Bill Text: AZ HB2521 | 2024 | Fifty-sixth Legislature 2nd Regular | Chaptered
Bill Title: Partition; property; inheritance
Spectrum: Partisan Bill (Republican 2-0)
Status: (Passed) 2024-04-09 - Chapter 122 [HB2521 Detail]
Download: Arizona-2024-HB2521-Chaptered.html
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House Engrossed
partition; property; inheritance |
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State of Arizona House of Representatives Fifty-sixth Legislature Second Regular Session 2024
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CHAPTER 122
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HOUSE BILL 2521 |
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An Act
amending title 12, Arizona Revised Statutes, by adding chapter 27; amending section 14-3911, Arizona Revised Statutes; relating to the partition of property.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Title 12, Arizona Revised Statutes, is amended by adding chapter 27, to read:
CHAPTER 27
UNIFORM PARTITION OF HEIRS PROPERTY ACT
ARTICLE 1. GENERAL PROVISIONS
12-3401. Short title
This chapter may be cited as the uniform partition of heirs property act.
12-3402. Definitions
In this chapter, unless the context otherwise Requires:
1. "Ascendant" means an individual who precedes another individual in lineage, in the direct line of ascent from the other individual.
2. "Collateral" means an individual who is related to another individual under the law of intestate succession of this state but who is not the other individual's ascendant or descendant.
3. "Descendant" means an individual who follows another individual in lineage, in the direct line of descent from the other individual.
4. "Determination of value" means a court order that determines the fair market value of heirs property or that adopts the valuation of the property agreed to by all cotenants.
5. "Heirs property" means real property that is held in tenancy in common and that satisfies all of the following requirements as of the filing of a partition action:
(a) there is no agreement in a record that binds all the cotenants and that governs the partition of the property.
(b) One or more of the cotenants acquired title from a relative, whether living or deceased.
(c) Any of the following applies:
(i) Twenty percent or more of the interests are held by cotenants who are relatives.
(ii) Twenty percent or more of the interests are held by an individual who acquired title from a relative, whether living or deceased.
(iii) Twenty percent or more of the cotenants are relatives.
6. "Partition by sale" means a court-ordered sale of the entire heirs property, whether by open-market sale, sealed bids or auction.
7. "Partition in kind" means the division of heirs property into physically distinct and separately titled parcels.
8. "Record" means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.
9. "Relative" means an ascendant, descendant or collateral or an individual who is otherwise related to another individual by blood, marriage or adoption or by any other law of this state.
12-3403. Applicability
This chapter applies to partition actions filed on or after The effective date of this chapter.
12-3404. Relation to other law; service; notice by posting
A. In an action to partition real property under section 14-3911, the court shall determine whether the property is heirs property. if the court determines that the property is heirs property, the heirs property must be partitioned pursuant to this chapter unless all of the cotenants otherwise agree. This section does not limit or affect the method by which service of a petition in a partition action may be made.
b. In a partition action, if the plaintiff seeks to give notice of the action by publication and the court determines that the property may be heirs property, not later than TEN days after the court's determination THAT THE PROPERTY MAY BE HEIRS PROPERTY THE PLAINTIFF shall post and maintain while the action is pending a conspicuous sign on the property that is the subject of the PARTITION action. The sign SHALL state that the partition action has commenced and shall identify the name and address of the court and the LEGAL DESCRIPTION OF THE PROPERTY. The court may require the petitioner to publish on the sign the name of the petitioner and the known respondents.
12-3405. Determination of value
A. If the court determines that the property that is the subject of a partition action is heirs property, the court shall determine the fair market value of the heirs property by ordering an appraisal pursuant to subsection B OF THIS SECTION, UNLESS ONE OF THE FOLLOWING APPLies:
1. If all cotenants have agreed to the value of the property or to another method of valuation, the court shall adopt that value or the value PRODUCED by the agreed method of valuation.
2. If the court determines that the evidentiary value of an appraisal is outweighed by the cost of the appraisal, the court, after an evidentiary hearing, shall determine the fair market value of the property and PROVIDE notice to the parties of the value.
B. If the court orders an appraisal, the court shall appoint a disinterested real estate appraiser licensed in this state to determine the fair market value of the property assuming sole ownership of the fee simple estate. On completion of the appraisal, the appraiser shall file a sworn or verified appraisal with the court. If an appraisal is conducted pursuant to THIS SUBSECTION, the court shall PROVIDE notice of the appraisal to each party with a known address not later than TEN days after the appraisal is filed. thE NOTICE SHALL INCLUDE ALL OF THE FOLLOWING:
1. The appraised fair market value of the property.
2. That the appraisal is available at the court clerk's office.
3. That a party may file with the court an objection to the appraisal not later than THIRTY days after the notice is PROVIDED. ThE OBJECTION SHALL statE the grounds for the objection.
c. If an appraisal is filed with the court pursuant to subsection B OF THIS SECTION, the court shall conduct a hearing to determine the fair market value of the property not sooner than THIRTY days after a copy of the notice of the appraisal is PROVIDED to each party PURSUANT TO SUBSECTION B OF THIS SECTION, whether or not an objection to the appraisal is filed pursuant to subsection B, PARAGRAPH 3 OF THIS SECTION. In addition to the court-ordered appraisal, the court may consider any other evidence of value offered by a party. After THE HEARING but before considering the merits of the partition action, the court shall determine the fair market value of the property and PROVIDE notice to the parties of the determination of value.
12-3406. Cotenant buyout
A. If any cotenant requested partition by sale after the determination of value PURSUANT TO section 12-3405, SUBSECTION C, the court shall PROVIDE notice 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. Not later than FORTY-FIVE days after the notice is PROVIDED, any cotenant, except a cotenant that requested partition by sale, may FILE notice WITH the court that THE COTENANT elects to buy all the interests of the cotenants that requested partition by sale. The purchase price for each of the interests of a cotenant that requested partition by sale SHALL BE the FAIR MARKET value of the entire parcel determined PURSUANT TO section 12-3405, SUBSECTION C multiplied by the cotenant's fractional ownership of the entire parcel. After expiration of the forty-five-day period, the following rules apply:
1. If only one cotenant elects to buy all the interests of the cotenants that requested partition by sale, the court shall notify all the parties of that fact.
2. If more than one cotenant elects to buy all the interests of the cotenants that requested partition by sale, the court shall allocate the right to buy those interests among the electing cotenants based on each electing cotenant's existing fractional ownership of the entire parcel divided by the total existing fractional ownership of all cotenants electing to buy and provide notice to all the parties of that fact and of the price to be paid by each electing cotenant.
3. If no cotenant elects to buy all the interests of the cotenants that requested partition by sale, the court shall PROVIDE notice to all the parties of that fact and resolve the partition action PURSUANT TO SECTION 12-3407.
B. If the court PROVIDES notice to the parties PURSUANT TO subsection A, paragraph 1 or 2 OF THIS SECTION, the court shall set a date not sooner than ninety days after the date the notice was PROVIDED by which electing cotenants must pay their apportioned price to the court. After ninety days, the following rules apply:
1. If all electing cotenants timely pay their apportioned price, the court shall issue an order reallocating all the interests of the cotenants and disburse the amounts held by the court to the persons entitled to them.
2. If no electing cotenant timely pays its apportioned price, the court shall resolve the partition action PURSUANT TO SECTION 12-3407 as if the interests of the cotenants that requested partition by sale were not purchased.
3. If one or more but not all of the electing cotenants fails to pay their apportioned price on time, the court, ON MOTION, shall PROVIDE notice to the electing cotenants that paid their apportioned price of the interest remaining and the price for that interest.
C. not later than TWENTY days after the court PROVIDES notice pursuant to subsection B, PARAGRAPH 3 OF THIS SECTION, any cotenant that paid may elect to purchase all of the remaining interest by paying the entire amount TO the court. after the TWENTY-day period, the following rules apply:
1. If only one cotenant pays the entire price for the remaining interest, the court shall issue an order reallocating the remaining interest to that cotenant. the court shall promptly issue an order reallocating the interests of all of the cotenants and disburse the amounts held by the court to the persons entitled to them.
2. If no cotenant pays the entire price for the remaining interest, the court shall resolve the partition action PURSUANT TO SECTION 12-3407 as if the interests of the cotenants that requested partition by sale were not purchased.
3. If more than one cotenant pays the entire price for the remaining interest, the court shall reapportion the remaining interest among those paying cotenants, based on each paying cotenant's original fractional ownership of the entire parcel divided by the total original fractional ownership of all cotenants that paid the entire price for the remaining interest. The court shall promptly issue an order reallocating all of the cotenants' interests, disburse the amounts held by the court to the persons entitled to them and promptly refund any excess payment held by the court.
D. Not later than forty-five days after the court provides notice to the parties pursuant to subsection A OF THIS SECTION, any cotenant who is entitled to buy an interest under this section may 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 that did not appear in the action. If the court receives a timely request PURSUANT TO THIS SUBSECTION, the court, after a hearing, may deny the request or authorize the requested additional sale on such terms as the court determines are fair and reasonable, subject to ALL OF THE FOLLOWING:
1. A sale authorized under this subsection may occur only after the purchase prices for all interests subject to sale PURSUANT TO SUBSECTIONs A, B and C OF THIS SECTION have been paid to the court and those interests have been reallocated among the cotenants as provided in subsections A, B and C of this section.
2. the purchase price for the interest of a nonappearing cotenant is based on the court's determination of value PURSUANT TO section 12-3405, SUBSECTION C.
12-3407. Partition alternative
A. If all the interests of all cotenants that requested partition by sale are not purchased by other cotenants or if after the conclusion of A BUYOUT PURSUANT TO SECTION 12-3406 a cotenant remains that has requested partition in kind, the court shall order partition in kind unless the court, after considering the factors PRESCRIBED IN SECTION 12-3408, finds that partition in kind will result in MANIFEST prejudice to the cotenants as a group. In considering whether to order partition in kind, the court shall approve a request by two or more parties to have their individual interests aggregated.
B. If the court does not order partition in kinD PURSUANT TO subsection A OF THIS SECTION, the court shall order partition by sale pursuant to SECTION 12-3409. If no cotenant requested partition by sale, the court shall dismiss the action. If the court orders partition in kind pursuant to subsection A OF THIS SECTION, the court may require that one or more cotenants pay one or more other cotenants amounts so that the payments, taken together with the value of the in-kind distributions to the cotenants, will make the partition in kind just and proportionate in value to the fractional interests held. If the court orders partition in kind PURSUANT TO SUBSECTION A OF THIS SECTION, the court shall allocate to the cotenants that are unknown, unlocatable or the subject of a default JUDGMENT, if their interests were not bought out pursuant to SECTION 12-3406, a part of the property representing the combined interests of these cotenants as determined by the court, and this part of the property shall remain undivided.
12-3408. Considerations for partition in kind
A. In determining under section 12-3407 whether partition in kind would result in MANIFEST prejudice to the cotenants as a group, the court shall consider all of the following factors:
1. Whether the heirs property practicably can be divided among the cotenants.
2. Whether partition in kind would apportion the property in such a way that the aggregate fair market value of the parcels resulting from the division would be materially less than the value of the property if it were sold as a whole, taking into account the condition under which a court-ordered sale likely would occur.
3. Evidence of the collective duration of ownership or possession of the property by a cotenant and one or more predecessors in title or predecessors in possession to the cotenant who are or were relatives of the cotenant or each other.
4. A cotenant's sentimental attachment to the property, including any attachment arising because the property has ancestral or other unique or special value to the cotenant.
5. The lawful use being made of the property by a cotenant and the degree to which the cotenant would be harmed if the cotenant could not continue the same use of the property.
6. The degree to which the cotenants have contributed their pro rata share of the property taxes, insurance and other expenses associated with maintaining ownership of the property or have contributed to the physical improvement, maintenance or upkeep of the property.
7. Any other relevant factor.
b. The court may not consider any one factor listed in subsection A of this section to be dispositive without weighing the totality of all relevant factors and circumstances.
12-3409. Open-market sale; sealed bids; auctions
A. If the court orders a sale of heirs property, the sale must 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. If the court orders an open-market sale and the parties, not later than TEN days after the entry of the order, agree on a real estate broker licensed in this state to offer the property for sale, the court shall appoint the broker and establish a reasonable commission. If the parties do not agree on a broker, the court shall appoint a disinterested real estate broker licensed in this state to offer the property for sale and shall establish a reasonable commission. The broker shall offer the property for sale in a commercially reasonable manner at a price noT lower than the FAIR MARKET value of the property determined pursuant to section 12-3405, subsection C and on the terms and conditions established by the court. If the broker appointed PURSUANT TO THIS SUBSECTION obtains within a reasonable time an offer to purchase the property for at least the determined fair MARKet value, both of the following apply:
1. The broker shall comply with the reporting requirements in SUBSECTION D OF THIS SECTION.
2. THe sale may be completed in accordance with state law other than the provisions of this SECTION.
B. If the broker appointed PURSUANT TO SUBSECTION A of this section does not obtain within a reasonable time an offer to purchase the property for at least the determined FAIR MARKET value of the property, the court, after a hearing, may DO ANY OF THE FOLLOWING:
1. Approve the highest outstanding offer, if any.
2. Redetermine the value of the heirs property and order that the heirs property continue to be offered for an additional time.
3. Order that the heirs property be sold by sealed bids or at an auction.
C. If the court orders a sale by sealed bids or at an auction, the court shall set terms and conditions of the sale. If the court orders an auction, the auction must be conducted pursuant to title 33, chapter 6, article 2. If a purchaser is entitled to a share of the proceeds of the sale, the purchaser is entitled to a credit against the price in an amount equal to the purchaser's share of the proceeds.
D. Unless required to do so within a shorter time, a broker who is appointed PURSUANT TO SUBSECTION A OF THIS SECTION to offer heirs property for open-market sale shall file a report with the court not later than seven days after receiving an offer to purchase the heirs property for at least the FAIR MARKET VALUE of the heirs property. The report must contain ALL OF the following information:
1. A description of the property to be sold to each buyer.
2. The name of each buyer.
3. The proposed purchase price.
4. The terms and conditions of the proposed sale, including the terms of any owner financing.
5. The amounts to be paid to lienholders.
6. A statement of contractual or other arrangements or conditions of the broker's commission.
7. ANY Other material facts relevant to the sale.
12-3410. Commissioners
IF the court appoints COMMISSIONers pursuant to section 12-1215, each COMMISSIONer, in addition to the requirements and disqualifications applicable to COMMISSIONERS, must be disinterested and impartial and not be a party to or a participant in the action.
12-3411. Uniformity of application and construction
In applying and construing this chapter, the courts shall consider the need to promote uniformity of the law with respect to its subject matter among the states that enact the uniform partition of heirs property act.
12-3412. Relation to electronic signatures in global and national commerce act
This SECTION modifies, limits and supersedes the Electronic Signatures in Global and National Commerce Act (15 United States code Sections 7001 through 7031) but does not modify, limit or supersede Section 101(c) of that act (15 United States code Section 7001(c)) or authorize electronic delivery of any of the notices described in Section 103(b) of that act (15 United States code Section 7003(b)).
Sec. 2. Section 14-3911, Arizona Revised Statutes, is amended to read:
14-3911. Partition for purpose of distribution
When two or more heirs or devisees are entitled to distribution of undivided interests in any real or personal property of the estate, the personal representative or one or more of the heirs or devisees may petition the court prior to before the formal or informal closing of the estate, to make partition. After notice to the interested heirs or devisees, the court shall partition the property either:
1. In the same manner as provided by the law for civil actions of partition. The court may direct the personal representative to sell any property which that cannot be partitioned without prejudice to the owners and which that cannot conveniently be allotted to any one party.
2. Beginning on the effective date of this amendment to this section, pursuant to title 12, chapter 27.
APPROVED BY THE GOVERNOR APRIL 9, 2024.
FILED IN THE OFFICE OF THE SECRETARY OF STATE APRIL 9, 2024.
