This post is Part I in a series about new and revised laws passed by the Virginia General Assembly in their 2020 session that affect trust and estates and guardianships and conservatorships. Unless otherwise noted, each of these new laws come into effect on July 1, 2020.
The first of these laws is the Uniform Partition of Heirs Property Act, which addresses inequities caused in the past when an owner of real estate has died without a will. Under such circumstances, that person’s property passes directly to his or her heirs in as tenants in common, meaning that each person owns a proportional interest in the whole and that interest then passes to their own heirs rather than to the other co-tenants. This does not generally cause any difficulties initially, as property often passes directly to a spouse or to a small number of children, but as time goes by and the heirs pass on their ownership to heirs of their own, a single piece of property may come to be owned by dozens or even hundreds of heirs or non-relatives who have purchased ownership from the heirs. The chances are high that the co-tenants will not all agree on how to deal with the property, assuming all of them are even aware of their ownership.
To deal with these circumstances, the law has created an action called partition, which may be brought by any person who has even a small ownership interest in the property. When the property is capable of being divided, the court has the ability to grant each co-tenant a part of it in proportion to their share. However, if the property cannot be fairly divided among the different co-tenants, the court has the authority to order that it be sold, either to one of the previous co-tenants who can afford to pay for the whole or to a third party, and that the proceeds be distributed proportionally.
While this system is generally fair when only the heirs themselves are involved, it has become overwhelmingly unjust to poor and disadvantaged families whose only wealth may be in their ownership of land. All it takes is for one co-tenant to sell their fractional interest to a real estate speculator or developer, who then has the ability to force a partition sale of the whole at what is often well below fair market value. Studies have shown that this has disproportionately affected African-American families in the South; a Washington Post article from July of last year describes the issues faced by two families in south Virginia in particular.
To address this inequity, Virginia, along with a number of other states, has adopted the provisions of the Uniform Partition of Heirs Property Act for all partition actions filed after July 1, 2020. Under the new Act, which is codified in Virginia Code §§ 8.01-81, 8.01-81.1, 8.01-81.2, and 8.01-81.3, any co-tenant who does not wish to have the land sold has the right to buy out the ownership of those that do rather than requiring a forced sale of the whole. The court must appoint a disinterested appraiser to determine the fair value of the property unless all the co-tenants agree on its value. Moreover, if multiple co-tenants wish to purchase the whole property, the court is required to consider a number of factors in deciding who should get to do so, including how long each person or their immediate relatives owned it, whether there is a sentimental attachment to the property, and who has been paying the taxes, insurance, and other expenses. A forced sale may only take place where it is neither practical or equitable for the property to be allotted or sold to co-tenants.
These new laws should provide heirs the ability to hold on to their family property for generations. At the same time, they will change how even ordinary partition actions proceed. If you find yourself involved in a dispute over property, an experienced trust and estate litigator can advise you of your rights and help you proceed.