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For centuries, New York landlords have used an old legal concept to force tenants out of their homes. This legal maneuver is called a “partition action.” When multiple owners own property, any one of them can file for a partition action. Partition actions ask a judge to divide the property. When a court does not divide the property, it will become auctioned off. Partition actions often come into play when multiple family members inherit a house. 

Partition Actions can Harm Families Who Inherit Property

A NY1 news investigation revealed one example of a partition action that resulted in negative consequences. A man from Queens inherited a one-third share of his family home. Each of his brothers also inherited one-third share each of the properties. Both brothers sold their shares of the home to an outside investor. Eventually, a partition action was filed and he was forced to sell his share, even though he did not want to. The investor purchased the home for $525,000 and sold it for $900,000. 

Understanding the Uniform Partition of Heirs Property Act

11 other states have passed some version of the Uniform Partition of Heirs Property Act, including New York. Nine states have introduced the legislation. Under the new law, a holdout heir of the property has the right to buy out the interests of another owner who is trying to partition the property. When the sale of the house cannot be avoided, the sale must happen on the open market. 

The sale will happen through a broker appointed by the court, not through an auction. Both of these regulations are intended to help a holdout owner who inherited property receive fair market value for the property. 

Commercial Property Investors Often Prey on Families Who Have Inherited Property

Partition actions are often used by real estate investors to acquire inherited family homes at prices below the market value. Commercial property investors often target properties that have been handed down in families. Specifically, investors target family homes that are now owned by multiple members of the same family. 

Brad Hoylman, a Democratic state senator from Manhattan sponsored the new partition of heirs legislation. The state senator stated that “the message to property developers who would like to try to take advantage of grieving loved ones and try to buy out homes from underneath them is: stay out of New York,” 

The investors buy one share of a property and then ask the court to issue a partition action. As a result of the partition action, a New York court can force family members who do not want to sell the property at auction. At the auction, these family homes often sell for much less than they would on the market. 

Who Does the New Partition Action Law Protect?

The Uniform Partition of Heir’s Property Act protects family members who inherit property. Family members can inherit property from a parent or family member’s will, or through New York’s intestacy laws when the family member does not have a will. The law only protects family members who inherit real estate as tenants in common with their other family members.  

Tenants in common is a legal relationship in which two or more people share the ownership rights in a parcel of land or property. Each independent tenant in common has an individual owner of the property. For example, if there are four tenants in common, they might each own a 25% interest in the property. Or, they might each own different shares. For example, one tenant could own 40%, and the other three tenants could each own 20%. Tenants in common have the right to leave their own share of the property to any beneficiary in a will or trust. Family members can independently sell their portion of the ownership, or borrow against it. However, one owner cannot sell his or her property share without the approval of the other owners, unless the court issues a partition action. 

What Happens When Owners Cannot Agree on Whether to Sell the Family Home?

Owners of the property who are holding out and do not want to sell must have the option to buy out the other owners. When families cannot agree as to whether or not to sell a property, they will need to attend a mediation session. The goal of the mediation session will be to resolve the issue before a partition action happens. 

Through the mediation process, the owners might decide not to sell. If the owners cannot reach an agreement through the mediation process, a New York judge might require the sale of the property through the open real estate market, not at an auction. The whole goal of the legislation is to make sure that some co-owners do not run over the interests of other co-owners. It also seeks to ensure that commercial investors do not prey on those who have inherited property. 

If You Need to Start a Partition Action or Defend Against a Partition Action, We can Help

Do you own property with a relative? Have you reached an impasse with co-owners regarding what to do with the property? If so, you may need to start a partition action. On the other hand, you might be a co-owner of a piece of property and you are the only co-owner who does not want to sell the property. Both of these situations can be stressful, especially when coping with the passing of a loved one. 

At Thomas Weiss & Associates, we understand how complicated family co-ownership of property can become. We also have an in-depth understanding of New York’s new partition law. Regardless of whether you want to sell or want to keep your inherited property, we can fight hard for your rights throughout the process. Contact our New York law firm as soon as possible to schedule your initial consultation.