Owelty of Partition Deeds in Texas

Texas Owelty of Partition Deeds

Co-ownership of property provides many advantages for owners if everyone agrees about the shared property and its use. When relationships, finances, or other factors change, however, co-ownership may no longer be the best option. Fortunately, Texas laws provide several options for opting out of co-ownership without great difficulty or cost. One such option is an owelty of partition deed.

Definition and Application

Literally defined, owelty means equality. In real estate, an owelty partition is a division of property (usually where one owner retains 100% of the property subject to the other owner’s lien) when dividing the property in kind is not feasible. It is a way to ensure that each co-owner receives equal value from the property when the property cannot easily be divided. An owelty of partition deed is most commonly used in divorces or other situations where co-owners want to grant the property to one owner and create lien rights for an owner or owners not remaining on title.

For example, a married couple going through a divorce may have the court award the property to one of the spouses. Should the property still be subject to a lien as a result of the spouses jointly receiving a loan to purchase the property while married, the spouse that will no longer be on title should require a type of lien to be enforced in the event the spouse remaining on title fails to pay the original note. This lien may be effected by creating an owelty lien in the deed between spouses. The spouse being awarded the property secures assumption by executing a deed of trust.

Additionally, co-tenants (joint owners) outside the context of divorce may execute owelty deeds as part of their desire for one owner to receive 100% of the property. The owelty deed itself will create a lien, and the specific facts of the transfer may require other lien documents as well. For example, a third-party lender may provide funding for purchase of a part of the property, thereby requiring a separate note and deed of trust to be created.

Sample Language

The following is some sample language often found in owelty of partition deeds.

"First.  A divorce was granted terminating the marriage between Grantor and Grantee by divorce decree dated ______, rendered in Cause No. ______ in the ______ ______ Court of ______ County, Texas.  An order partitioning the Property was entered ______ in the same cause and Court.

First.  Grantor and Grantee have agreed to the transfer of ownership and owelty of partition effected by this deed by separate Owelty of Partition Agreement dated ______, between Grantor and Grantee, as cotenants of the Property.

Second.  Grantor and Grantee, owning the Property as tenants in common, desire to effect a partition of the Property in order that Grantee own 100 percent of the Property in fee simple.  Grantee has arranged to borrow the amount of $______ from ______ ("Lender"), in order to acquire the Property Portion Conveyed in fee simple.  Lender is willing to advance that amount provided that the indebtedness is secured by a first and superior vendor's lien, owelty lien, superior title, and a deed-of-trust lien, all on the full fee simple title in and to 100 percent of the Property.

Third.  The Property is not susceptible to partition in kind and, for Grantee to acquire the full fee simple title in and to the Property Portion Conveyed, it is necessary to fix a lien on the entirety of the Property in the amount of $______.  The lien represents an owelty of partition and the necessary adjustment between the parties to carry out the purposes of the partition.  Grantee acknowledges that the vendor's lien, owelty lien or owelty of partition, and superior title are superior to Grantee's rights to use and occupy the Property as Grantee's homestead or otherwise as fully and completely as if the liens or owelty of partition were fixed and judicially decreed in a partition suit between Grantor and Grantee."

Owelty of partition deeds and affixing liens to property upon division by joint owners are some of the most complex concepts in Texas real estate law. These matters are especially complicated by homestead rights in Texas. Working with a competent real estate lawyer will ensure that co-owners protect their interests by using the options which best meet their needs to separate ownership.

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