NEW RULES - UNIFORM PARTITION OF HEIRS PROPERTY ACT

On December 6, 2019, Governor Andrew Cuomo signed into law New York’s version of the Uniform Partition of Heirs Property Act (UPHPA) (RPAPL §993). As the bill noted:

"As a general rule under current New York law, when real property has multiple owners who hold the property as tenants in common, any one co-owner can try to force the sale of the property by filing a partition action in court under Article 9 of the Real Property Actions and Proceedings Law. In recent years, predatory real estate speculators have taken advantage of New York's laws governing partition actions by purchasing a stake in a residential property - usually after a number of family members have inherited the property - and then using that owners hip stake to file a partition action to dispossess the family of the property through a forced sale, often for pennies on the dollar relative to the actual value of the property. Lower- and middle-class families are particularly susceptible to these types of schemes, as they often do not engage in the kind of sophisticated estate planning that could prevent predatory partitioning actions.

This legislation would address the issue of predatory partition actions, while preserving a co-owner's right to sell his or her share of the property. The Act would only apply in situations where at least one of the co-owners has inherited their property interest from a relative and there is no written agreement otherwise governing partition among the owners. In such situations, there are a number of protections in place when a co-owner files for a partition order:

- The co-owner requesting the partition must give notice to all of the other co-owners.

- The court must order an independent appraisal to determine the property's fair market value.

- Any co-owner may exercise a right of first refusal to buy out the interest of the co-owner seeking partition for a proportional share of the court-determined fair market value.

- If no co-owner elects to buy out the co-owner seeking partition, the court must first consider ordering a partition-in-kind if the property can be physically divided.

- If a partition-in-kind would be inappropriate, and the court orders a partition-by-sale, the property must be offered for sale on the open market at a price no lower than the court-determined value for a reason- able period of time and in a commercially reasonable manner. As of March 2019, eleven other states and the U.S. Virgin Islands have adopted similar legislation."