GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2009
H D
HOUSE DRH70138-MEz-40 (2/25)
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Short Title: Partition Sales/Buyout, Factors, Attny Fees. |
(Public) |
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Sponsors: |
Representative Bryant. |
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Referred to: |
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A BILL TO BE ENTITLED
AN ACT to provide a buyout option in the partition PROCEDURES whereby nonpetitioning existing owners may BUY OUT their co‑owners who seek the sale of the property, to change the current purely economic "substantial injury" test to determine when a court should order a partition sale into a multiple factor test that also considers noneconomic factors, and to prohibit the assessment of attorneys' fees in a partition sale against a co‑owner who opposes the partition sale.
The General Assembly of North Carolina enacts:
SECTION 1. Article 2 of Chapter 46 of the General Statutes is amended by adding a new section to read:
"§ 46‑22.1. Sale of cotenants' interest in lieu of sale of property.
(a) If the court determines the property cannot be partitioned in‑kind as provided in this Chapter, the court shall, prior to ordering a sale of the property described in the petition, or of any part, allow the nonpetitioning cotenants to purchase the petitioner's interest in the property (the 'buyout option'). The court shall explain the buyout option procedures to any cotenant who appears in person before the court without counsel.
(b) Within 15 days of the determination that the property cannot be divided in‑kind, a petitioner may, with permission of the court, withdraw as petitioner and become a nonpetitioning cotenant with the ability to purchase the interest of any petitioners. Likewise, a nonpetitioning cotenant who wishes to be bought out may, with permission of the court, become a petitioner. If no petitioner remains in the partition action 15 days after the court determines that the property cannot be partitioned in‑kind, then the proceeding shall be dismissed, and the petitioners who have withdrawn shall be liable for the costs of the action.
(c) A nonpetitioning cotenant who wishes to exercise the buyout option shall notify the court of the cotenant's intent no sooner than 15 days and no later than 30 days after the court has determined that the property cannot be partitioned in‑kind. A nonpetitioning cotenant may purchase an interest in the property as provided in this section even if a default judgment has been entered against the cotenant. If more than one nonpetitioning cotenant wishes to exercise the buyout option, each cotenant shall be entitled to purchase a portion of the available interest equal to the cotenant's existing percentage ownership divided by the total percentage ownership of all cotenants participating in the buyout.
(d) If the cotenants cannot agree on the price of the petitioner's interest, the value of the interest shall be determined by one or more competent and independent real estate appraisers approved and appointed by the court. A second appraiser shall be appointed if a second appraisal is requested by the cotenants and the court finds that a second appraisal is needed. The cost of any appraisals ordered pursuant to this section shall be taxed as part of the costs of court to all cotenants. Any of the cotenants may also submit an appraisal to the court from an appraiser not appointed by the court, but those cotenants shall pay the cost of that appraisal.
(e) An appraiser appointed under subsection (d) of this section shall file a written appraisal of the property to the court within 30 days of being appointed. If the court receives appraisals of different values, the court shall evaluate the appraisals and determine the weight to be given to each in determining the value of the interest subject to sale.
(f) If the petitioner objects to the value of the interest as determined by an appraiser, the petitioner shall file written notice of the objection with the court no later than 10 days after the filing of the appraiser's report and shall request a hearing on the value of the interest subject to sale. The court shall hold a hearing limited to determining the value of the interest subject to sale and, after hearing evidence as to the issue, shall enter an order stating the value.
(g) Upon a determination of the value of the interest as provided in this section, the nonpetitioning cotenants who have exercised the buyout option shall have 45 days to pay into the court the price set as the value of the interest. Upon payment of the price, the court shall order that the proper instruments transferring title in the interest be executed and delivered to the purchasing cotenants.
(h) If one or more but not all of the cotenants who exercised the buyout option under subsection (c) of this section fail to pay the price set as the value of the interest, the remaining cotenants who exercised the buyout option may purchase a portion of the defaulting cotenant's interest by paying the price of the share into the court within 10 days after the expiration of the 45‑day deadline provided in subsection (g) of this section. The portion that each of the remaining cotenants may purchase shall be equal to the cotenant's original percentage ownership divided by the total percentage ownership of all cotenants interested in purchasing the defaulting cotenant's interest. If none of the cotenants who exercised the buyout option pays the price set as the value of the interest, the court may order a sale of the property as provided in G.S. 46‑22.
(i) This section shall not apply when there is a written tenants‑in‑common or joint tenants management agreement."
SECTION 2. G.S. 46‑22 reads as rewritten:
"§ 46‑22. Sale in lieu of partition.
(a) The court shall order a sale of the property described in the petition, or of any part, only if it finds, by a preponderance of the evidence, that an actual partition of the lands cannot be made without substantial injury to any of the interested parties.
(b) "Substantial injury" means the fair
market value of each share in an in‑kind partition would be materially
less than the share of each cotenant in the money equivalent that would be
obtained from the sale of the whole, and if an in‑kind division would
result in material impairment of the cotenant's rights. In determining "substantial
injury," the court shall consider at least the following factors:
(1) Whether the property is able to be divided between the party or parties seeking a partition by sale and those seeking to remain tenants in common;
(2) Whether a partition in-kind would apportion the property in such a way that the value of the parcels resulting from the division, in the aggregate, would be materially less than the actual value of the property if it were sold as a whole, based upon a valuation that takes into account the type of sale conditions under which the court‑ordered sale would occur;
(3) Evidence of long-standing ownership by any individual owner as supplemented by the period of time that any person or persons that such a cotenant is or was related to by blood, marriage, or adoption who was in the chain of title owned an interest in the property;
(4) Any owner's particular sentimental links with or attachment to the property, including any attachments arising out of the fact that the property has ancestral or other unique or special value to one or more of the co‑owners;
(5) The use being made of the property by any of the owners and the degree to which this owner or owners would be harmed if they could not continue to use the property for these purposes;
(6) The degree to which the owners have contributed their pro rata share of the property taxes, insurance, and other carrying charges associated with maintaining ownership of the real property as well as the degree to which the owners have contributed to the physical improvement or the upkeep of the property, including any upkeep related to protecting the interests of the owners against any person who has no legal claim to the property but who attempts to use the property without the consent of the owners; and
(7) Any other economic or noneconomic factors that the court finds appropriate to consider.
(c) In considering the factors set forth in G.S. 46‑22(b) as well as any other economic or noneconomic factor that the court may consider to be relevant, a court should not consider any single factor to be dispositive.
(c)(d) The court shall specifically find the
facts supporting an order of sale of the property.
(d)(e) The party seeking a sale of the
property shall have the burden of proving substantial injury under the
provisions of this section."
SECTION 3.(a) Article 2 of Chapter 46 of the General Statutes is amended by adding a new section to read:
"§ 46‑22.2. Attorneys' fees prohibited.
In a partition proceeding under Article 1 or 2 of this Chapter, the court shall not assess attorneys' fees against a nonpetitioning cotenant who contests the partition or sale of the property by appearing in person before the court."
SECTION 3.(b) G.S. 6‑21(7) reads as rewritten:
"§ 6‑21. Costs allowed either party or apportioned in discretion of court.
Costs in the following matters shall be taxed against either party, or apportioned among the parties, in the discretion of the court:
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(7) All costs and expenses incurred in special
proceedings for the division or sale of either real estate or personal property
under the Chapter entitled Partition. Partition, except as otherwise
provided therein.
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The word "costs" as the same appears and is used in this section shall be construed to include reasonable attorneys' fees in such amounts as the court shall in its discretion determine and allow: provided that attorneys' fees in actions for alimony shall not be included in the costs as provided herein, but shall be determined and provided for in accordance with G.S. 50‑16.4."
SECTION 4. This act becomes effective October 1, 2009.