Partition Sales of Real Estate in Missouri
When real estate is owned by more than one person or entity, it is possible to file a partition lawsuit to force the sale or division of the real estate. While it is possible for a court to decide to partition real estate into separate parcels and give them to the owners in proportion to their ownership, partition sales — where the property is sold and the proceeds divided in proportion to ownership — is much more common. With a partition sale, the court orders the sheriff to sell the real estate at a set place and time. Note that this rarely will result in the highest possible sale price because it is a distressed sale.
Partition sales typically have two substantive steps: (1) determine the ownership interests of the parties in the real estate and then (2) divide the sale proceeds. Step (1) is usually reasonably straightforward. Step (2) can be complex because there may be debts encumbering the real estate and parties may be entitled to credits or set-offs from the gross proceeds. Specifically, parties are entitled to reimbursement for expenditures with respect to the property for taxes, insurance, necessary repairs and improvements. Hahn v. Hahn, 297 S.W.2d 559, 567 (Mo. 1957). Reimbursement is only available where the expenses were “made in good faith, are of necessary and substantial nature, materially enhance the value of the property, and the circumstances show that it would be equitable to do so.” Hartog v. Siegler, 615 S.W.2d 632, 636 (Mo. Ct. App. 1981). On the other hand, an out-of-possession tenant may have the rental value set off against the improvements, taxes and other charges paid by the tenant in exclusive possession. Christen v. Christen, 38 S.W.3d 488, 492 (Mo. Ct. App. 2001). Ouster by the exclusive tenant in possession is not required. Id. The rental value the out-of-possession tenant is entitled to is “the reasonable rental value of the premises without the improvements made by the tenant in possession.” Bass v. Rounds, 811 S.W.2d 775, 782 (Mo. Ct. App. 1991). Finally, it is important to remember that the party initiating the partition sales is often entitled to have his/her attorney fees paid from the general proceeds. Often time, then, it can become a race to the courthouse to be in a position to claim those fees.
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