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Forced Sale of Inherited Property

Forcing the sale of inherited property among heirs is common. Real Property Actions & Proceedings Law (RPAPL) § 901 allows a joint owner or tenant-in-common to force the sale of co-owned property. Heirs who inherit property together are tenants-in-common, and one heir can force the sale of inherited property by filing an action for partition under RPAPL § 901.

Partition usually happens when one or more heirs live on the inherited property, rent-free, while the other heirs derive no benefit from the inherited property.

Different treatment of inherited property in New York

In New York, the forced sale of inherited property goes through a different process than ordinary partition to protect the heirs who have inherited property. Previously, prior to the enactment of the Uniform Partition of Heirs Property Act (UPHPA) in 2019, unscrupulous real estate investors would purchase the share of an unhappy heir who does not want to go through the process of filing an action for partition. After purchasing the share of the heir, the real estate investor would then file the action for partition.

An action for partition under RPAPL § 901 would ultimately end with the property being sold in a public auction, with the real estate investor as the winning bidder. A sale in a public auction would usually yield a price below market value than a sale through a broker in the open market.

Uniform Partition of Heirs Property Act (UPHPA)

UPHPA allows the co-heirs to get the maximum value out of inherited property. In order to enjoy the benefits of UPHPA, the first step requires the classification of the property as “heirs property.” Once the court classifies the inherited property as heirs property, the other co-owners are given the opportunity to buy-out the share of the other co-owners who filed an action for partition.

When is inherited property classified as heirs property?

Inherited property is considered as heirs property when the property is owned under tenancy-in-common at the time an action for partition was filed, and which has all of the following characteristics:

  1. No written agreement governs the partition of the property;
  2. At least one tenant-in-common acquired title from a relative; and
  3. Any of the following applies:
    1. 20% or more of the interests are held by co-tenants who are relatives;
    2. 20% or more of the interests are held by an individual who acquired title from a relative;
    3. 20% or more of the co-tenants are relatives of each other; or
    4. any co-tenant who acquired title from a relative resides in the property.

Mandatory settlement conference

After property is designated as heirs property and before a forced sale of inherited property can continue, the heirs who are tenants-in-common must attend a mandatory settlement conference to negotiate in good faith on a mutually agreeable solution. If even one of the plaintiffs refuses to negotiate in good faith, the partition action may be dismissed.

Buy-out procedure

Once property is classified as heirs property, the property is appraised in order to obtain its market value. The appraisal will provide the lowest price the property can be purchased, and it also provides a reference point for which an heir can buy the interests of the other heirs who filed an action for partition to enforce the sale of the inherited property.

Open market sale

If the buy-out procedure fails and none of the co-heirs purchase the interests of the unhappy co-owner/s, the property is sold in the open market and not through public auction. Selling the property in the open market on a private sale will yield a higher price than selling it through public auction. This protects the heirs from unscrupulous real estate investors who seek to sell the property through public auction and get the property at a lower price than market value.

Options before filing a lawsuit for partition

Before forcing the sale of inherited property through court action, try to see if you can negotiate with the other co-owners on other possible options so that you don’t need to litigate and you can save on legal expenses. Litigating will eat up the owner’s equity in the inherited property because the proceeds of the sale of the inherited property will be used to pay for legal expenses before distributing it to the co-heirs. Attorney’s fees may be recovered once proven that the other co-owners were obstructive in efforts to enter into an amicable resolution to dispose of your share of the inherited property. Schorner v. Schorner, 128 Misc.2d 415 (1985).

  • Negotiate a buy-out with your other co-owners

    • Talk to your other co-owners 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.
  • Send a demand letter through your lawyer to compel negotiation

    • If your other co-owners do not take your issue seriously, you can contact a lawyer to send a demand letter to the co-owners, requesting for 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 co-owned property. In most instances, co-owners 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.

Forcing the sale of inherited property through an action for partition may entail some initial expense, but sometimes, it can be inevitable, especially when the co-heirs cannot agree amongst themselves. If you are a co-heir who wants 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. 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 attorneyalbertgoodwin@gmail.com.