Bill Text: TX SB499 | 2017-2018 | 85th Legislature | Enrolled

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Bill Title: Relating to the adoption of the Uniform Partition of Heirs' Property Act.

Spectrum: Bipartisan Bill

Status: (Passed) 2017-05-29 - Effective on 9/1/17 [SB499 Detail]

Download: Texas-2017-SB499-Enrolled.html

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S.B. No. 499

AN ACT
relating to the adoption of the Uniform Partition of Heirs'
Property Act.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Title 4, Property Code, is amended by adding
Chapter 23A to read as follows:
CHAPTER 23A. UNIFORM PARTITION OF HEIRS' PROPERTY ACT
Sec. 23A.001. SHORT TITLE. This chapter may be cited as the
Uniform Partition of Heirs' Property Act.
Sec. 23A.002. DEFINITIONS. In this chapter:
(1) "Ascendant" means an individual who precedes
another individual in lineage, in the direct line of ascent from the
other individual.
(2) "Collateral" means an individual who is related to
another individual under the law of intestate succession of this
state but who is not the other individual's ascendant or
descendant.
(3) "Descendant" means an individual who follows
another individual in lineage, in the direct line of descent from
the other individual.
(4) "Determination of value" means a court order
determining the fair market value of heirs' property under Section
23A.006 or 23A.010 or adopting the valuation of the property agreed
to by all cotenants.
(5) "Heirs' property" means real property held in
tenancy in common that satisfies all of the following requirements
as of the filing of a partition action:
(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 percent or more of the interests are
held by cotenants who are relatives;
(ii) 20 percent or more of the interests are
held by an individual who acquired title from a relative, whether
living or deceased; or
(iii) 20 percent or more of the cotenants
are relatives.
(6) "Partition by sale" means a court-ordered sale of
the entire heirs' property, whether by open-market sale, sealed
bids, or auction conducted under Section 23A.010.
(7) "Partition in kind" means the division of heirs'
property into physically distinct and separately titled parcels.
(8) "Record" means information that is inscribed on a
tangible medium or that is stored in an electronic or other medium
and is retrievable in perceivable form.
(9) "Relative" means an ascendant, descendant, or
collateral or an individual otherwise related to another individual
by blood, marriage, adoption, or law of this state other than this
chapter.
Sec. 23A.003. APPLICABILITY; RELATION TO OTHER LAW.
(a) In an action to partition real property under Chapter 23, the
court shall determine whether the property is heirs' property. If
the court determines that the property is heirs' property, the
property must be partitioned under this chapter unless all of the
cotenants otherwise agree in a record.
(b) This chapter supplements Chapter 23 and the Texas Rules
of Civil Procedure governing partition of real property. If an
action is governed by this chapter, this chapter supersedes
provisions of Chapter 23 and the Texas Rules of Civil Procedure
governing partition of real property that are inconsistent with
this chapter.
Sec. 23A.004. SERVICE; NOTICE BY POSTING. (a) This
chapter does not limit or affect the method by which service of a
petition in a partition action may be made.
(b) If the plaintiff in a partition action seeks citation by
publication and the court determines that the property may be
heirs' property, the plaintiff, not later than the 10th day after
the date the determination is made, shall post, and maintain while
the action is pending, a conspicuous sign on the property that is
the subject of the action. The sign must state that the action has
commenced and identify the name and address of the court and the
common designation by which the property is known. The court may
require the plaintiff to publish on the sign the name of the
plaintiff and the known defendants.
Sec. 23A.005. COMMISSIONERS. If the court appoints
commissioners under Rule 761, Texas Rules of Civil Procedure, each
commissioner, in addition to the requirements and
disqualifications applicable to commissioners under that rule,
must be impartial and may not be a party to or a participant in the
action.
Sec. 23A.006. DETERMINATION OF VALUE. (a) Except as
provided by Subsection (b) or (c), if the court determines that the
property that is the subject of a partition action is heirs'
property, the court shall determine the fair market value of the
property by ordering an appraisal under Subsection (d).
(b) If all cotenants have agreed to the value of the
property or to another method of valuation, the court shall adopt
that value or the value produced by the agreed method of valuation.
(c) 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.
(d) If the court orders an appraisal, the court shall
appoint a disinterested real estate appraiser to determine the fair
market value of the property assuming sole ownership of the fee
simple estate. On completion of the appraisal, the appraiser shall
file a sworn or verified appraisal with the court.
(e) If an appraisal is conducted under Subsection (d), not
later than the 10th day after the date the appraisal is filed, the
court shall send notice to each party with a known address, stating:
(1) the appraised fair market value of the property;
(2) that the appraisal is available at the clerk's
office; and
(3) that a party may file with the court an objection
to the appraisal not later than the 30th day after the date notice
is sent, stating the grounds for the objection.
(f) If an appraisal is filed with the court under Subsection
(d), the court shall conduct a hearing to determine the fair market
value of the property not earlier than the 30th day after the date a
copy of the notice of the appraisal is sent to each party under
Subsection (e), whether or not an objection to the appraisal is
filed under Subsection (e)(3). In addition to the court-ordered
appraisal, the court may consider any other evidence of value
offered by a party.
(g) After a hearing under Subsection (f), but before
considering the merits of the partition action, the court shall
determine the fair market value of the property and send notice to
the parties of the value.
Sec. 23A.007. COTENANT BUYOUT. (a) If any cotenant
requested partition by sale, after the determination of value under
Section 23A.006, the court shall send notice to the parties that any
cotenant except a cotenant that requested partition by sale may buy
all the interests of the cotenants that requested partition by
sale.
(b) Not later than the 45th day after the date notice is sent
under Subsection (a), any cotenant except a cotenant that requested
partition by sale may give notice to the court that the cotenant
elects to buy all the interests of the cotenants that requested
partition by sale.
(c) The purchase price for each of the interests of a
cotenant that requested partition by sale is the value of the entire
parcel determined under Section 23A.006 multiplied by the
cotenant's fractional ownership of the entire parcel.
(d) After the period provided by Subsection (b) expires:
(1) if only one cotenant elects to buy all the
interests of the cotenants that requested partition by sale, the
court shall notify all the parties of that fact;
(2) if more than one cotenant elects to buy all the
interests of the cotenants that requested partition by sale, the
court shall:
(A) allocate the right to buy those interests
among the electing cotenants based on each electing cotenant's
existing fractional ownership of the entire parcel divided by the
total existing fractional ownership of all cotenants electing to
buy; and
(B) send notice to all the parties of that fact
and of the price to be paid by each electing cotenant; or
(3) if no cotenant elects to buy all the interests of
the cotenants that requested partition by sale, the court shall:
(A) send notice to all the parties of that fact;
and
(B) resolve the partition action under Section
23A.008(a) or (b).
(e) If the court sends notice to the parties under
Subsection (d)(1) or (2), the court shall set a date, not earlier
than the 60th day after the date notice was sent, by which an
electing cotenant must pay the cotenant's apportioned price into
the court. After that date:
(1) if all electing cotenants timely pay their
apportioned price into court, the court shall:
(A) issue an order reallocating all the interests
of the cotenants; and
(B) disburse the amounts held by the court to the
persons entitled to them;
(2) if no electing cotenant timely pays its
apportioned price, the court shall resolve the partition action
under Section 23A.008(a) or (b) as if the interests of the cotenants
that requested partition by sale were not purchased; or
(3) if one or more but not all of the electing
cotenants fail to pay their apportioned price on time, the court
shall give notice to the electing cotenants that paid their
apportioned price of the interest remaining and the price for all
that interest.
(f) Not later than the 20th day after the date the court
gives notice under Subsection (e)(3), any cotenant that paid may
elect to purchase all of the remaining interest by paying the entire
price into the court. After that period expires:
(1) if only one cotenant pays the entire price for the
remaining interest, the court shall:
(A) issue an order reallocating the remaining
interest to that cotenant;
(B) promptly issue an order reallocating the
interests of all of the cotenants; and
(C) disburse the amounts held by the court to the
persons entitled to the amounts;
(2) if no cotenant pays the entire price for the
remaining interest, the court shall resolve the partition action
under Section 23A.008(a) or (b) as if the interests of the cotenants
that requested partition by sale were not purchased; or
(3) if more than one cotenant pays the entire price for
the remaining interest, the court shall:
(A) reapportion the remaining interest among
those paying cotenants, based on each paying cotenant's original
fractional ownership of the entire parcel divided by the total
original fractional ownership of all cotenants that paid the entire
price for the remaining interest;
(B) promptly issue an order reallocating all of
the cotenants' interests;
(C) disburse the amounts held by the court to the
persons entitled to the amounts; and
(D) promptly refund any excess payment held by
the court.
(g) Not later than the 45th day after the date the court
sends notice to the parties under Subsection (a), any cotenant
entitled to buy an interest under this section may request the court
to authorize the sale as part of the pending action of the interests
of cotenants named as defendants and served with the complaint but
that did not appear in the action.
(h) If the court receives a timely request under Subsection
(g), the court, after hearing, may deny the request or authorize the
requested additional sale on such terms as the court determines are
fair and reasonable, subject to the following limitations:
(1) a sale authorized under this subsection may occur
only after the purchase prices for all interests subject to sale
under Subsections (a) through (f) have been paid into court and
those interests have been reallocated among the cotenants as
provided in those subsections; and
(2) the purchase price for the interest of a
nonappearing cotenant is based on the court's determination of
value under Section 23A.006.
Sec. 23A.008. PARTITION ALTERNATIVES. (a) If all the
interests of all cotenants that requested partition by sale are not
purchased by other cotenants under Section 23A.007, or if after
conclusion of the buyout under Section 23A.007 a cotenant remains
that has requested partition in kind, the court shall order
partition in kind unless the court, after consideration of the
factors listed in Section 23A.009, finds that partition in kind
will result in substantial prejudice to the cotenants as a group.
In considering whether to order partition in kind, the court shall
approve a request by two or more parties to have the requesting
parties' individual interests aggregated.
(b) If the court does not order partition in kind under
Subsection (a), the court shall order partition by sale under
Section 23A.010 or, if no cotenant requested partition by sale, the
court shall dismiss the action.
(c) If the court orders partition in kind under Subsection
(a), the court may require that one or more cotenants pay one or
more other cotenants amounts so that the payments, taken together
with the value of the in-kind distributions to the cotenants, will
make the partition in kind just and proportionate in value to the
fractional interests held.
(d) If the court orders partition in kind, the court shall
allocate to the cotenants that are unknown, unlocatable, or the
subject of a default judgment, if those cotenants' interests were
not bought out under Section 23A.007, a part of the property
representing the combined interests of those cotenants as
determined by the court, and that part of the property shall remain
undivided.
Sec. 23A.009. CONSIDERATIONS FOR PARTITION IN KIND.
(a) In determining under Section 23A.008(a) whether partition in
kind would result in substantial prejudice to the cotenants as a
group, the court shall consider the following:
(1) whether the heirs' property practicably can be
divided among the cotenants;
(2) whether partition in kind would apportion the
property in such a way that the aggregate fair market value of the
parcels resulting from the division would be materially less than
the value of the property if the property were sold as a whole,
taking into account the condition under which a court-ordered sale
likely would occur;
(3) evidence of the collective duration of ownership
or possession of the property by a cotenant and one or more
predecessors in title or predecessors in possession to the cotenant
who are or were relatives of the cotenant or each other;
(4) a cotenant's sentimental attachment to the
property, including any attachment arising because the property has
ancestral or other unique or special value to the cotenant;
(5) the lawful use being made of the property by a
cotenant and the degree to which the cotenant would be harmed if the
cotenant could not continue the same use of the property;
(6) the degree to which the cotenants have contributed
the cotenants' pro rata share of the property taxes, insurance, and
other expenses associated with maintaining ownership of the
property or have contributed to the physical improvement,
maintenance, or upkeep of the property; and
(7) any other relevant factor.
(b) The court may not consider any one factor under
Subsection (a) to be dispositive without weighing the totality of
all relevant factors and circumstances.
Sec. 23A.010. OPEN-MARKET SALE, SEALED BIDS, OR AUCTION.
(a) If the court orders a sale of heirs' property, the sale must be
an open-market sale unless the court finds that a sale by sealed
bids or at an auction would be more economically advantageous and in
the best interest of the cotenants as a group.
(b) If the court orders an open-market sale and the parties,
not later than the 10th day after the date the order is entered,
agree on a real estate broker to offer the property for sale, the
court shall appoint the broker and establish a reasonable
commission. If the parties do not agree on a broker, the court
shall appoint a disinterested real estate broker to offer the
property for sale and shall establish a reasonable commission. The
broker shall 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.
(c) If the broker appointed under Subsection (b) obtains
within a reasonable time an offer to purchase the property for at
least the determination of value:
(1) the broker shall comply with the reporting
requirements of Section 23A.011; and
(2) the sale may be completed in accordance with state
law other than this chapter.
(d) If the broker appointed under Subsection (b) does not
obtain within a reasonable time an offer to purchase the property
for at least the determination of value, the court, after hearing,
may:
(1) approve the highest outstanding offer, if any;
(2) redetermine the value of the property and order
that the property continue to be offered for an additional time; or
(3) order that the property be sold by sealed bids or
at an auction.
(e) If the court orders a sale by sealed bids or at an
auction, the court shall set terms and conditions of the sale. If
the court orders an auction, the auction must be conducted in the
manner provided by law for a sale made under execution.
(f) If a purchaser is entitled to a share of the proceeds of
the sale, the purchaser is entitled to a credit against the price in
an amount equal to the purchaser's share of the proceeds.
Sec. 23A.011. REPORT OF OPEN-MARKET SALE. (a) Unless
required to do so earlier by other law governing the partition of
real property, a broker appointed under Section 23A.010(b) to offer
heirs' property for open-market sale shall file a report with the
court not later than the seventh day after the date an offer is
received to purchase the property for at least the value determined
under Section 23A.006 or 23A.010.
(b) The report required by Subsection (a) must contain the
following information:
(1) a description of the property to be sold to each
buyer;
(2) the name of each buyer;
(3) the proposed purchase price;
(4) the terms and conditions of the proposed sale,
including the terms of any owner financing;
(5) the amounts to be paid to lienholders;
(6) a statement of contractual or other arrangements
or conditions of the broker's commission; and
(7) other material facts relevant to the sale.
Sec. 23A.012. UNIFORMITY OF APPLICATION AND CONSTRUCTION.
In applying and construing this chapter, consideration must be
given to the need to promote uniformity of the law with respect to
the subject matter of this chapter among states that enact a law
based on the uniform act on which this chapter is based.
Sec. 23A.013. RELATION TO ELECTRONIC SIGNATURES IN GLOBAL
AND NATIONAL COMMERCE ACT. This chapter modifies, limits, and
supersedes the Electronic Signatures in Global and National
Commerce Act (15 U.S.C. Section 7001 et seq.) but does not modify,
limit, or supersede Section 101(c) of that act (15 U.S.C. Section
7001(c)) or authorize electronic delivery of any of the notices
described in Section 103(b) of that act (15 U.S.C. Section
7003(b)).
SECTION 2. Chapter 23A, Property Code, as added by this Act,
applies only to a partition action commenced on or after the
effective date of this Act. A partition action commenced before the
effective date of this Act is governed by the law as it existed
immediately before the effective date of this Act, and that law is
continued in effect for that purpose.
SECTION 3. This Act takes effect September 1, 2017.
______________________________ ______________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 499 passed the Senate on
April 10, 2017, by the following vote: Yeas 31, Nays 0.
______________________________
Secretary of the Senate
I hereby certify that S.B. No. 499 passed the House on
May 19, 2017, by the following vote: Yeas 144, Nays 0, two
present not voting.
______________________________
Chief Clerk of the House
Approved:
______________________________
Date
______________________________
Governor