When deceased parents leave property to their children, the siblings inherit the property together as tenants-in-common. Usually, one or some of the siblings live in the inherited property rent-free, while the other siblings (especially those who live out-of-state) do not receive any income from the inherited property. These siblings who do not receive any benefit would now consider forcing the sale of inherited property.
Different procedure from regular partition proceedings is required under the Uniform Partition of Heirs Property Act.
Uniform Partition of Heirs Property Act (UPHPA)
Under UPHPA, property classified as “heirs property” undergoes a different procedure to ensure that the heirs will receive fair market value over the sale of inherited property. First, UPHPA requires the siblings to bargain in good faith regarding the sale of the property in a mediation conference. If this fails, the court is required to make a valuation of the inherited property in an evidentiary hearing. Based on this value, the property is offered to the defendant’s siblings, who are given the right to purchase the share of the sibling seeking partition. If the defendant-siblings do not exercise this right of first refusal, the property may be sold in the open market (and not at auction) at fair market value.
Options before filing the petition to force the sale of inherited property
Despite the UPHPA provisions providing for better procedures to sell inherited property, it is still better to explore out-of-court options before filing this petition to force the sale of inherited property. Usually, co-owner siblings have three options:
- Negotiate a buy-out with your other siblings
- Talk to your other siblings and see if they are willing to buy out your share. This will entail an appraisal of the property in order to compute your respective share.
- Sell your property share to a non-owner
- You can also sell your interest to a third party. However, this option is rarely utilized because no one wants to co-own property with a stranger.
- Previously, real estate investors would buy the share of a co-owner/co-heir and then file an action for partition. This would allow the real estate investor to buy the house in an auction at a price below market value. However, with the enactment of the Uniform Partition of Heirs Property Act in New York, this practice has been minimized.
- File an action with the court to force the sale of the house
- Filing a lawsuit for partition with the court should be considered an action of last resort because it entails legal fees and expenses which might eat up your equity in the home. Usually, however, once an action is filed, parties are more amenable to resolving the issue by selling the property in order to avoid protracted litigation and expensive attorney’s fees.
Voluntary sale of the house
Before filing an action for partition, you should try to talk with the other siblings so you can come to an agreement regarding the property. As mentioned above, the other siblings could buy out your share. All the siblings can also agree to just sell the property at a particular price. A voluntary agreement among the siblings will eliminate the need for expensive litigation on an action for partition.
Demand letter to compel negotiation
If your other siblings do not take your issue seriously, you can contact a lawyer to send a demand letter to your siblings requesting the sale of the property. Although you can send the demand letter yourself, having a demand letter sent by an attorney shows that you are serious in your endeavor to sell the inherited property. In most instances, your siblings would already take your issue seriously because going to court will entail expenses and rarely will a court deny an action for partition filed by a co-owner.
If the siblings still ignore your issue, make sure all your efforts to reach an amicable resolution with them in selling the inherited property is documented. You may be able to recover attorney’s fees when you file an action for partition if you prove that your siblings were obstructive in your efforts to enter into an amicable resolution to dispose of your share of the inherited property. Schorner v. Schorner, 128 Misc.2d 415 (1985).
Filing an action for partition
Filing a partition lawsuit should be a last resort because it entails legal fees and other expenses. Once a lawsuit is filed, parties usually enter into an amicable settlement to resolve the dispute and avoid protracted litigation. Pursuing a partition lawsuit until finality is not wise because legal fees will eat up the homeowner’s equity.
Expenses you can claim as reimbursement
In an action for partition, you can claim reimbursement for expenses you spent on the property, such as real property taxes, home improvements, and the like, for as long as these expenses are substantiated with receipts. You can also recover attorney’s fees, which will usually be taken from the proceeds of the property when it is sold. This will eat up the homeowners’ equity, because once the property is sold and the mortgage debt, if any, is paid, attorney’s fees might have to be deducted from the proceeds before it is distributed to the siblings, which will result in a lower share. For this reason, it is to all the siblings’ best interests to resolve an action for partition through a voluntary sale.
Defenses to an action to compel the sale of the house
When a sibling files an action to force the sale of inherited property, you can raise the following defenses:
- The property can be divided physically.
If the property can be divided physically, the court may prioritize physical division of the property to the co-owners rather than selling it. This, however, usually applies in cases of land, where physical division is possible. In cases where a house is co-owned, physical division is difficult, if not impossible, so a forced sale is usually ordered.
- The sibling who filed the action for partition has come to court with unclean hands.
In Kopsidas v. Krokos, 294 A.D.2d 406 (2002), the Court held that a partition action may be dismissed when a plaintiff comes to court with unclean hands. This happens when the complaining party is guilty of immoral, unconscionable conduct, and even then, only when the conduct relied on is directly related to the subject matter in litigation and the party seeking to invoke the doctrine was injured by such conduct.
Forcing the sale of inherited property through partition may entail some initial expenses, but sometimes, it can be inevitable, especially when they do not agree to the sale. If you would like to force the sale of inherited property, consult with a partition lawyer immediately. Usually, a demand letter can already initiate negotiations. At the most, a partition action will compel the parties to really sit down and negotiate an amicable resolution to the dispute, which would involve the sale of the property and the distribution of proceeds. If you need assistance, we at the Law Offices of Albert Goodwin are here for you. We have offices in New York, NY, Brooklyn, NY and Queens, NY. You can call us at 718-509-9774 or send us an email at email@example.com.