In a previous blog post we discussed splitting jointly owned real property through a partition proceeding in New York State Court. In this post we talk about what happens when the property that is subject of the partition action was inherited. A somewhat recent New York State Statute – – RPAPL §993, the Uniform Partition of Heirs Property Act – – addresses this situation.
What is a Partition Action?
As a refresher, a person holding and in possession of real property as a joint tenant or tenant in common may maintain an action for the partition of the property or for a sale if it appears that a partition cannot be made without great prejudice to the owners. What that means is that if it is not possible for the property to be physically divided, the court can order a public sale. The parties would then split the proceeds from the sale in accordance with their respective interest in the property.
The Uniform Partition of Heirs Property Act (the “UPHPA”)
The UPHPA was enacted in New York in 2019 to mainly address a situation that negatively and disproportionately impacts minority communities in the State. That is, an outside investor purchases a share of inherited real property from one family member who co-owns the property with another family member that often resides on the property and does not want to sell it. The outside investor then commences a partition action to force a sale of the home. Because the remaining family member often cannot bear the cost of defending a partition action, the outside investor is able to unfairly induce the family member to sell his or her interest in the property to the investor for a lot less than what it is actually worth. The UPHPA attempts to curb this abuse by, among other things, requiring that the parties to a partition action involving “heirs property” engage in a judicially supervised settlement conference at the beginning of the litigation. There, the party who does not wish to sell the property may be given the option to buy the interest of the owner who wants to sell their share. The fairly comprehensive statute also provides for a fair market appraisal and a fair market sale of the property, as opposed to a sale at public auction.
What Is “Heirs’ Property”?
To qualify for relief under the UPHPA, the property at issue must be deemed to be “Heirs Property”. To qualify as such, the property must be held as a tenancy in common and must also satisfy the following requirements: (i) there is no agreement in a record binding all of the co-tenants which governs the partition of the property; (ii) any of the co-tenants acquired title from a relative, whether living or deceased; and (iii) any of the following applies: (A) twenty percent or more of the interests are held by co-tenants who are relatives; (B) twenty percent or more of the interests are held by an individual who acquired title from a relative, whether living or deceased; (C) twenty percent or more of the co-tenants are relatives of each other; or (D) any co-tenant who acquired title from a relative resides in the property. RPAPL§2(e).
Whether it is the partition of Heirs Property or property that does not fall within the scope of the UPHPA, partition actions are highly technical and should be carefully litigated. If you need assistance with a partition action contact Canales PLLC today.
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