In a recent case of first impression, argued and won by Thomas Dunlap and Mike Whitticar of Dunlap, Grubb, and Weaver, the Supreme Court of Virginia handed down an opinion which, for the first time, gave co-tenants the leverage they need against their uncooperative counterparts when making intangible improvements to their joint property.

The Court ruled that a co-tenant must pay for her share of improvements to real property even if she did not agree to the improvements, as long as the improvements increased the value of the property and that increase is realized through a subsequent sale.

Our firm defended three of the four siblings against the uncooperative sister in this case.

Four siblings owned a large plot of land as co-tenants in common located in Loudoun County, Virginia. Three of the four siblings paid for plans to subdivide the land into 68 plots in an amount of approximately $700,000. With the approval for the subdivision, the property was valued $8,895,000 and at only $4,800,000 undivided. Before the subdivision was built but after the plans were approved the market declined and the property was ultimately sold to a third party for $6,000,000.

The lone holdout, a sister who spends part of her year in Paris, initially opposed plans to subdivide the property. Her preference was to divide the 350-acre family farm into four equally valued parcels through partition in kind. The other three siblings had less interest in owning a 87 acre piece of the family farm so they sought to maximize the land’s potential value.

After discovering the land had 71 approved drain fields, the three siblings hired an engineering firm to complete surveys and other engineering work necessary to move forward with a subdivision. This move proved to be a wise use of the land as it nearly doubled the value from $4,800,000 to $8,695,000, and at a cost of slightly less than $650,000.

The Circuit Court of Loudon County eventually ordered a sale of the property, which yielded $6,000,000 from a developer who planned to go forward with the approved subdivision. Even though the property sold for $1,200,000 more than it would have without the improvements, the sister refused to pay her share of the $650,000 cost of the plans. She appealed the Circuit Court’s allocation of approximately $150,000 worth of costs to her share.

She argued that she should not have to pay for the work because it did not represent a “permanent” or “tangible” improvement to the property. Our firm was able to convince the Court otherwise.

Previously, the court had held that tangible improvements, such as a barn or physical improvements to a residence are permanent improvements and, therefore, chargeable against a co-tenant in a partition suit (a sale of land ordered by a court when there is discord between co-tenants and the owners cannot agree on the use, improvement, or disposition of the property) even if the co-tenant did not assent to the improvement. This has been undisputed law for some time. The basis of these decisions was the “permanent improvement” principle.

The court has also applied the “permanent improvements” doctrine to easements over one parcel of property to another. The court determined that the easements, although not physical or tangible, were sufficiently “permanent” to require co-tenants to pay their share of the cost.

Courts have previously held that summer plowing and weeding of agricultural land, even though it could be reversed through later neglect, increased the value received during a later partition of the land, so it should be treated as an improvement and the co-tenant should be required to pay a proportionate share of the cost. The basis for this decision was the principle that the increased value was received by the co-tenants at the time of the partition sale and, therefore, the improvement became “permanent” at that time.

It is now clear that improvements need not be tangible nor do they need to be permanent to add value to the land. If the value of the improvements is realized at sale the courts will force a co-tenant to pay their share of said expenses.

Our firm was pleased to represent the Christensen’s. It would have been an injustice to allow the one sister to benefit from the engineering work without also paying for her share of that work.