The Basics of the Uniform Partition of Heirs Property Act in New York

By: Ariel S. Holzer, Esq., Michael A. Curatola, Esq. and Jessica M. Moore, Esq.

Introduction

The law concerning partitioning a property in New York changed as of December 2019 when New York enacted the Uniform Partition of Heirs Property Act (“UPHPA”). The UPHPA seeks to protect owners who have recently inherited real property from an estate. It does so by mandating a settlement conference before any heirs property can be partitioned, and requires that the parties to that conference act in good faith. This, however, raises some uncertainties. What exactly is “heirs property”? What does it mean to act in “good faith”? And how does this whole process start in the first place?

Background

In 2010, the UPHPA was first drafted by the Uniform Law Commission. It was subsequently adopted by several states, including New York on December 6, 2019. In New York, the UPHPA is governed by Real Property Actions and Proceeding Law (“RPAPL”) §993. The UPHPA was drafted as a response to the practice of some real estate investors who would acquire a fractional interest in property owned by a number of people as tenants-in-common (often family members) and then force a sale of the property at below-market rate. This was more common in communities where estate planning was less prevalent, resulting in a decedent’s property passing to heirs in intestacy as a tenants-in-common. Partition by sale under these circumstances depleted the wealth of many families. The UPHPA was intended to protect the most vulnerable of these families.

What is a Tenancy-in-Common?

Tenancy-in-common is a ubiquitous form of property ownership in the United States. The owners, known as tenants-in-common, each own a portion of an undivided parcel of real property. One reason tenancy-in-common is so prevalent is intestacy. If a person dies without a will or other testamentary instrument, they die “intestate” and their assets are distributed under a default system known as “intestacy.” If a person dies intestate, any real property they own will often be given to their heirs who then become tenants-in-common.

For example, if an elderly widow with three surviving children owns a house at the time, she dies intestate, ownership of the house will transfer to the three children, who will each own the house as tenants-in-common. The children each inherit with a one-third interest in the property.

What is Heirs Property?

Heirs property is defined in the UPHPA as real property held in tenancy-in-common which, at the time the partition action is filed, satisfies all of the following requirements:

1. There is no agreement governing the partition of the property;
2. Any of the co-tenants acquired title from a relative; and
3. Any of the following applies:
   1. 20% or more of the interests are held by co-tenants who are relatives;
   2. 20% or more of the interests are held by an individual who acquired title from a relative;
   3. 20% or more of the co-tenants are relatives of each other; or
   4.  any co-tenant who acquired title from a relative resides in the property.

It is important to note that the court has the final say on whether a property meets this definition. While there is no specific timeline for this determination, at minimum the co-tenants must receive notice of the proceeding. Property that is not determined to be heirs’ property is not governed by the UPHPA and may proceed as a regular partition action.

Nuts and Bolts: How Does the Proceeding in New York Get Started?

RPAPL §993 does not change the service requirements for partition actions if the plaintiff is attempting personal service. Thus, if a plaintiff wants to initiate a partition action against co-tenants for heirs property, the plaintiff must serve its co-tenants in compliance with CPLR §308.[1]

However, under RPAPL §993, if a plaintiff seeks an order of notice of the partition action by publication and the court determines the property is heirs property, the plaintiff must also post a conspicuous sign on the property within 10 days of the court’s determination. The plaintiff is required to maintain that sign for the pendency of the action. The sign must state that an action was commenced, identify the court and its address, and the common designation of the property. A court may also require the plaintiff to place his name and the name of known defendants on the sign.

Regardless of how service of the notice of partition is rendered, the plaintiff must file proof of service with the Clerk’s office within 20 days of such service. The plaintiff will then file a request for judicial intervention and the court will inform the parties of the time, place, and purpose of a settlement conference. The plaintiff must post a copy of the settlement conference notice in a conspicuous place on the property within 20 days of the date of the notice. Pursuant to UPHPA the parties to the partition action must participate in a settlement conference prior to moving forward with the partition. The purpose of the settlement conference is to encourage co-tenants to resolve issues related to partition, including determining the value of the property.

What is the “Good Faith” Requirement?

Once the settlement conference begins, the parties are required to negotiate in good faith to reach a mutually agreeable solution. If the plaintiff fails to negotiate in good faith, the partition action will be dismissed.  This is even true where there are multiple plaintiffs and only one fails to negotiate in good faith. The statute does not state whether the court is required to dismiss the action with prejudice. If the action is dismissed without prejudice, then the plaintiff may have an opportunity to bring the action again.

During the settlement conference, if the parties fail to reach a mutually agreeable solution, a referee, judicial hearing officer, or other staff will make a report of the facts, conclusions of law, and make recommendations to the court regarding any parties’ failure to negotiate in good faith. The recommendations will determine whether or not the action is dismissed with prejudice.

What can a plaintiff do to act in good faith during a settlement conference? The answer is not clear. Some guidance may be found in the good faith standard based on “totality of the circumstances” found in foreclosure settlement conferences. However, this only means that there is no single factor that determines whether the plaintiff acted in good faith. Rather, all the factors will be considered together. A plaintiff should at a minimum seek to comply with all applicable statutes and court rules. Further, a plaintiff should attempt to a form of resolution with the defendant and avoid unreasonable delay. Essentially, parties should aim to be on their best behavior and make real effort to resolve the matter amicably.

Liberal Pleading Requirements for Defendants

In most actions, if a defendant fails to respond to a complaint, the plaintiff may seek a default judgment against the defendant and obtain the relief that was sought. However, in an action brought under RPAPL §993, so long as a defendant attends the first settlement conference, the defendant is excused from any failure to file an answer or pre-answer. At the settlement conference, the court will inform the defendant of his rights and responsibilities under the law. The defendant will be able to file an answer within 30 days after his initial appearance at the settlement conference.

More Questions? Contact Us!

Falcon Rappaport & Berkman LLP has the knowledge and experience necessary to guide you through you a partition proceeding. To set up a meeting with one of our attorneys, please call (516) 599-0888.

[1] Thus, the plaintiff must serve the notice of partition to a co-tenant domiciled within the state by personally delivery to the cotenant or delivery to a person of suitable age and discretion at the co-tenant’s place of business, home, or dwelling and mailing the notice to the person’s last known residence of place of business. These are the most common forms of personal service. There are other forms of service and we can discuss the requirements of the other forms if necessary.

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.