ARIZONA HOUSE OF REPRESENTATIVES

Fifty-sixth Legislature

Second Regular Session

House: GOV DP 9-0-0-0

HB 2521: partition; property; inheritance

Sponsor: Representative Peņa, LD 23

Caucus & COW

Overview

Creates the Uniform Partition of Heirs Property Act (UPHPA) and outlines procedures for the partition of real property determined as heirs property.

History

When two or more heirs or devisees are entitled to distribution of undivided interests in any real or personal estate property, the personal representative (or one or more of the heirs) may petition the court before the estate closes to make partition.  After notice to the interested heirs, the court must partition the property in the same manner as provided by the law for civil actions of partition.  The court is authorized to direct the personal representative to sell any property that cannot be:

1)   partitioned without prejudice to the owners; and

2)   allotted to any one party (A.R.S. § 14-3911).

Provisions

Notice by Posting

1.   Requires the court, in an action to partition real property, to determine whether the property is heirs property. (Sec. 2)

2.   Establishes that heirs property must be partitioned according to the UPHPA unless all of the cotenants agree otherwise. (Sec. 2)

3.   States that the UPHPA does not affect or limit the method by which service of a petition in a partition action may be made. (Sec. 2)

4.   Directs a plaintiff, if the plaintiff seeks to give notice of the action by publication, to post and maintain a conspicuous sign on the property that is the subject of the partition action no later than 10 days after the court determines that the property may be heirs property. (Sec. 2)

5.   Details the information a sign must include and additional information the court may require on the sign. (Sec. 2)

Determination of Value

6.   Asserts that the court must determine the fair market value of the heirs property by ordering an appraisal unless:

a)   all cotenants have agreed to the value of the property or to another method of valuation then the court must adopt the value or the value produced by the agreed method of valuation; or

b)   the court determines by an evidentiary hearing that the evidentiary value of an appraisal is outweighed by the cost of the appraisal then the court must determine the fair market value of the property and provide notice to the parties of the value. (Sec. 2)

7.   Instructs the court to appoint a disinterested licensed real estate appraiser to determine the fair market value of the property assuming sole ownership of the fee simple estate. (Sec. 2)

8.   Mandates the appraiser file a sworn or verified appraisal with the court. (Sec. 2)

9.   States that the court must provide, within 10 days after the appraisal is filed, notice of the appraisal to each party with a known address. (Sec. 2)

10.  Outlines what must be included in the notice. (Sec. 2)

11.  Directs the court to conduct a hearing to determine the fair market value of the property no sooner than 30 days after a copy of the appraisal is provided to each party. (Sec. 2)

12.  Authorizes the court to consider any other evidence of value offered by a party in addition to the court-ordered appraisal. (Sec. 2)

13.  Requires the court to determine the fair market value of the property and provide notice to the parties of the determination of value after the hearing but before considering the merits of the partition action. (Sec. 2)

Cotenant Buyout

14.  Directs the court to provide notice, if any cotenant requested partition by sale after the determination of value, to the parties that any cotenant except a cotenant that requested partition by sale may buy all the interests of the cotenants that requested partition by sale. (Sec. 2)

15.  Allows any cotenant, except a cotenant that requested partition by sale, to file notice with the court within 45 days after notice is provided that the cotenant elects to buy all the interests of the cotenants that requested partition by sale. (Sec. 2)

16.  Prescribes that the purchase price for each of the interests of a cotenant that requested partition by sale is the fair market value of the entire parcel multiplied by the cotenant's fractional ownership of the entire parcel. (Sec. 2)

17.  Outlines the rules that apply after expiration of the 45-day period when cotenants elect to buy interests. (Sec. 2)

18.  Provides rules that apply when electing cotenants pay their apportioned price to the court after 90-day notice was provided. (Sec. 2)

19.  Establishes rules that apply, within 20 days after the court provides notice, when any cotenant that paid elects to purchase all of the remaining interest by paying the entire amount to the court. (Sec. 2)

20.  Authorizes a cotenant who is entitled to buy an interest, within 45 days after the notice of cotenant buyout, to request the court to authorize the sale as part of the pending action of the interests of cotenants named as respondents and served with the complaint but who did not appear in the action. (Sec. 2)

21.  Allows the court, after receiving a timely request for the sale and after a hearing, to deny or authorize the requested additional sale on such terms as the court deems fair and reasonable and subject to prescribed rules. (Sec. 2)

Partition In Kind

22.  Requires the court, if requested by a cotenant, to order partition in kind if all the interests of all cotenants that requested partition by sale are not purchased or after the conclusion of a buyout, unless the court finds that partition in kind with will result in manifest prejudice to the cotenants as a group. (Sec. 2)

23.  States that, in considering whether to order partition in kind, a court must approve a request by two or more parties to have their individual interests aggregated. (Sec. 2)

24.  Maintains that if the court does not order partition in kind, it must order partition by sale and, if no cotenant requested partition by sale, the court must dismiss the action. (Sec. 2)

25.  Specifies if the court orders partition in kind, the court:

a)   may require that one or more cotenants pay other cotenants amounts so that the payments together with the in-kind distributions will make the partition in kind just and proportionate in value to the fractional interests held; and

b)   must allocate a part of the property representing the combined interests of the cotenants who are unknown as determined by the court, and this part of the property is to remain undivided. (Sec. 2)

26.  Prescribes the factors that must be considered by the court in determining whether partition in kind would result in manifest prejudice to the cotenants as a group. (Sec. 2)

27.  Prohibits the court from considering any one factor to be dispositive without weighing the totality of all relevant factors and circumstances. (Sec. 2)

Partition By Sale

28.  Mandates a sale of heirs property be an open-market sale unless the court finds that a sale by sealed bid or an auction would be more economically advantageous and in the best interest of the cotenants as a group. (Sec. 2)

29.  Outlines procedures, within 10 days after entry of the order for an open-market sale, for the court to appoint a licensed real estate broker to offer the property for sale and to establish a reasonable commission. (Sec. 2)

30.  Specifies the procedures for the appointed broker if the broker receives an offer to purchase the property for at least the determined fair market value within or not within a reasonable time. (Sec. 2)

31.  Lists the information to be included in the report made by the appointed broker within seven days of receiving an offer to purchase the heirs property for at least the fair market value. (Sec. 2)

32.  Directs the court to set terms and conditions for the sale if the court orders a sale by sealed bids or at an auction. (Sec. 2)

33.  Maintains that an auction, if ordered by the court, must be conducted pursuant to statute relating to foreclosure. (Sec. 2)

34.  Stipulates that a purchaser is entitled to a credit against the price in an amount equal to the purchaser's share of the proceeds if the purchaser is entitled to a share of the proceeds of the sale. (Sec. 2)

Miscellaneous

35.  Adds the UPHPA to the options the court may utilize to partition property after notice to the interested heirs or devisees. (Sec. 1)

36.  Entitles this legislation as the UPHPA. (Sec. 2)

37.  Specifies that the UPHPA applies to partition actions filed on or after the general effective date. (Sec. 2)

38.  Specifies, if the court appoints commissioners pursuant to statute, the commissioners must be disinterested, impartial and not be a party to or a participant in the action. (Sec. 2)

39.  Establishes that the courts must consider the need to promote uniformity of the law with respect to its subject matter among the states that enact the UPHPA. (Sec. 2)

40.  Stipulates that these provisions modify, limit and supersede the Electronic Signatures in Global and National Commerce Act but do not modify, limit or supersede federal code related to authorization of electronic delivery of any notices described in federal code. (Sec. 2)

41.  Defines:

a)   ascendant;

b)   collateral;

c) descendant;

d)   determination of value;

e)   heirs property;

f) partition by sale;

g)   partition in kind;

h)   record; and

i) relative. (Sec. 2)

42.  ☐ Prop 105 (45 votes) ☐ Prop 108 (40 votes) ☐ Emergency (40 votes) ☐ Fiscal NoteMakes technical changes. (Sec. 1)

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46.                    HB 2521

47.  Initials SJ Page 0 Caucus & COW

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