Uniform Law Commission
111 N. Wabash Ave., Suite 1010, Chicago, IL 60602
Contact: Ben Orzeske, ULC Legislative Counsel, email@example.com
Katie Robinson, ULC Communications Officer, firstname.lastname@example.org
For Immediate Release:
Arkansas 5th State to Enact Uniform Partition of Heirs Property Act
New Act Protects Vulnerable Landowners
February 24, 2015 – Arkansas has recently become the fifth state in the country to enact the Uniform Partition of Heirs Property Act (UPHPA), a state law which helps to protect the interests and needs of vulnerable landowners. The Uniform Act, introduced in Arkansas as HB 1245 and sponsored by Rep. Matthew J. Shepherd, was signed into law by Arkansas Governor Asa Hutchinson on February 18 and is now Act 107.
“Heirs’ property” generally refers to family-owned land, passed down without a will and held by descendants as “tenants in common.” Heirs’ property is typically owned by a family for many generations, with each owner having inherited an undivided interest in the land. Anyone who inherits or purchases even a small interest in the land can file with a court to force other owners to sell. These “partition sales” often occur against the wishes of many of the family members that own the property. The end result is often a sale that does not meet fair market value, and may result in the dispossession of family members from their inherited land.
Property owners with access to trust and estate attorneys, business planners, and other professional assistance, can avoid or mitigate the harsh consequences of a forced partition sale by structuring agreements with their fellow cotenants to contract around the default rules of the tenancy in common. Low- to moderate-income heirs’ property owners, on the other hand, do not have access in most cases to similar professional assistance and are particularly vulnerable to predatory speculation. Most such owners are not even aware that their property is in jeopardy until a partition action is already underway.
The Uniform Partition of Heirs’ Property Act establishes a number of important protections for owners of heirs’ property, while retaining flexibility for those wishing to sell their interest in the land.
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.
The Uniform Partition of Heirs Property Act provides an important addition to states’ laws governing partition for heirs’ property, and provides heirs’ property owners with significant protections against unexpected and often devastating predatory speculation. The Act will assist heirs’ property owners, particularly (but not exclusively) low- to moderate-income heirs owners, with preserving the integrity and value of property that has both economic and strong familial significance.
UPHPA was drafted and approved by the Uniform Law Commission in 2010. It has been enacted in Alabama, Arkansas, Georgia, Montana, and Nevada, and has also been introduced this year in Connecticut, the District of Columbia, Hawaii, and South Carolina. Further information on the Uniform Partition of Heirs’ Property Act can be found at the ULC’s website at www.uniformlaws.org.
The Uniform Law Commission, now in its 124th year, provides states with non-partisan, well-conceived and well-drafted legislation that brings clarity and stability to critical areas of state statutory law. The organization comprises more than 300 lawyers, judges, and law professors, appointed by the states as well as the District of Columbia, Puerto Rico, and the U.S. Virgin Islands, to research, draft and promote enactment of uniform state laws in areas of state law where uniformity is desirable and practical. Since its inception in 1892, the group has promulgated more than 200 acts, among them such bulwarks of state statutory law as the Uniform Commercial Code, the Uniform Probate Code, and the Uniform Partnership Act.