Disclaimer: This article is educational only and is not legal advice. Consult a licensed New York attorney before making binding offers or filings.
Detailed Answer
When co-owners seek partition of real property in New York, the court can ultimately order the property divided in kind or sold and the proceeds divided. The procedure for partition actions is governed by the New York Real Property Actions and Proceedings Law (RPAPL). See RPAPL (general): https://www.nysenate.gov/legislation/laws/RPAPL.
If you want to buy out your co-owners before the court orders a sale, you can and frequently should try to settle the case by offering to purchase their interests. Courts generally allow parties to settle partition actions, and a voluntary buyout can avoid the cost, delay, and uncertainty of a court-ordered sale. Here is a practical, step-by-step approach that follows New York practice and good transactional habits.
Step 1 — Understand the legal and factual starting point
- Confirm how title is held (tenancy in common, joint tenants, tenancy by the entirety) and each party’s percentage interest.
- Check for recorded liens or mortgages and note who is responsible for them. Liens affect the net proceeds and closing mechanics.
- Review the pending partition pleadings and any court orders or scheduling deadlines. The pending court posture affects timing and whether the judge will accept a proposed stipulation dismissing or resolving the action.
Step 2 — Determine a defensible buyout price
Co-owners typically base a buyout price on market value. Common methods include:
- Obtain a current broker comparative market analysis (CMA) or a full real estate appraisal to establish fair market value.
- Start from the appraised market value and multiply by the co-owner’s percentage interest. Adjust for unpaid rents, utility and tax credits, improvements, repairs, or occupancy credits as appropriate.
- Consider costs the court would deduct in a sale (broker commissions, advertising, legal fees, mortgage payoff). Use net value to offer a realistic buyout figure.
Step 3 — Prepare a formal written offer
Make the offer in writing and send it to each co-owner and their counsel (if they have counsel). A clear written offer should include:
- Buyout price and allocation to each co-owner based on their share.
- How you propose to handle outstanding mortgages and liens (pay off, assume, or deduct from price).
- Proposed closing date and place.
- Deposit amount and escrow agent information (proof of funds or a mortgage commitment letter if you will finance).
- Any contingencies (inspection, title review, removal of tenants, financing) and a deadline for acceptance.
- A proposed form of settlement/stipulation that would resolve the pending partition action if the co-owners accept, including mutual releases and allocation of closing costs.
Step 4 — Attach supporting documentation
To make your offer credible, include:
- An appraisal or CMA supporting the price.
- Proof of funds or a mortgage pre-approval or commitment letter.
- A draft of the settlement/stipulation and proposed order for the court (so co-owners and the judge can see how the case will be dismissed or resolved).
Step 5 — Offer mechanics and negotiation
Expect counteroffers and negotiation. Typical negotiation points include price, allocation of closing costs and liens, timing, and releases. If co-owners accept, you and the other parties should sign a written settlement agreement or stipulation resolving the partition action.
Step 6 — File the settlement with the court and obtain any required order
To end the partition case, parties usually submit a signed stipulation of settlement to the court and request an order dismissing or discontinuing the action consistent with the agreement. Courts will review terms to ensure they are lawful and protect any nonparty lienholders. A dismissal or stipulated order provides finality and prevents further litigation about partition.
Practical and legal considerations specific to New York
- RPAPL authorizes partition actions and gives courts broad powers to order sale or division. Parties may, however, settle and dismiss pending actions by agreement. See RPAPL (general): https://www.nysenate.gov/legislation/laws/RPAPL.
- Court approval may be needed for settlements that affect third-party rights (for example, when lienholders need notice or when minors or incapacitated persons are involved). The court may require accounting, proof of notice to lienholders, or additional safeguards before signing off on the settlement.
- Tax consequences can arise from transfers between co-owners. Discuss potential capital gains, transfer taxes, or mortgage recording taxes with a tax advisor or attorney before closing.
Sample offer language (short form)
“I/We offer to purchase your undivided [X]% interest in the property at [address or legal description] for $[amount], subject to the terms below. Closing to occur on or before [date]. Buyer will deposit $[amount] into escrow with [escrow agent]. Buyer will [pay/assume/deduct] outstanding mortgage(s) and liens as follows: [describe]. This offer is conditioned on acceptable title, a short-form title search, and delivery of a mutually executed stipulation dismissing the pending partition action upon closing. Please respond by [date].”
Helpful Hints
- Get a written appraisal or broker opinion before making a firm offer. It strengthens your negotiating position.
- Obtain proof of funds or lender commitment before sending the offer. Sellers and courts want confidence you can close.
- Use an attorney experienced in New York partition and real estate settlements. A lawyer can draft the stipulation and proposed court order to avoid surprises at closing.
- Include releases and indemnities in your settlement to avoid later claims by co-owners about past rents, repairs, or improvements.
- Consider escrow for the deposit and use a title company that can handle payoff of liens and coordinate recording at closing.
- If co-owners do not respond or refuse to negotiate, you can still seek court relief; the partition action will proceed and the court may order a sale. Early, good-faith offers are often viewed favorably by judges if the parties later seek court approval to dismiss the action.
- Keep all communications with co-owners professional and in writing. That record helps in court if the deal falls apart.
For general information about New York courts and case procedures, see the New York State Unified Court System: https://www.nycourts.gov/courthelp/.
Again, this is not legal advice. Before sending a formal offer or filing documents, consult a New York real estate or litigation attorney who can tailor the offer and the settlement paperwork to your situation and ensure compliance with RPAPL and local court rules.