Monday, May 6, 2013
Montana has become the third state to enact the Uniform Partition of Heirs' Property Act (the others are Nevada and Georgia)."Heirs' property" typically refers to land passed down through generations without a will and owned by descendants as tenants in common. The trouble with these arrangements is that anyone who purchases even the smallest fractional interest from one owner can file a partition action with a court and force a sale of the property. These sales often happen against the explicit wishes of many of the family members who have ownership shares in the property. Family members may end up forced off land where they have lived for generations and, all too often, the mandated sales fail to secure fair market value for the property.
The Uniform Partition of Heirs’ Property Act seeks to create a number of protections for owners of heirs’ property. Under the Act, "the court appoints a disinterested real estate appraiser to assess the fair market value of the property, unless all the cotenants agree to a different valuation method, agree on the value of the property, or the court determines that the cost of the appraisal will outweigh its evidentiary value. The Act provides the procedural timeline for determining the fair market value. After the court determines the value of the property, the Act provides all of the cotenants who did not request partition by sale with a right to buy out all of the interests of those who have done so, at a price equal to the court-determined value of the property multiplied by the fractional interest of the cotenant that is bought out. If the buy-out does not resolve the matter, the Act provides courts with a clear set of protocols and considerations for determining whether and how to proceed with partition in kind or by sale for this important subset of property."
A warm congratulations to property professor Thomas Mitchell of the University of Wisconsin Law School, who served as primary drafter of the act.