Who Pays for a Partition Action in New York City?

In New York, each party pays for their own attorney’s fees for a partition action. So if you are bringing the action, you’re paying your attorney to pursue it. If you’re defending it, you’re paying for your attorney to defend it.

Under the Real Property Actions and Proceedings Law, partition is an action filed by a co-owner (either a joint tenant or tenant in common) for the sale of the property. Generally, if the property cannot be physically divided, the court will order the sale of the property and direct the distribution of the proceeds to the co-owners after payment of expenses.

How a Partition Action Works in New York

In New York, partition almost always occurs among co-owners who inherit the property. One or two co-owners usually live in the property rent-free while the other co-owners who do not live in the property do not derive any benefit from owning such property. In this situation, when the co-owners do not agree on how to utilize the property, an action for partition is filed.

New York courts usually grant a partition action. Although a specialized procedure is strictly observed in the case of heirs who inherit property, partition is almost always granted. When the property can be physically divided, such as land, the court may order the property’s division. If the property cannot be physically divided, the court will order the sale of the property and the distribution of the proceeds among the co-owners after payment of expenses.

Payment of Attorney Fees

A big cost in partition actions is the payment of attorney fees and court costs. Court costs may be taken from the sale proceeds of the property, but the attorney fees are borne by each party. These are taken from the distribution of the sales proceeds to the co-owners after expenses are paid. For this reason, the longer a partition action continues, the higher the attorney fees, and the lower the distribution of the co-owners.

When a partition action is filed, it is to the best interests of the co-owners to immediately find a way to amicably settle the case. The chances of a court denying a partition action for substantive reasons are small, but a court may likely dismiss without prejudice a partition action for failure to observe the proper procedure, especially when it comes to heirs property.

Prolonging a partition action can only mean lower distributions to the co-owners due to the higher attorney fees they will incur. Partition actions can be complex depending on the unique circumstances of each case. Should you need assistance in filing or defending a partition action, we at the Law Offices of Albert Goodwin are here for you. We have offices in New York City, Brooklyn, NY and Queens, NY. You can call us at 212-233-1233 or send us an email at [email protected].

Categories of Costs in a Partition Action

A partition action involves several distinct categories of costs that should be understood:

Court filing fees. The case begins with a summons and complaint filed in Supreme Court. Filing fees range from a few hundred dollars to over a thousand depending on the type of case and any additional filings. These costs are typically paid by the plaintiff initially and may be recoverable from the sale proceeds.

Notice of pendency recording. The lis pendens is recorded at the County Clerk or City Register, with recording fees.

Service of process fees. Each defendant must be served. Service typically costs from $50 to several hundred dollars per defendant depending on the difficulty of service.

Referee's fees. The court appoints a referee to handle the sale. The referee earns a fee based on the work performed, typically calculated as a percentage of the sale price.

Real estate broker commissions. Standard New York real estate commissions of 5-6% of the sale price are paid from the proceeds at closing.

Title clearance costs. Title searches, abstracts, and any work needed to clear title issues before sale.

Closing costs. Transfer taxes, recording fees, mortgage payoff (if any), and other closing-related expenses.

Attorney fees. Each party's own attorney is paid by that party, typically on an hourly basis. The plaintiff's attorney may be compensated from the proceeds in some cases.

When the Plaintiff's Attorney Fees Can Be Paid from Proceeds

The general American rule that each party pays their own fees has a meaningful exception in partition cases. The plaintiff's attorney fees can sometimes be paid from the sale proceeds when the action has produced a benefit to the common interests of all the owners. The reasoning is that the plaintiff did the work that benefited everyone, and the others should not be free riders.

Courts evaluate this on a case-by-case basis. Factors that support paying the plaintiff's fees from the proceeds include:

• The action was uncontested or only minimally contested.
• The plaintiff acted in the common interest rather than just for personal benefit.
• The fees are reasonable in light of the work performed.
• The action produced a benefit to all owners (typically a higher sale price than holding the property would have produced, or simply ending a stalemate that benefited no one).

Factors that work against fee-shifting include the action being heavily contested by other owners with legitimate positions, fees that appear excessive, and circumstances suggesting the plaintiff filed for personal advantage rather than common benefit.

The Accounting Among Co-Owners

Beyond direct fees, a partition action typically includes an accounting among the co-owners that can significantly affect how the proceeds are divided. The court calculates credits and charges:

• Credits for carrying costs paid. An owner who paid mortgage, taxes, insurance, or other carrying costs is credited for the other owners' shares of those payments.
• Credits for capital improvements. An owner who funded substantial improvements that added value may receive a credit.
• Charges for sole occupancy. An owner who lived in the property alone may be charged the fair rental value of the other owners' shares (particularly where the other owners were excluded).
• Charges for waste. An owner who damaged or depreciated the property may be charged.

These adjustments can shift the net distribution substantially. An equal owner who paid all the costs for years may end up with substantially more than the equal share would suggest.

Settlement as a Cost-Saving Path

Most partition actions settle before reaching the auction or sale stage. Settlement saves significant costs:

• The legal fees of continued litigation.
• The referee's and broker's fees in some cases.
• The time and stress of continued proceedings.
• The risk of an unfavorable accounting result.

Settlement structures include:

• Buyout. One co-owner buys the others out at a negotiated price. The plaintiff receives cash and walks away; the buying co-owner keeps the property.
• Private sale with negotiated split. The owners agree on a sale price (with or without engaging a broker) and how the proceeds will be divided.
• Structured payment. The buying co-owner pays the others over time, with a mortgage securing the obligation.
• Property exchange. When the family has multiple properties, ownership can be reallocated.

We try to identify settlement opportunities early in every partition case. Settlement is rarely available when one or more parties take extreme positions, but a reasonable settlement is usually achievable when the parties focus on the economics.

What to Expect in Total Cost

For a typical New York partition case involving an inherited home and reasonably cooperative parties, the total cost (across all parties) from filing to closing typically runs from $20,000 to $50,000 or more. Heavily contested cases involving multiple parties, accounting disputes, and trial preparation can run substantially higher.

The costs are deducted from the sale proceeds before distribution to the owners. The net distribution to each owner depends on the sale price, the costs incurred, and the accounting adjustments.