The Uniform Partition of Heirs Property Act (UPHPA) is a uniform statute that facilitates the preservation of real property within a family after the death of the property holder. This Act was drafted and recommended for enactment in all states by the National Conference of Commissioners on Uniform State Laws. At this time, only nine states have enacted it, and Arizona is not one of them. UPHPA provides that if a landowner dies without a will, the property is passed on to the heirs as tenants-in-common under state law. When property is owned as tenants-in-common, any one tenant can compel a partition of the land through a court-ordered sale. In order to prevent the unwanted divestment of inherited property, UPHPA provides a series of protections and procedures for those who inherit property in this manner.
The Problem with Co-Tenancy
UPHPA arose to address the various issues that present challenges to individuals who inherit property as co-tenants, which is the default ownership structure for two or more individuals who inherit property from a family member. In a tenancy in common, two or more co-tenants own an undivided interest in the property. Any tenant can sell or give away his interest without receiving permission from his fellow tenants. Moreover, any co-tenant has the right to file a suit to partition the property regardless of when the party seeking partition acquired the interest or the relative size of that interest. In a partition action, the court may order a partition in kind (which divides the property into separate lots proportionate in value to each tenant’s interest) or a partition by sale (which mandates a forcible sale of the whole property with proceeds divided proportionately among the co-tenants). Although a partition by sale is regarded as an extraordinary remedy, some states enforce partition by sales. This divests property owners of their land without their consent and against their will. The negative effects of the involuntary loss of property disproportionally affects lower to middle income property holders who tend to inherit property as tenants in common.
The Effect of UPHPA on Property Disputes
Under UPHPA, the real property inherited from a relative is protected when a co-tenant files an action for partition (assuming no other written agreement exists) through a number of due process requirements. First, notice must be given to all co-tenants of the intended partition. Second, the court conducts an appraisal to determine the value of the land as a whole. One co-tenant may then purchase the interests of another co-tenant requesting partition in an amount equivalent to the share of the property. The co-tenants may utilize their right of first refusal within 45 days, and if exercised, they have another 60 days to obtain financing. If none of the co-tenants choose to buy the share of land from the moving co-tenant, the court is required to order a partition in kind unless doing so would cause great harm to the other co-tenants in the opinion of the court. If the court opts to order a partition by sale, the property must be offered at a fair market price as determined by the court. These procedures are intended to protect the rights of the prospective seller to convey the property and those of the co-tenants to avoid an involuntary sale of the property.
Chernoff Law handles business and real estate litigation matters throughout Arizona. Contact us by calling 480-719-7307 to discuss your legal matter.