Anna and Mark are residents of Memphis, Tennessee. While they were married, they purchased a condominium in Gatlinburg, Tennessee for vacation purposes. They purchased the condominium with marital funds and as tenants by the entirety. In 2004, Mark and Anna divorced, but maintained a friendly relationship. Since they both wanted to continue to have access to their condo in Gatlinburg, they had their lawyers insert the following clause into their divorce agreement:
"Both parties hereto agree that as long as both parties are living, neither party may sell, encumber, or otherwise partition our condominium in Gatlinburg, TN without the consent of the other party."
In 2012, Mark has some financial difficulties and really needs the money he could get from selling his share of the condo. Anna, who still wants to continue to use the condo, will not give her consent on selling and cannon afford to buy him out. Mark seeks an action to partition the property, stating that the clause that was placed in the divorce agreement is not enforceable because it is an invalid restraint on alienation.
There are two issues to address here. The first one is whether or not the agreement Mark and Anna made is an invalid restraint on alienation. Once that issue is addressed, it can be determined if it is enforceable or if the action to partition should be granted.
In Connie McGahey v. James Wilson, 2001 Tenn. App. LEXIS 499, McGahey and Wilson had purchased land together as tenants by the entirety while they were married. When they divorced, they entered into a property settlement agreement that included a provision that the parties agreed that the property could not be sold unless both parties gave consent.
When Connie sought an action to partition fifteen years later, the special master that was appointed to the case by the trial court found that the agreement was unenforceable because it violated public policy. Later, the appellate court affirmed the decision but modified the order to show that the restriction was unenforceable not because it violated public policy but because the settlement agreement provided no time limitation regarding the restriction, and the agreement did not indicate the reason the parties agreed to the restriction.
Anna and Mark's case is much like McGahey v. Wilson. Mark and Anna's settlement agreement, like McGahey and Wilson's, did not provide a reasonable time limitation for the restraint. It also did not provide any indication as to the parties' intentions for agreeing not to sell or partition the property.
To maintain the enforceability and rigour of the agreement not to sell or partition property, since there was no period of limitation expressed, there must be evidence of the reason for the restraint adequate enough to allow for the determination of a reasonable duration necessary to achieve such result. See McGahey v. Wilson, 2001 Tenn. App. LEXIS 499. There was no such evidence present here. Therefore, the agreement that was made between Mark and Anna is an invalid restraint on alienation.
Mark and Anna purchased the condo as tenants by the entirety, which only exists between husband and wife and is terminated upon divorce. Unless stated otherwise, it then becomes a tenancy in common. It has not been stated otherwise which means that Mark and Anna are now tenants in common. Tenancy in common is defined as a tenancy between two or more individuals who may hold either equal or unequal shares, where each person has an equal right to possess the entire property, with no right of survivorship.
Tennessee law states that any person that holds possession of an estate as a tenant in common, or otherwise, with other co-tenants is entitled to partition the property or sell the property for partition. See Tenn. Code Ann @ 29-27-101 (2011).
Based on the McGahey v. Wilson case and the Tennessee Code, it is probable that the court would find the agreement made between Mark and Anna to be unenforceable. Following that decision, it is also probable that the action to partition would be granted.