In Libeau v. Fox, download file, the Delaware Supreme Court affirmed in part and reversed in part a Chancery Court decision that interpreted an agreement among three friends for co-ownership of a beach house. The Chancery Court ruled that the parties effectively agreed to waive their statutory right to a partition of the property and based on the record presented at trial, the trial court determined that the agreement would expire upon the death of the last of the three original owners. However, the Supreme Court determined that reformation of the agreement that expressed the intent of the parties did not extend to changing the form of ownership from a joint tenancy with a right of survivorship to a tenancy in common. The Supreme Court adopted the reasoning of the trial court in determining that one can waive partition rights without an explicit disclaimer.
Rather, such an agreement need only contain a procedure for the co-owners to sell their interest in a manner that is inconsistent with the later maintenance of a partition action.
Specifically, when a contract provides an exit mechanism that is subject to certain conditions and when the filing of a partition action would allow an exiting party to escape those conditions, the exiting party’s decision to sign the contract constitutes a waiver of the statutory right of partition. Lastly, the court noted that such agreements are not inconsistent with public policy which allows for reasonable restrictions on the transferability of real property.