Anthony A. Nozzolillo, Esq.
It is among the most frequent calls this office receives, and it almost never arrives as a legal question. A parent has died. The house passed to three (3) children. Two of them want it sold, one of them is living in it, and the conversation which began politely at the repast has by now stopped being a conversation at all. What the caller wishes to know is whether the sibling who refuses to sell is permitted to refuse.
The first question is a different one. It is whether the house belongs to any of you yet.
Does the Estate Still Own the House, or Do You?:
Title to a decedent's real property vests in those who take under the Will, or in the distributees where there is no Will, at the moment of death. That vesting is nevertheless subject to the needs of the Estate, and while the Estate remains open those needs may displace what the family wants.
Under EPTL §11-1.1, absent a contrary or limiting provision in the Will or the decree of appointment, a fiduciary is authorized to sell property of the Estate at public or private sale upon such terms as in his opinion will be most advantageous to those interested. That power carries a limit which matters a great deal here: it does not reach property which the Will specifically disposes of. Where the Will left the house to the three (3) of you by name, the Executor's general power of sale does not extend to it; where the house simply fell into the residuary estate, it very well may.
The Executor is accordingly "side stepped," and the side step is conditional. A Will which leaves the house to the children by name makes a specific bequest, and once the Will is probated title vests in them in that character — as specific devisees under the Last Will and Testament of the decedent — so that the Executor does not sign off upon the deed. The Executor must nevertheless submit the Will to be probated before that designation of ownership is triggered. It does not happen by operation of law.
Separately, the Surrogate's Court may authorize a disposition of a decedent's real property under SCPA §1901, for the purposes enumerated at SCPA §1902: the expenses of administration, funeral expenses, the debts of the decedent including judgments and other liens existing at the time of death but excepting mortgage liens, death taxes, a debt or legacy charged upon the property, distribution of their respective shares to the persons entitled, or any other purpose the court deems necessary.
The practical consequence is that a family fighting over a house while the Estate is still open is frequently fighting in the wrong building. Where debts, administration expenses or taxes must be paid and the Estate has no other source from which to pay them, the forum is the Surrogate's Court and the question is not which sibling prevails.
Once Title Has Vested, You Are Tenants in Common:
Where the Estate has been administered and the house is genuinely yours, the form of ownership is almost always the same one.
EPTL §6-2.2 provides that a disposition of property to two (2) or more persons creates in them a tenancy in common unless expressly declared to be a joint tenancy, and that property passing in intestacy to two (2) or more persons is taken by them as tenants in common. A Will which leaves the house "to my children, share and share alike" has created a tenancy in common. So has an intestate death.
That label carries a consequence which surprises nearly everyone who hears it. A tenant in common holds an undivided interest in the whole of the premises rather than in a particular room or a particular third of the lot. The sibling who is living in the house is therefore occupying property which he owns, and he is not a trespasser, is not a holdover tenant, and cannot be removed in a summary proceeding by the others. A one-third (1/3) owner has precisely the same right to occupy the premises as the other two (2) have, and the fact that he exercises it while they do not changes nothing about the right itself.
Any Co-Owner May Compel an End to the Co-Ownership:
RPAPL §901 permits a joint tenant or a tenant in common holding and in possession under an estate of inheritance, for life or for years, to maintain an action for partition, and for a sale where it appears that partition cannot be made without great prejudice to the owners. Where a decedent's Estate owns the tenancy-in-common interest, the executor or administrator may bring such an action or intervene in one on the Estate's behalf upon the surrogate's approval.
No co-owner is obliged to remain a co-owner. That is the answer to the question most callers actually ask, and standing alone it suggests that the sibling who wants the house sold simply files and prevails.
It is at this point that the analysis of an inherited home departs from the analysis of any other co-owned property, and the departure is substantial.
An Inherited Home Is Almost Always "Heirs Property":
New York has adopted the Uniform Partition of Heirs Property Act, codified at RPAPL §993. It applies where the property is held in tenancy in common and four (4) conditions are satisfied as of the filing of the partition action:
No agreement in a record binding all of the co-tenants governs partition of the property; any co-tenant acquired title from a relative, living or deceased; the property is used for residential or agricultural purposes; and any one (1) of the following is true — twenty percent (20%) or more of the interests are held by co-tenants who are relatives, twenty percent (20%) or more of the interests are held by an individual who acquired title from a relative, twenty percent (20%) or more of the co-tenants are relatives of one another, or any co-tenant who acquired title from a relative resides in the property.
Read that list against the facts of an ordinary family house and the result is not close. Three (3) siblings who inherited from a parent, with no written agreement among them, one of whom lives there, satisfy every condition several times over. Where the court determines after notice and the right to be heard that the premises are heirs property, the matter proceeds under §993 rather than under the general partition article, unless every co-tenant agrees otherwise in a record.
What Must Happen Before Anyone Sells Anything:
The statute interposes a mandatory settlement conference, to be held within sixty (60) days after a request for judicial intervention is filed or upon such adjourned date as the parties agree. Each party, or the representative appearing for a party, must be fully authorized to dispose of the case. The parties are required to negotiate in good faith toward a resolution, which may take the form of an agreement among the co-tenants, a buyout, a division of the premises, an open-market sale, or any other fair arrangement.
Good faith carries a sanction here. Where no resolution is reached and the court determines that the plaintiff has failed to negotiate in good faith, the statute provides that the partition action shall be dismissed. A co-owner who files in order to apply pressure, rather than to resolve the matter, therefore assumes a genuine risk of losing the action outright.
The Buyout, Which Is Where Most of These Matters End:
This is the provision the caller needs to hear, and it is the one which most often resolves the dispute without a sale.
A co-tenant who requests partition by sale has, by making that request, agreed that his own interest may be purchased by the co-tenants who did not ask for a sale. The court first determines the fair market value of the premises, ordinarily by ordering an appraisal from a disinterested real estate appraiser licensed in this State, valuing the property as though a single owner held the fee simple. The parties are notified of the appraised value, may object within thirty (30) days, and a hearing to fix value follows whether or not an objection is filed.
Once value is fixed, any co-tenant other than one seeking the sale may notify the court, not later than forty-five (45) days after the notice of the determination of value is sent and by the date specified in that notice, of the percentage interest he elects to purchase. The price is the value of the whole multiplied by the percentage being bought. Where the elections exceed what is available, the statute allocates priority first to electing co-tenants who acquired title from a relative and reside upon the property, and then to other electing co-tenants who acquired title from a relative. Those who elect are given a date, not sooner than sixty (60) days after notice, by which to pay the purchase price into court.
Stated plainly: the sibling living in the house may buy out the siblings who wish to sell, at a value the court itself has fixed, with a date certain by which to produce the money — and where more than one (1) co-tenant wishes to buy, the one who acquired his interest from a parent and resides there stands first in line. That is a materially different posture from the one he believed himself to occupy when he placed the call.
If Nobody Buys, the Statute Still Prefers Division to Sale:
Where the interests of those seeking a sale are not all purchased, the court is directed to order partition in kind — a physical division into separately titled parcels — unless it finds, after weighing the statutory factors, that doing so would result in great manifest prejudice to the co-tenants as a group. Only where partition in kind is not ordered does the court order a sale, and where no co-tenant has timely requested a sale the action is dismissed.
The factors the court weighs are worth setting out, because several of them are the very facts a family assumes carry no legal weight whatever: whether the premises can practicably be divided; whether division would yield materially less than a sale of the whole; the collective duration of ownership by a co-tenant and by relatives who held before him; a co-tenant's sentimental attachment, including any ancestral value; the lawful use a resident co-tenant makes of the premises and the harm were that use to end; and the extent to which each co-tenant paid his pro rata share of the taxes, the insurance and the upkeep. No single factor may be treated as dispositive without weighing the totality.
A single-family house on a sixty-by-one-hundred (60 x 100) lot in Nassau County is not going to be physically divided, and that should be said honestly. What the factors do accomplish is to put the length of the family's ownership, the attachment of the sibling who stayed, and the record of who actually paid the taxes squarely before the court.
And Where the House Is Sold, It Is Sold Properly:
Where a sale of heirs property is ordered, it is to be an open-market sale unless the court finds that sealed bids or an auction would be more economically advantageous and in the best interest of the co-tenants as a group. The parties may agree upon a licensed New York real estate broker within ten (10) days of the order, and failing agreement the court appoints a disinterested one and sets the commission. The broker must offer the premises in a commercially reasonable manner at a price no lower than the value the court determined.
The difference between that and a sale on the courthouse steps is measured in tens of thousands of dollars, and it accrues to every co-owner including the one who never wanted the sale.
In Summation:
The sibling who will not sell is exercising a right he actually possesses, and the sibling who wants the house sold possesses one as well. What the Uniform Partition of Heirs Property Act supplies is a sequence — a determination of status, a settlement conference held in good faith upon pain of dismissal, an appraisal, a buyout with the resident heir at the front of the line, a preference for division over sale, and an open-market sale where a sale must occur — and that sequence rewards the family which understands it before the papers are filed rather than afterward.
Nearly every one of these matters is capable of being resolved at the settlement conference, or before anyone reaches one. Be sure to consult a seasoned attorney at the earliest point at which the disagreement appears to be hardening, and well before a Summons and Complaint is served upon a brother or a sister.
DISCLAIMER: THIS ARTICLE IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT TO BE RELIED UPON AS LEGAL ADVICE. NO ATTORNEY CLIENT RELATIONSHIP IS CREATED BY THIS PUBLICATION. AN INDEPENDENT LEGAL OPINION SHOULD BE OBTAINED BY THE READER.