Uniform Partition of Heirs Property Act Partition by Sale in New York State


Mar 10, 2021

Uniform Partition of Heirs Property Act Partition by Sale in New York State

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

Introduction to the Uniform Partition of Heirs Property Act

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.

Pursuant to 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.

Court Ordered Partition In Kind Under the UPHPA

When co-tenants fail to purchase all the available interests in the property under the UPHPA buyout procedure, the court is directed to order a partition in kind. Partition in kind is a process by which the court divides the property into equal parts and each co-tenant will own a part of the property. In determining whether a partition in kind is appropriate, the court looks to various, including:

  • Whether property can be practicably divided among co-tenants;
  • Whether partition would result in a reduction of market value, significantly less than the amount reasonably expected to be obtained if the property was sold as a whole;
  • Evidence of the collective duration of ownership or possession of the property by a co-tenant and his or her predecessors in title or possession;
  • Co-tenant’s sentimental attachment to the property including ancestral, unique, or other special value;
  • Lawful use being made of the property by a resident or other co-tenant and the degree of harm if resident/co-tenant is no longer able to use the property;
  • Co-tenant’s contribution to property taxes, insurance, and maintenance of the property and/or contributions to the physical improvement of the property;
  • Price, terms, and conditions of the acquisition of the co-tenant's interest in the property if such co-tenant is not a relative of the person from whom he or she acquired his, her or its interest; and
  • Any other relevant factor.

If the court determines a partition in kind is appropriate, the court may require one or more of the co-tenants to make payments to each other to make the partition proportionate to the interests held by each co-tenant. During the proceeding, if certain co-tenants are unknown, cannot be located, or are the subject of a default judgment, the court shall combine the interests of those co-tenants and that proportion of the property will remain undivided.

If the court determines that a partition in kind would prejudice the co-tenants as a whole, the court may direct a partition by sale of the property, but only if at least one of the co-tenants timely requests a partition by sale. If none of the co-tenants initiates a partition by sale, the court will dismiss the action.

Open Market Sales are now the Default Under the UPHPA

Under the UPHPA, the default method of sale for heirs property is now an open market sale. Previously, when a court ordered a partition by sale, there would typically be an auction at the courthouse or in more limited circumstances, a sale by sealed bids. This limited the number of potential buyers and often reduced the price obtained for the sellers. Nevertheless, if an auction or sale by sealed bids would be more economically advantageous to the co-tenants, then the court may direct a sale by those means.

Upon entry of an Order by the court directing an open market sale, the parties have ten days to agree upon a NY licensed real estate broker, whereafter the Court will appoint the broker and establish a reasonable commission. If the parties cannot agree, the court will appoint a disinterested real estate broker. The broker then has a commercially reasonable time to obtain an offer at or above the pre-determined value of the property. The value for the property is determined either by an agreement of the co-tenants or by an agreeable method of valuation (See our article “Determination of Market Value” for an overview of that process). Once an offer comes in at or above that value, the property will be sold pursuant to the laws of the State of New York.

If after a commercially reasonable amount of time, no offer is obtained, the court may either (i) keep the property on the market with the same or substitute broker, (ii) approve the highest outstanding offer if it would be in the best interest of the parties, or (iii) order the property to be sold by sealed bids or at an auction.

An appointed broker that receives an offer for the heirs property must prepare a report for the court within seven days containing the following information:

  • a description of the property to be sold to each buyer;
  • the name of each buyer;
  • the proposed purchase price;
  • the terms and conditions of the proposed sale, including the terms of any owner financing;
  • the amounts to be paid to lienholders;
  • a statement of contractual or other arrangements or conditions of the broker’s commission; and
  • other material facts relevant to the sale.

Once the property is sold, each co-tenant will receive payment based on their fractional interest in the property as a whole. If the purchaser of the property is also a co-tenant entitled to share in the proceeds, the purchaser is entitled to a credit against the purchase price in an amount equal to the purchaser’s share of the net proceeds.

Conclusion

The UPHPA establishes procedural hurdles that co-tenants must overcome to a obtain a partition by sale of heirs property, and thus demonstrates the legislature’s desire to preserve wealth among family members and to keep residents in their homes. However, if the parties agree to a partition by sale, or the court believes it is in the best interests of the parties, the UPHPA provides the means to do so.

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.

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.

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