Partition

Nature of Partition

Co-owners may agree to divide the property between them by way of partition.  Partition involves a physical division/apportionment of the property, between the co-owners so that each is the full owner of a part only.  Joint tenants and tenants in common may partition by agreement.

The principle applies to any estate whether a freehold estate, a long or a short lease.  A lease may require the consent of the landlord, which may preclude partition.

A partition may extend to easements and so-called incorporeal hereditaments.  Dividing the dominant tenement will generally divide the benefit of easements, provided that they attached to the whole.  Certain types of easements and incorporeal hereditaments cannot be divided. Certain profits, fishing and riparian rights may not be divided, when held in common.  Parties may circumvent this principle, by agreeing to divide the shares or the periods of occupation between them.

Upon a partition of land, owners may wish to reserve mutual easements over access ways and services,  so that each piece of land is sustainable by itself.  A third-party may be appointed to undertake a fair partition. An unbiased method of the division is thought to be where the person who seeks the subdivision, chooses his part last.

Agreement to Sell

Co-owners may realise the value of their land by sale by mutual agreement.  Where there is disagreement or another contentious matter, a mechanism may be agreed for realising the maximum value and distribution of the sale price.  A single solicitor might be appointed with joint carriage of sale.

In the event of not all co-owners agree to a sale or partition, any owner may apply to the court for an order for partition or sale. The Partition Acts deal with the forced partition of property held by co-owners.

The Land and Conveyancing Law Reform Act provides that a conveyance or a contract to divide land by a single owner is void, at law and equity.  It is necessary to apply to the court to dispense with consent.  After the legislation, the registration of a judgment mortgage against a joint owner does not sever the joint tenancy.

A judgment mortgage is extinguished on the death of the judgment debtor.  However, the holder of the judgment mortgage may apply to the court for partition and sale.

Court Order

Any person having an estate or interest in land which is co-owned, whether at law or in equity may apply to court for an order.  The order may be for

• partition;
• sale;
• for taking an account of encumbrances affecting the land;
• making inquiries in relation to encumbrances affecting the land;
• directing adjustments and accounts between owners;
• dispensing with consent to severance of a joint tenancy where such consent is unreasonably withheld; or
• such other order which may be just and equitable.

The order may be made, with or without conditions.  The application may be refused or dismissed. One order may be granted in place of that the subject of the application.  A combination of orders may be granted.

A person having an interest in land, for this purpose,  includes an owner,  mortgagee,  secured creditor, judgment mortgagee or a trustee. A person with an equitable interest in the property may apply to the court.

At common law and under the older Partition Acts, persons entitled in remainder or reversion were not entitled to apply for partition.  The courts did not wish to permit the partition jurisdiction to be used to destroy settlements.

An accounting adjustment includes

• payments for occupation by one co-owner, to the exclusion of another;
• compensation where one person has incurred disproportionate expenditure in respect of the land;
• contribution towards outgoings including rates and service charges;
• redistribution of profits and rents; or
• any other adjustment as may necessary to achieve fairness.

Older Exceptions

Under the older legislation, there were a public interest exceptions to partition.  A castle for the defence of the realm could not be partitioned.  It has been suggested that in modern form, this principle would not prevent an for partition in breach of planning legislation and building.

The courts did not order partition if we would override the terms of a trust.  This principle applies where the property is vested in trust without a power of sale.  However, under a trust for land, post-2009, the trustees of land have a statutory power of sale.

Beneficiaries could apply for partition or sale if trustees had a mere power of sale.  This is in contrast to the position where the settlor directs the property be managed and vested in a particular manner.  A court order may be made where the settlor has provided for a means of distributing the property, but the trustees may otherwise postpone sale in frustration of this intention.

Agreements

Co-owners may enter co-ownership or partnership agreement.  Traditionally, it was held that co-ownership agreements could displace the statutory power to order partition and sale.  It appears that co-owners may be precluded by contract or estoppel from exercising the right to apply for partition, sale etc.

However, there are different opinions as to the extent to which joint owners and co-owners may permanently agree not to sell their interest in the property.  It has been suggested that co-owners cannot contract out of a Partition Act for all purposes.

Co-ownership agreements may provide for rights of pre-emption on the part of co-owners, in the event of a prospective sale.  The courts may interpret apply such agreements narrowly.  It appears, on balance, that the Irish courts are likely to uphold these clauses. Otherwise, a partition action would circumvent the contract.

Application for Partition

The respective shares of the co-owning parties must be ascertained.  Accordingly, where there are prospective future owners under a trust or an undisclosed class of future persons, a partition may not be ordered.

In considering an application for partition, the courts consider whether there is an appropriate basis for application on the above criteria.  In the context of separation agreement and arrangements, the courts have been willing to find that the non-residing party is estopped from seeking partition, by an implied agreement to this effect.

The parties to a partition action should be the persons interested in the land.  In some cases,  all potentially interested parties need to be joined, but may instead, be given notice. The court may require that persons who appear to be interested, actually or presumptively, be given notice.

A court may not order partition if it would prejudice third parties rights over the entire property.  This may include for example, the rights of a mortgagor or mortgagee.  The effect of partition might be to prejudice the mortgagee’s choice of the appropriate time of sale, where for example, the property is in negative equity.

Where a property is tenanted, the partition of the freehold interest may be refused where it would require the tenant to pay portions of the rent to a different party.

An action for sale may be sought by an owner, no matter how small his interest.

Sale and Relevant Considerations I

Traditionally the courts would order a sale and a distribution of the proceeds, if it would be more beneficial to the parties, than a partition or division.  This will depend on the nature of the property, the number of persons interested, the presence or absence of disability on their part and other relevant circumstances.

The courts look at the matter objectively. The matter tends to be looked at from a financial perspective.  A sale may be ordered if the sale value is higher than the rental value.  It may be ordered where the sale of the entire would yield a higher price, than the sale of the partitioned part.

Where commercial property is involved, the courts will consider the commercial interests of the party.  The mere fact that a party’s commercial interests are affected prejudicially, does not necessarily preclude an order for sale.

Personal and family matters and circumstances may be taken into account. However the fact that one party having a right of residence will not preclude a sale.  The measure may be taken into account and account may be taken in the division of proceeds.

Sale and Relevant Considerations II

Formerly, the right to a sale required the applicants have at least one-half interest in the property.  The one half could be made up by a number of persons applying collectively.  This required that the persons show that their interests would achieve one half of the value of the land.

The courts would order a sale, if the application was made by one half or more of the owners collectively, in the absence of a good reason to the contrary.  This gives considerable discretion to the court.  It was thought to create a high hurdle to partition and sale.

The fact that the sale would cause personal or significant inconvenience will not necessarily be sufficient reason for refusing it.  It may be ordered even if it would force one party to relocate its business or residence.

The fact that the applicant is motivated by commercial reasons or simply wants to realise his investment, is not necessarily a sufficient ground to preclude a sale. The fact that a sale would produce a monetary loss of itself, does not prevent an order for partition and sale, where the court is otherwise minded to require a sale.

It appears on balance that the possibility of making a feasible partition is not a good reason of itself.  It may however be part of circumstances constituting a good reason to the contrary.

Courts rarely refuse sale under the above provisions.  Refusals of consent are referable to particular circumstances and conditions.  In some cases, the absence of good faith is relevant. The courts have refused consent where the plaintiff is acting spitefully or vexatiously. However, merely acting to realise one’ investment, would not amount to this.

Sale and Relevant Considerations III

Under the old legislation, a sale might be resisted if there are exceptional circumstances for refusing sale and there was no difficulty in making a partition order.  In modern cases, the courts have been willing to consider family circumstances to a greater extent, than previously.  A sale which disrupts matrimonial property or children is less likely to be granted.

The older legislation allowed for the possibility of an order for sale unless one party undertook to purchase the share of the party requesting the sale. It might direct the sale in the alternative.  For such purpose, the court might order a valuation of the share of the person requesting sale.  It appears that the party requesting sale need not necessarily accept the valuation.

If he does not choose the valuation, he may not be forced to do so but may be given a common law right to partition.  This provision could be invoked by any co-owner, including one owning less than 50%.  Where a person accepts the undertaking to purchase, the court may order a valuation and make necessary directions.

The Partition Act allowed any party to bid at the sale subject to permission of the courts.

The effect of the Partition Acts has been to make a sale the most common remedy, in the case of a dispute the parties wish to force a sale. Sale or partition may be requested in the alternative.