Determination of Market Value Under the Uniform Partition of Heirs Property Act

By: Samantha M. Compono, Esq., Michael A. Curatola, Esq. and Jessica M. Moore, Esq.

Introduction

One of the most important aspects of the Uniform Partition of Heirs Property Act (the “The UPHPA”) is the determination of the value of the property at issue. Often, issues arise between the parties to the action because they do not know the value of the property. To remedy this issue and provide a fair and equitable solution to the parties, the UPHPA provides flexibility in determining a value.

Background

The Uniform Partition of Heirs Property Act (“UPHPA”) allows co-tenants of inherited property to avoid forced partition by sale. However, in some circumstances, partition by sale may still be appropriate. The UPHPA was enacted into law in New York State by Governor Andrew Cuomo on December 6, 2019.

Under the UPHPA, under any action to partition real property, a court is now required to determine whether the property is “heirs property,” as defined by the UPHPA. If the court determines that the property is heirs property, then a court shall partition the property in accordance with the UPHPA. Alternatively, the Court may direct the property be sold on the open market, whereafter a determination of market value of the property will need to occur.

Methods for Determination of Market Value

Parties to the action will first attempt to resolve the issue of value at the settlement conference. There, all parties, especially the plaintiff, are expected to negotiate in good faith to determine either the fair market value of the property or a method of determining the fair market value of the property. Methods for determining value can include, agreeing to use a particular real estate broker’s opinion, averaging the value of multiple broker opinions, or using an appraiser. Parties are also given the opportunity to choose other creative methods to resolve the issue of market value.

At the settlement conference, if the parties agree to a fair market value or method of determining the fair market value, then the court must accept the parties’ decision. This solution is preferred because it can reduce unnecessary costs such as hiring an appraiser and may allow the parties to get the greatest value for the property (if they choose to sell) by using a broker’s opinion. Encouraging resolution at the settlement conference stage will also reduce the parties’ potential attorneys’ fees.

If the parties cannot agree on the fair market value and/or the method of determining the fair market value of the property at the settlement conference, the court will hold an evidentiary hearing to determine the fair market value of the property.

Use of Appraisals to Determine Market Value

The court will only order an appraisal if “the evidentiary value of an appraisal is outweighed by the cost of the appraisal” RPAPL § 993(6)(c). Otherwise, the court will hold a hearing in which both parties may present evidence as to their proposed valuation of the property. This provision is helpful for co-tenants of smaller or less valuable properties as it reduces their overall costs in pursuing an action or maintaining their property as the court will not automatically order an appraisal which can cost parties hundreds or thousands of dollars.

If the court determines that an appraisal is beneficial, the court will appoint a disinterested real estate appraiser to determine the fair market value of the property. The UPHPA does not provide a procedure for appointing an appraiser. Courts often seek recommendations from the parties and then choose from amongst the recommendations.

Once the appraiser provides the court with a verified or sworn to appraisal, within 10 days, the court must send a notice to the parties informing them (1) of the appraised fair market value of the property plus the cost of the appraisal, (2) that the appraisal is available at the clerk’s office; and (3) that the parties may file objections to the appraisal no later than 30 days after the notice was sent, stating grounds for objection.

Whether or not the parties file any objections, the court must hold another hearing to determine the fair market value of the property no sooner than 30 days after a copy of the notice of appraisal is sent to each party. At this hearing, the court may consider other evidence offered by other parties. At the conclusion of the hearing, the court will determine the fair market value and send notice to the parties, regardless of whether the fair market value is determined with or without an appraisal.

Conclusion

The inclusion of a determination of fair market value stage highlights the legislature’s intent that the issues dealing with heirs property be dealt with earlier in the litigation process and with as little court intervention as possible. This provides co-tenants more autonomy in this process. Parties dealing with distribution of heirs property are most often family members who have the most intimate knowledge of the property and the financial circumstances of other family members. These factors may be important to determining property value and with the guidance of mediators and referees at court conferences, the underlying issues surrounding the valuation of the property may be addressed to prevent waste of judicial and personal resources.

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DISCLAIMER: This summary is not legal advice and does not create any attorney-client relationship. This summary does not provide a definitive legal opinion for any factual situation. Before the firm can provide legal advice or opinion to any person or entity, the specific facts at issue must be reviewed by the firm. Before an attorney-client relationship is formed, the firm must have a signed engagement letter with a client setting forth the Firm’s scope and terms of representation. The information contained herein is based upon the law at the time of publication.