Understanding New York Partition Actions

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New York is a unique place to own real estate, because co-ownership is a lot more common here than it is in other parts of the country. This offers the advantage of making real estate investment more accessible to a wider group of people than it would be otherwise, given real estate prices, but comes with complications, too.


Co-ownership is also common in cases where two or more people inherit a house together or when two individuals take joint ownership of a property upon marriage, etc.


Co-ownership is more complicated because co-owners get into disputes. A common one arises when one owner wants to sell the property and the other does not. Sometimes the co-owner who does not want to sell is not in a position to buy out the selling co-owner’s share.


When this happens, New York real estate law allows for an action known as a partition. There are two types.


A physical property divide.


If it is possible to physically divide up the property then the courts may do so, essentially turning one property into two. The owners of each of the newly created entities are free to do whatever they want with their property.


For example, if you have a property with six lots then it’s easy enough to give three lots to one owner and three lots to the other. The owner of either parcel may now sell that parcel as if they were the sole owner of a 3-lot parcel all along.


A legal property divide.


Physical property divides aren’t very common in New York. It’s far more common to see properties which exist in a single building which can’t be separated.


You would then have the option to a voluntary partition, giving the co-owner the right to sell his or her share to someone else entirely. This is common when everyone involved is an investor, but can be harder when everyone involved is family. Family members may object to suddenly sharing ownership of a property with a stranger, or at least someone who is outside the family.


The Partition Action


A partition action takes the dispute to the courts. The most common outcome will be for the judge to order the sale of the property so that the proceeds of the sale may be split 50/50.


Co-owners can also voluntarily sell without going to court, but they’ll need a solid settlement agreement to protect all parties involved. Either court order or agreement will have provisions for a lot more than the disposition of the sale proceeds. For example, it will need to talk about who pays property taxes and upkeep costs until the property sells.


These actions are complicated.


They may sound simple enough when you read this, but the truth is any of these arrangements requires some highly technical legal work. The court has many requirements, and mistakes can be extremely costly.


There are highly situational issues to consider. For example, often one co-owner lives on the property and the other didn’t. The owner who lives on the property can’t block the sale and may be forced from the home, an issue which caused New York to pass new laws this year after discovering that investors would buy an interest in a property that had been passed down from generation to generation, then use partition actions to force the rest of the family to sell.


The bill offers several protections to homeowners: requiring the property to be sold on the open market and not at auction, mandatory mediation, and the right of first refusal for “holdouts” who don’t want to sell. Note that none of this blocks the investor from pressing the issue.


Whether you are the target of a partition action or the initiator of one you’ll need a skilled real estate attorney on your side. If you need help, contact Richman Law Firm PLLC today.


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