When property is left as an inheritance to more than one person, we get into situations where multiple people own the same property. Owning property together does not always make sense. For example, if it’s a one-family house owned by two people, they cannot both live there. They can either rent it out and share the rent, have one of them live there and pay the other person rent, agree that the person who doesn’t live there is okay with not getting compensated, or they can sell the property.
Situations arise where there is no agreement on how to share ownership rights to the property. For example, one of the heirs uses the property or rents out the property, not letting the other heirs benefit. In New York when property is owned jointly by more than two individual owners or two entities and a conflict erupts, any owner has the right to bring a partition lawsuit with the Court. Partition lawsuits can be brought regarding residential or commercial property. In other words, a partition lawsuit means that property ownership or property maintenance and responsibilities are going to be decided by the Court by dividing the property or the tasks in some manner.
Typical conflicts that may result with residential joint property owners are who is going to live at the property, who maintains the property, takes care of repairs and who is responsible for paying taxes and whether to sell the property or not. Conflicts involving commercial property may be similar except that instead of who is going to live at the property it may be over choosing the most suitable tenant. When the parties are unable to resolve their conflicts, a partition lawsuit is sometimes the only way to get the other party to agree to what must or needs to be done.
There are several remedies that the Court may use to resolve conflicts. For instance, if property needs to be sold, the Court will typically appoint a referee to sell the property and divide the profits amongst the owners according to their percentage of ownership. This type of situation frequently occurs after a New York decedent leaves property to their adult children, and one child decides they want to sell the property and the other does not. Another common situation is when the children decide to keep the property and then cannot decide who is responsible for paying the maintenance, repair and taxes. The referee may allow the owners to submit their evidence of expenses so that the referee can decide on how to allocate expenditures and reimbursements that may be due to an owner. Another solution may be a buy-out by one of the co-owners when one party no longer wants to retain the property. Or the property may be leased with the referee deciding the amount of rental payments that should be allocated to each owner. The Court may look at statutory limits as well as the rights, title and interests of the parties in the property before making any decisions.
Avoiding Partition Lawsuits
One way to avoid a partition lawsuit is to use estate planning techniques before death, such as making a will which directs for the property to be sold and to not have anyone use the property after the original owner’s death, or to create a trust (if tax-appropriate). While it is difficult to anticipate what might happen when you purchase or invest in property with another person, or leave the property to your heirs, you can minimize your risk of ending up in a partition lawsuit by utilizing estate planning or preparing a partnership or other agreement which sets forth the duties and responsibilities of each owner and the proportion of the costs each owner is responsible for so that there are less conflicts later on down the road. Also, you should make sure the other joint owner or owners are people that you know and trust. This way it is may be easier to avoid conflicts or resolve them without having to turn to the Courts for help. Also, working with an experienced New York property attorney can help you avoid and settle conflicts.
If you wish to speak to a New York estate and property attorney, call the Law Offices of Albert Goodwin at (212) 233-1233.