Many people opt for a simple approach to dividing their assets when making their estate plans, instructing that their property be “split equally” among heirs. Unfortunately, not all assets can be divided into equal parts.
When two (or more) unmarried individuals acquire real estate together through inheritance or investment, it may not make sense for them to physically share the property. In these cases, partition actions are used to settle disputes and give each owner a fair value for their share of the property.
Who Might Need a Partition Action?
Partition actions may be needed whenever co-owners (known as tenants in common) cannot agree on how an inherited property should be used. The majority of these actions involve selling the property and dividing the proceeds among the owners.
For example, a partition action may be necessary for a second residence if:
- One owner wants to live in the house and the other wants to sell.
- One owner wants to sell the house and another would like to keep it as a rental property.
- There are multiple co-owners.
- One owner wants to sell the house now, but another wants to fix it up and sell it for a profit.
- The co-owners originally agreed on how the house would be used, but circumstances. have changed.
- One owner wants to “buy out” the other.
- The tenants-in-common no longer wish to co-own the property.
How Do the Courts Divide a Shared Estate?
The New York Real Property Actions and Proceedings Law makes provisions for co-owners who wish to sell or divide their interest in shared real property, including the partition actions. These actions may be brought voluntarily by both parties, but if one party is resistant, another co-owner may file the action to force the sale of the property.
The court will consider many factors, including:
- The value of the property. Before making a ruling, the court will need to know how much the property is worth. There will need to be a full accounting of the property, including its fair market value, costs of maintaining the property, the selling price, and the amount owed on any outstanding mortgages.
- Whether you could physically split the property. There are two ways to partition real estate in New York. If the property is vacant, is a plot of land, or contains multiple lots or units, it may be possible to divide it into portions that each party would hold as sole owner. This is known as a partition in kind.
- How the property will be sold. If the property cannot be physically partitioned, it will be sold and the proceeds of the sale will be divided among the owners. Depending on the specifics of the case, the court may order the property to be sold at auction, by a neutral third party, or order one owner to buy out the other(s).
- How the proceeds will be distributed. The amount of profit received in these actions is proportionate to each owner’s amount of equity in the property. For instance, a house worth $125,000 split equally among five children would net each heir $25,000. However, if 50% of the same house were left to the oldest child, the oldest would receive $62,500 and the other heirs would receive $15,625 each.
Selling the property at a fair value and splitting the proceeds is usually the fairest way to divide co-owned real estate. A voluntary partition is best for all parties, as they require far less litigation and court time than a judicial partition. However, some owners may be unwilling to part with a property even if they will be compensated in the sale. In these cases, a co-owner may need to pursue a ruling from the courts, leading to higher litigation costs as well as delays in the settling of an estate.
Our experienced New York estate litigation lawyers can help you file a petition action and protect your rights throughout court proceedings. Contact Landskind & Ricaforte Law Group today through our online form to learn how we can help.