Facts: Ms. Blue and Ms. Vance were in a domestic partnership for 15 years, during most of which they lived in a single-family residence.

Ms. Blue purchased the couple’s home with her funds and had the property deeded to both as tenants in common with rights of survivorship.

Five years after Ms. Blue bought the home, they took out a loan secured by the house to renovate their business and pay off Ms. Vance’s credit card debt. Six years later, they obtained another line of credit that was secured by the home so they could pay various business expenses.

Ms. Vance, an alcoholic, exhibited increasingly erratic behavior that became violent. Ms. Blue obtained several orders of protection against Ms. Vance. Ms. Vance only occupied the property intermittently between 2011 and 2015. The relationship ended in 2015 after a violent episode where Ms. Blue obtained a five-year order of protection, and Ms. Vance pleaded guilty to criminal charges. Shortly after that, Ms. Vance moved to Illinois.

Three years later, Ms. Vance filed a partition action alleging that their jointly owned real property should be sold and the proceeds divided because the property was not suitable for partition in kind. Ms. Blue agreed the property was not suitable for partition in kind, sought compensation for paying more than her share of property expenses and asked the court to allow her to buy Ms. Vance’s interest in the property.

The proof showed that Ms. Vance contributed nothing toward the purchase or maintenance of the property. Ms. Blue paid all property taxes, insurance premiums, and mortgage payments. At most, Ms. Vance may have paid small amounts for certain repairs. The property was valued at $435,000.

The trial court found it would be inequitable to order the property sold under the circumstances. Because Ms. Blue “paid for everything” and was forced to seek protective orders due to Ms. Vance’s violent behavior, the trial court decided she should be allowed to purchase Ms. Vance’s interest for 5% of the property’s fair market value after accounting for each party’s contribution—or lack thereof—to the acquisition and preservation of the property.

Ms. Vance appealed.

On Appeal: The Court of Appeals reversed the trial court.

Tennessee law provides that a co-tenant may have jointly held property partitioned in kind or by sale.

Partition in kind means the physical division of the property. For example, if one two-acre lot is divided into two one-acre lots, that is a partition in kind. It is rarely possible to divide a single-family residence in that manner.

Tennessee law provides two options: partition in kind or sell the property and divide the proceeds. When a partition in kind is impossible, as is the case with most single-family residences, the property must be sold. The court’s only role is to determine the appropriate division of the sale proceeds.

The Court found the trial court erred by not ordering the sale of the property:

Here, the parties stipulated that the property cannot be partitioned in kind. So a sale is justified. Yet the court did not order the premises sold for division. Rather, it adopted a price and allowed one party to buy the other party’s interest for a court-specified amount. But a court-ordered divestiture of property interests at a court-determined price is not a sale as contemplated by [Tennessee’s partition statutes].

The court lacked the authority to order Ms. Vance to sell her interest to Ms. Blue. While the court has a statutory and inherent right to adjust the equities and settle all claims between or among the parties, it has no power to divest title out of one tenant and vest it in another. The statutory adjustment must be made by an appropriate allocation of the net sales proceeds, to be reflected in the court’s decree on distribution. The court must order a sale of the premises. Equitable considerations should factor into the court’s division of the sales proceeds. So we reverse the court’s remedy of a forced buyout and remand for further proceedings consistent with the partition statutes.

Because the trial court did not order a sale for partition, it did not determine an appropriate division of the sales proceeds. On remand, the court, without further proof, shall determine all rights and claims between the parties, partition the property by public sale, and make an appropriate allocation of the proceeds.

The Court reversed the trial court and ordered the sale of the jointly owned property.

K.O.’s Comment: (1) It is inevitable that family-law attorneys will have cases where unmarried couples own real estate together and need to divide the property when the relationship ends. Family-law attorneys must be familiar with the laws governing the partition of jointly owned real property.

(2) Enjoy some laughs from Saturday Night Live.

Vance v. Blue (Tennessee Court of Appeals, Middle Section, November 28, 2022).

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