New York Real Estate Lawyers Blog
A prior blog post discussed issues relating to a property partition action in New York State. To summarize, when two or more co-owners of a property are unable to agree on the disposition of a jointly-owned property, a partition action may be brought by one of the owners. The Court will review the evidence and rule on the disposition of the property.
The general legal principle underpinning a partition action is that the property dispute should be handled fairly and equitably for all parties. This means that a Court will attempt to divide the property, if possible, according to the ownership interests of the parties to the case.
The first question that a claimant must answer is whether the property is capable of being physically divided in a fair manner among the co-owners. The physical division of a property is a fact issue for a Court to determine. Residential property such as a house is usually not capable of being sub-divided among the parties. For example, a single or two family house cannot be physically divided into separate properties, each with their own lot and tax bill. If the land in dispute is simply vacant land without any improvements, then it may be possible to divide the lot into separate properties, with the co-owners receiving shares of the new lots in proportion to their ownership percentages of the original property.
Another common situation concerns commercial property. For example, a commercial property may consist of several storefronts, each with their own separate physical space. It is theoretically possible to subdivide the property into separate lots so that each store becomes separate property, with its own block, lot, and property tax and utility obligations. Of course, such a separation must comply with all state and local regulations, and would require a significant financial contribution from the parties in order to pay for the services of an architect, as well as the legal filings with the applicable municipality necessary to create separate properties.
In the likely event that the property is not capable of being fairly divided between the parties, then a Court has several options. The most common option is the appointment of a referee to sell the property, and to divide the proceeds among the parties. As discussed in our prior blog post, the referee will also take evidence of each party’s financial contributions, both negative and positive, to the property. Once these amounts have been reconciled, the referee will issue their report regarding the sale of the property, and, once a third party buyer has been located, the property will be sold and the proceeds distributed to the parties in proportion to their ownership interests, with credits and debits for their past contributions to the upkeep and obligations involving the property, as well as any profits earned by the parties also being taken into account.
The other alternative is that one party may simply pay the other for their fair share of their ownership interest in the property. Once this is done, a deed is prepared and the person “buying out” the other then becomes the sole owner of the property in question. Our firm has extensive experience in litigating such matters and negotiating such settlements, which must also be approved by the Court in which the action was brought. We invite any parties who may be involved in such property disputes to contact us at their earliest convenience.