for 10% to 20% less if sold in parcels rather than sold as a unit. The property otherwise consisted of basically fungible acreage - one part no more or less valuable than any other part. One cotenant wanted to preserve possession of a one third physical portion, and opposed sale. The trial court ordered the sale of the whole property instead of preserving the one-third undivided interest of the party seeking to maintain ownership of her parcel.
On appeal: held: Reversed. The Supreme Court recognized the statutory right to sell the whole of any subject property in a partition suit or a part thereof. The test for determining the appropriateness of a sale requires that the party seeking the sale establish that a partition in kind would greatly prejudice his or her interest.
But the court noted that judicial analysis was not limited to financial issues but encompassed a number of appropriate considerations.
"[M]onetary considerations, while admittedly significant, do not rsie to the level of excluding all other appropriate considerations. [The statutes] speak of 'great prjudice, not 'great financial prejudice.'
The considerations explicitly adopted by the court included ownership of agricultural lands by family members, the financial ability of the parties to repurchase the land through the sale, the location and size of the property, the use of the property before and after the sale and the sentimental value attached to the property. The court also recognized the equitable option of "owelty" as consideration in offsetting some financial concerns raised by dividing parcels prior to sale. Under this device, the court could order the party retaining a physical one third portion to pay to the others cash to offset their loss from the sale in small parcels.
Here, the party seeking to retain physical possession was interested in keeping land in the family basically for sentimental reasons. She was willing to be flexible as to which land she received, and was willing to provide access easements to the other parcel to be sold. She even expressed a willingness to pay "owelty." After adopting these factors and reinforcing the preference for a partition in kind the Supreme Court reversed and remanded.
Reporter's Comment: Although the court explicitly refers to some considerations by footnote, supplementing them with factors outlined by other jurisdictions, the tone of the opinion indicates that the list is nonexclusive. The court also supports its holding with policy arguments against forced sale being offensive to an individual owners will and expectations regarding inheritance. The court's to to support from numerous jurisdictions suggests that the common law preference for physical partition still remains strong.
Editor's Comment: Part of the privilege of owning land is the right to determine when and how to sell it. The editor concurs in the view that courts should not intervene to replace a bargaining process among the parties except in the most egregious cases. If the physical partition preference is clear, and parties bargain against that background, then in most cases some compromise will be reached without judicial intervention.
Also see: Cain v. Christie, 937 P.2d 119 (Okla. Ct. App. 1997) (case also indicates a predisposition to physical partition, but the facts were much more favorable for that result than in the instant case - preservation of an Indian burial ground.)
Items in the Daily Development section generally are extracted from the Quarterly Report on Developments in Real Estate Law, published by the ABA Section on Real Property, Probate & Trust Law. Subscriptions to the Quarterly Report are available to Section members only. The cost is nominal. For the last six years, these Reports have been collated, updated, indexed and bound into an Annual Survey of Developments in Real Estate Law, volumes 1-6, published by the ABA Press. The Annual Survey volumes are available for sale to the public. For the Report or the Survey, contact Stacy Walter at the ABA. (312) 988 5260 or firstname.lastname@example.org
Items reported here and in the ABA publications are for general information purposes only and should not be relied upon in the course of representation or in the forming of decisions in legal matters. Accuracy of data and opinions expressed are the sole responsibility of the DIRT editor and are in no sense the publication of the ABA.