Partition of Real Estate; or, Breaking Up is (Not) Hard to Do

Posted: 7 Sep 2000

See all articles by Thomas J. Miceli

Thomas J. Miceli

University of Connecticut - Department of Economics

C. F. Sirmans

Florida State University - Department of Risk Management, Insurance, Real Estate & Business Law

Abstract

Under the common law, joint owners of real estate have the right to seek partition, or physical division, of the land. However, modern statutes also allow courts to order a sale of the land, with proportionate division of the proceeds, if the loss from division is substantial. Although forced sale can be beneficial by preventing inefficient fragmentation of the land, it entails a cost by depriving nonconsenting owners of any value of their share of the land in excess of its market value. This paper develops an economic standard for choosing between partition and forced sale based on the objective of maximizing the aggregate value of the land. The basic trade-off is between the benefits of forced sale when scale economies are present and protection of subjective value under partition. A review of the case law suggests that courts have developed a standard that reflects this trade-off.

Suggested Citation

Miceli, Thomas J. and Sirmans, C. F., Partition of Real Estate; or, Breaking Up is (Not) Hard to Do. Journal of Legal Studies, Pt. 1, No. 2, Vol. 29, June 2000. Available at SSRN: https://ssrn.com/abstract=231119

Thomas J. Miceli (Contact Author)

University of Connecticut - Department of Economics ( email )

365 Fairfield Way, U-1063
Storrs, CT 06269-1063
United States
860-486-5810 (Phone)
860-486-4463 (Fax)

C. F. Sirmans

Florida State University - Department of Risk Management, Insurance, Real Estate & Business Law ( email )

Tallahasse, FL 32306
United States
850 644-4076 (Phone)

HOME PAGE: http://www.cob.fsu.edu/rmi

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