Partition Unleashes Fever in the “Funk House”
Apologies for the title but this is accurately reported as a dispute over partition of “The Funk House” in Indiana County, Pennsylvania. It came to our attention because a colleague has recently become involved in a case where real estate will be partitioned.
Partition is an obscure area of the law which comes into view in two different settings. As more and more people choose domestic partnerships without marriage, they often elect to own property together with much thinking about “consequences” if things don’t work out. Typically, these couples shop for, bid on and contract to buy a house. They apply for a mortgage. And when they arrive at settlement, they are asked “How will you be taking title?” Answer: As Audrey and Aaron or as Beth and Beatrice. Title clerk closing the transaction then asks: “Tenancy in Common or with Rights of Survivorship?” Hmmmmm. The answer is not considered and when problems erupt in subsequent years, no one ever re-visited the subject as recorded on the deed.
In this setting, the purchase is usually a single family residence and, blessedly, while the relationship might die, the cohabitants did not. But, when things don’t go well and the relationship does end, the resolution of the home ownership can be both messy and expensive.
Audrey and Aaron break up. When they bought the house they had roughly equal incomes. But over time, they had a child and Audrey became a homemaker. Aaron moved on to a new relationship and while he owes Audrey child support, that’s not going to pay the mortgage. If the mortgage isn’t paid, both of them will see their credit tank and risk a foreclosure. Meanwhile Audrey is mad not only because she has seen the relationship dissolve but she used her separate inheritance to put an addition on the house when the child came along. She wants that $50,000 “off the top” or she’s not budging. So, what’s to be done?
The answer is partition; an action between co-owners of property who are not married. It has its own rules. Pa. R.C.P. 1551 et seq. They can be cumbersome, and are often misconstrued, because there aren’t a lot of these cases.
If you are in such a relationship, you really should invest in a “partnership” agreement to set forth how the deal unfolds after the relationship does. We all have a big financial stake in houses and mortgages and our credit ratings. You don’t want to see months or years go by while fighting over whether the $50K home addition is or isn’t an offset to years where one party alone paid the mortgage. If things are awry, the parties should afford each other 30-45 days to see if they can resolve credits and whether one can buy the other out. Otherwise, the house goes on the market and the price is reduced by 3-5% every sixty days unless you both agree to defer that. Credits for separate contributions (e.g., the addition) or one party paying the expense should also be addressed. Yes, this agreement will costs some money, but it will be cheap compared to real partition proceedings.
Now, on to the Funk House, which is the second way families get in trouble. We start our journey with the Empfield family and their 54 acres of land which is their homestead and their legacy. Mr. E moves on and the property becomes the domain of Mrs. E. In 2011 the Empfields had gifted a 50% interest in the property to their daughter, Mrs. Funk. Shortly after acquiring her interest in the property Mrs. Funk and her husband started to build a house on the property. The Empfields did not contribute to that enterpise. The taxes on the property were split equally. In 2018 Mrs. Empfield deeded her half of the property to her other two kids so that Mrs. Funk held 50% and her siblings now owned her mother’s half. Not that it matters, but the three sisters now owning the property had suvivorship rights in each other’s shares.
You can see the problems emerging. Three kids own 54 acres but there are only two houses. And the facts aren’t clear but the impression created is that son-in-law Funk built a house (the Funk House) for he and his bride on land he had no ownership in. If his wife died, his living arrangement becomes ….funky, to say the least.
In making these arrangements, it stands to reason that Ma and Pa Empfield assumed their daughters would just get along. But, we should point out that arithmetically, one daughter got 50% of the land while the other two got 25% each. To give credit, the two daughters sharing their mother’s remaining 50% got the parcel with a house and other improvements where the Funks had built their own dwelling.
Parties in this setting can always refine their ownership by agreement. Alas, that was not to happen and Daughter Funk filed in 2019 to have the court resolve it by partition.
The court appointed a master to figure out how to divide the property. That begot appraisals and surveys to assess a fair division. We are not going to march you through that because the case is attached and, as you can see, the facts are unique. Suffice to say the problem originates with the impression that children will want to keep 54 acres forever and enjoy the rural life east of Indiana, Pennsylvania. But, marriages beget divorces and we live in a day when even happily married couples decide that Florida or some other distant place beckons. This isn’t just a rural thing either. Many families do what the Empfields did with the house Ma & Pa acquired in Stone Harbor, NJ in 1981 for $100,000. The three kids have owned it since 2000 when it was worth $900,000 but today the house next store just sold for $2.5 million and the kids are looking at college for the grandkids at $50,000 a year. That trapped equity and current needs can create conflict no one ever thought would occur. Then there is the no good son in law who files for divorce and says “Yea, you gifted your daughter $300,000 in Stone Harbor equity in 2000 but the ‘increase in value’ of her portion since then is $530,000 so I am looking for cash of $265,000 in equitable distribution.”
Family arrangements are nice, until they aren’t. If you are involved in this kind of real estate ownership, it is worth having some discussions and reducing them to agreements. Otherwise, buckle in for a funky time, with six years of litigation and two trips to the Superior Court.
Here’s last year’s Empfields. There was also a precedential opinion in the same case in 2022.