Forced Partition or Sale

Nature of Partition

Partition refers to the physical division of land, such that each co-owner becomes the owner of a part in satisfaction of his or her former share of the whole. The partition of land can take place by agreement. Partition may also arise on the basis of estoppel or any other mechanisms by which persons agree to acquire and dispose of property generally. See the sections on estoppel and on the sale and purchase of land.

In the case of partition by agreement, the relevant part should be mapped for Land Registry purposes. The respective areas should conform with the respective economic interests. Planning permission may be required. Capital gains tax and stamp duty issues should be considered.

Partition may be ordered by the court pursuant to an application under section 31 of the 2009 Act. It is one of the possible orders that may be made as an alternative to a sale. The court may attach conditions to the order.

Partition or Sale

Historically, the courts could not refuse both partition and sale.  The Partition Acts conferred jurisdiction on the court to make an order of partition, or sale instead of partition.  Courts now take the view that there is discretion to refuse both.

Partition is available, only if it is shown to be a feasible alternative to a sale. If third-party consent is required to the partition, the court may adjourn proceedings to see if consent will be forthcoming.  Because of the principle that a partition may not be ordered where it would prejudice a third party’s interest, the requirement for a third-party consent may be a bar to partition, where his consent is not available.

The court may refuse to order partition where it would be futile.  This will be so if a third-party can circumvent or defeat the order.  This reflects the principle that equity does not act in vain. Because the modern view is that there is a discretion to refuse both partition and sale, partition may be refused outside these traditional criteria.

Agreement to Sell

There may be a co-ownership agreement between the parties which determines the position and the procedures that apply. There may be pre-emption rights or rights of first refusal under the agreement, if one wishes to sell. There may be a procedure for offering the property to other co-owners. There may be a procedure for an independent valuation.

If the co-owners are partners, a partnership agreement may apply. In default of agreement, the Partnership Act procedures may apply.

It seems that co-owners cannot contract out of the legislation providing for a court application for partition and sale. However, the courts are likely to give effect to fair and reasonable co-ownership agreements. Ultimately, this is a matter of interpretation by the court.

2009 Act Reforms

The 2009 Act modernised much older legislation on partition and sale. Certain anomalies had arisen under that older legislation. Some Acts has been repealed in error.

The Irish courts had confirmed in recent decades that there was a discretion to refuse both partition and sale. Older cases had suggested that sale or partition was more in the nature of a right.

The 2009 Act gives the courts considerable discretion as to the appropriate order that should be made in the event of a dispute. The better view seems to be  that the court orders must conform with the nature of the underlying property rights and that the legislation does not confer discretion to reorder them.

Section 31 of the 2009 Act also applies to co-ownership in equity. The court has the power to make the same orders in the case of co-owners in equity (beneficial or equitable co–owners) that apply in respect of legal co-owners.

Court Order

Any person having an estate or interest in land which is co-owned, whether at law or in equity may apply to the 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.

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.

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 also apply9 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.

Older Exceptions

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

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 the sale in frustration of this intention.

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 an order upon the above criteria.  In the context of a separation agreement and like 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,  not 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.

Sale is the Norm

Although the 2009 Act was intended to modernise and update the law, it is unlikely to have changed it in a radical way. Its amendments are largely procedural. Although it introduces a reference to fairness, for the most part, it does not amend the longstanding substantive legal rules and equitable principles.

The former legislation, the Partition Act was worded in a way that tended towards a presumption that the property should be partitioned or sold. An order for sale and distribution of the proceeds of the sale is required to liquidate and realise  value. This order might be combined with any one of ore of the above types of order.

The effect of earlier cases was that sale and realisation of value is the primary remedy in the case of disagreement. A sale must be more beneficial than a physical partition. Older cases indicated that there was a high hurdle for a person resisting a sale to overcome. Modern case law suggests a wider discretion to refuse sale and partition, especially where the property is the family or shared home.

Co-owners who oppose the sale must submit some positive and substantive reason. In family cases, even significant inconvenience and emotional attachments are not usually enough. However, under family legislation other relevant provisions may apply.

Sale 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.  The court considers 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 parties.  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 has a right of residence will not preclude a sale.  The matter may be taken into account be taken in the division of proceeds.

Sale Considerations II

An action for sale may be sought by an owner, no matter how small his interest. Formerly, the right to a sale required the applicant 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 a 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 in 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 Considerations III

Under the old legislation, a sale might be resisted if there were exceptional circumstances for refusing sale. A partition order might be possible.

In modern cases, the courts have been willing to consider family circumstances to a greater extent, than previously.  A sale that 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 this  purpose, the court might order a valuation of the share of the person requesting sale.

It appears that the party requesting the sale need not necessarily accept the valuation. If he does not choose the valuation, he may be given a common law right to partition.

This principle 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. Sale or partition may be requested in the alternative.

References and Sources

Primary Texts

Wylie on Irish Land Law Wylie 6th Edition 2020

Land Law In Ireland -Lyall 4th Edition 2018

Principles Of Irish Property Law de Londras 2nd Edition 2011

Equity and the Law of Trusts in Ireland- Keane 3rd Edition

Land Law Kenna & Murphy 2019

Land Law Pearce & Mee 3rd Edition 2011

Other Irish Sources

The Land and Conveyancing Law Reform Act 2009: Annotations and Commentary -Wylie 2nd Edition 2017

Property Legislation 2009 2011 Cannon, Clancy, Kenna 2012

Irish Land Law – A Casebook: Adanan Maddox 2020

A Casebook on Equity and Trusts in Ireland – Wylie

 

Shorter Guides

Land Law Nutshell Cannon 2020

UK Textbooks

Land law C. Bevan 2nd ed.2020

Land Law: Text, Cases and Materials B McFarlane, N Hopkins and S Nield, (4th ed. OUP 2018)

Property Law R Smith(10th ed., Pearson, 2020)

Cheshire and Burn’s Modern Law of Real Property by Burn, E. H. 2011

Modern Land Law Dixon 2018

Elements of Land Law Gray, 2009

Property law: cases and materials Smith 2015

Land law Cooke 2015

The Limitation of Actions, 2nd ed Brady and Kerr 1994

Co-Ownership of Land: Partition Actions and Remedies – Conway