Fractional Interest
A partial ownership share in real property, less than complete ownership. Fractional interests commonly arise from inheritance when property passes to multiple heirs, each receiving a percentage based on their relationship to the deceased.
Understanding Fractional Interest
Fractional interests represent shared ownership of property. Each fractional owner has rights to the entire property proportional to their interest—they can't claim exclusive use of any portion. All fractional owners must agree to sell or mortgage the entire property.
Fractional interests most commonly arise through inheritance. When a property owner dies, their interest passes to heirs. If there are multiple heirs, each receives a fraction. Over generations without consolidation, ownership can become extremely fragmented.
Managing fractionally-owned property is challenging. Decisions require consensus or majority vote (depending on jurisdiction). Any owner can force sale through partition. Disagreements among owners often lead to neglect, tax delinquency, or forced sales.
For curative title investors, fractional interests present opportunities. Purchasing individual fractional interests, one by one, can lead to controlling or complete ownership. Alternatively, purchasing a single fraction and petitioning for partition can force sale of the entire property.
Real-World Example
A grandparent dies owning a property, leaving four children who each inherit 25%. One child dies, and their 25% splits among three grandchildren (8.33% each). Another child sells their 25% to an investor. Ownership is now: Investor (25%), two children (25% each), three grandchildren (8.33% each).
Texas-Specific Information
Texas follows general co-ownership rules for fractional interests. Any fractional owner can petition for partition under Texas Property Code. The Texas UPHPA provides additional protections for heir property facing partition. Texas does not recognize 'right of first refusal' for co-owners unless specifically agreed—fractional owners can sell to anyone.
Related Terms
Heir Property
Real estate passed down through generations without clear title documentation, typically because owners died without wills and no probate was filed. Multiple heirs often share fractional ownership interests.
Partition Sale
A court-ordered sale of property when co-owners cannot agree on its use or disposition. Any co-owner can petition for partition, forcing a sale and division of proceeds according to ownership percentages.
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