A petition for partition, when filed by a joint owner when they don’t want to be a co-owner anymore. Petitions for partition are common in the following situations:
- inherited properties
- one of the co-owners doesn’t live on the property
- one of the co-owners is not paying the mortgage
- the co-owners used to be in a romantic relationship and are not anymore
- people bought a property as business partners and don’t want to be business partners anymore
- the co-owners are not friends anymore
In New York, a petition for partition is filed in accordance with Real Property Actions & Proceedings Law (RPAPL) § 901. In other states, the petition is filed in accordance with the laws of the state, which may be similar.
Options before filing the petition for partition
When you are a co-owner who is thinking of filing a petition for partition, you have three options to consider:
- 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 a petition 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 a petition 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 a petition 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 a petition for partition, you should try to talk with the other co-owners so you can come into an agreement regarding the property. As mentioned above, the other co-owners could buy out your share. All the co-owners can also agree to just sell the property at a particular price. A voluntary agreement among the co-owners will eliminate the need for expensive partition litigation.
Demand letter 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 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 a partition lawsuit filed by a co-owner.
If the co-owners still ignore your issue, make sure all your efforts to reach an amicable resolution with your co-owners in selling this property are documented. You may be able to recover attorney’s fees when you file a petition for partition if you prove that your co-owners were obstructive in your efforts to enter into an amicable resolution to dispose of your share of the house. Schorner v. Schorner, 128 Misc.2d 415 (1985).
Filing a petition for partition
Filing a partition lawsuit should be a last resort for the co-owner 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.
- The property will be sold in an auction for a lower price, as opposed to selling the property through a broker in the open market (which would yield a higher price than an auction).
Expenses you can claim as reimbursement
In a petition 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 co-owners’ 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 co-owners, which will result in a lower share among co-owners. For this reason, it is in all the co-owners’ best interests to resolve a partition dispute through a voluntary sale.
Defenses to a petition to compel the sale of the house
When a co-owner files a petition to sell the house, 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 co-owner 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.
No partition for property bought as a married couple
Property owned under tenancy by the entirety, which occurs when a married couple purchase property together, cannot be partitioned through a partition sale. This tenancy-by-the-entirety property can be partitioned in a post-nuptial agreement, legal separation agreement, or divorce settlement.
When the co-owners are tenants-in-common, the petition can be filed by a joint owner or tenant-in-common.
Uniform Partition of Heirs Property Act (UPHPA)
In December 6, 2019, the UPHPA became effective. This law required property classified as “heirs property” to go through a different process than a partition sale. UPHPA requires the co-owners 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 co-owners, who are given the right to purchase the share of the co-owner seeking partition. If the defendants do not exercise this right, property may be sold in the open market (and not at auction) at fair market value.
Filing a petition for partition may entail some initial expenses, but sometimes, it can be inevitable, especially when the co-owners cannot agree amongst themselves. If you are a co-owner considering partition and you would like to file a petition for partition, consult with a 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.