Partitioning is a division in real or personal property between co-owners. This typically occurs when property is inherited or passed down to heirs. There are two types of partitioning: Partition in Kind and Partition by Sale. These are described in Chapter 46 of the North Carolina General Statutes.
Partition in Kind
Partition in Kind (also known as Actual Partition) occurs simply when the property is divided, equitably and fairly, between the multiple owners. Each co-owner will own a certain percentage of the property. Courts tend to favor this approach because it does not require someone to sell their property against their will.
Partition by Sale
Partition by Sale occurs on two occasions. First, a Partition by Sale could occur if the property at issue cannot physically (or equitably) be divided among the co-owners. A Partition by Sale can also occur when a Partition in Kind could not be made without substantial injury to any of the interested parties. This means that, if dividing the property among the co-owners would substantially injure any or all of the co-owners, the court will order a sale of the entire property and the proceeds from the sale will be divided up among the co-owners and distributed accordingly. When determining what constitutes “substantial injury,” according to North Carolina General Statute §46-22, the court will look at the following issues:
- Whether the fair market value of each co-owner’s share of the actual property would be materially less than the amount each co-owner would receive from a sale of the property as a whole.
- Whether dividing the property through Partition in Kind would result in material impairment of any co-owner’s rights.
If you are the party seeking a Partition by Sale rather than a Partition in Kind, you have the burden of proving that substantial injury would otherwise occur. It is generally frowned upon to compel someone to sell his or her property, which is why Partition in Kind is the most favored and most often route taken. However, if property is inherited or passed down by law, and co-owners are unable to agree on certain things, Partition by Sale allows a way out. Either way, please contact us for a consult with a competent attorney at King Law Offices to discuss your specific situation and options.
FAQ: Partition by Sale vs. Partition in Kind in North Carolina
What is partitioning of property in North Carolina?
Partitioning is the legal process of dividing real or personal property between co-owners, often in cases of inherited or jointly owned assets. There are two main types: partition in kind and partition by sale, as defined under North Carolina General Statutes Chapter 46.
What is a partition in kind?
A partition in kind, also known as actual partition, is when the court physically divides the property among the co-owners. Each party receives a portion of the property that is considered fair and equitable. What is a partition in kind? It’s the court’s preferred method because it allows owners to keep their share of the property without forcing a sale.
What is a partition by sale?
A partition by sale occurs when a property cannot be fairly or practically divided. In such cases, the court orders the entire property to be sold and the sale proceeds distributed among the co-owners. Partition by sale vs partition in kind comes down to whether physical division would cause substantial injury or significantly reduce the value of each owner’s share.
Partition in Kind vs Sale: How does the court decide?
The court evaluates whether dividing the property (partition in kind) would result in:
- A decrease in each co-owner’s fair market value share
- A material impairment of any co-owner’s rights
If either is true, the court may opt for partition by sale instead.
Who must prove that partition by sale is necessary?
The party requesting a partition by sale must demonstrate that a partition in kind would cause substantial injury to one or more owners. The burden of proof is on the requesting party, and the court requires clear evidence.
Can inherited property be subject to partition in kind or sale?
Yes. Partition in kind vs sale frequently arises in inheritance cases where siblings or heirs co-own property. If they can’t agree, the court may intervene with either method—though it will favor partition in kind unless proven unfeasible.
What does ‘substantial injury’ mean in these cases?
“Substantial injury” means a significant negative impact on the value or use of a co-owner’s share if the property is physically divided. In these situations, partition by sale is more likely to be ordered.
Why is partition in kind generally preferred by courts?
Because it avoids forcing co-owners to sell property they may wish to retain, courts usually favor a partition in kind—unless dividing the property would harm one or more parties financially or legally.
How is “partition in kind vs partition by sale” relevant to estate planning?
Understanding the difference between partition in kind vs partition by sale is important when drafting wills or handling family property. Without planning, disputes can arise, leading to court-ordered partitions.
Should I consult a lawyer for a partition action?
Yes. Whether you’re seeking a partition in kind or defending against a partition by sale, a skilled attorney can guide you through North Carolina’s property laws, help preserve your interests, and ensure proper valuation and distribution.