Request By:
F. Chris Gorman
Steinfeld, Eddleman, Gorman & Shearer
Suite 1210 Citizens Plaza
Louisville, Kentucky 40202
Opinion
Opinion By: Robert F. Stephens, Attorney General; By William S. Riley, Assistant Attorney General
With your recent letter to the Attorney General there are attached three Deeds of Partition.
The question is whether these deeds qualify for exemption under KRS 142.050(8)(g) which exempts from the transfer tax partitions of real property.
In Hamilton v. McDonald, C.A. Ariz., 503 F.2d 1138, 1150 (1974), the word "partition, " in connection with the division of real property, is defined as the dividing of lands held by joint tenants into distinct portions so that they may hold them in severalty; partition severs unity of possession.
In Holt v. Holt, 202 S.W.2d 650, 652, 185 Tenn. 1, 173 A.L.R. 1210 (1947), it is stated that a partition is not a sale, but is a separation between joint owners or tenants in common of their respective interests in land, and setting apart of such interests, so that they may enjoy and possess the same in severalty.
In 59 Am.Jur.2d, Partitions, Section 1, it is pointed out that the term [partition] is more technically applied to the division of real estate made between coparceners, tenants in common, or joint tenants. It has also been defined as the act or proceeding by which co-owners of property cause it to be divided into as many shares as there are owners, according to their interests therein. The right to partition does not arise out of contract. It is the right to a severance, when there is a rightful unity not only of title but of possession.
A partition may be compulsory, that is, judicial partition, or voluntary, that is, by mutual consent.
Owelty of partition is a sum paid or secured, in the case of partition in unequal portions, by him who has received the larger portion to him who has the less, for the purpose of equalizing the protions. The term is usually, if not universally, applied to the partition of lands. It is the pecuniary compensation decreed by the court in actual partition to adjust an inequality of the shares not justified by the interests of the parties in the estate.
It would appear from an examination of the three deeds in question that as a result of a dissolution of the partnership among the parties, a division of real property was made with additional compensation in the form of notes, mortgages, and other obligations assumed by certain parties in order to equalize the partition and distribution of partnership assets. Such being the case, it would appear that these are deeds of partition which would be exempt from the transfer tax.