Detailed Answer — How proceeds are divided after a partition sale in New York
When co-owners cannot agree about shared real property, a court can order a partition. Under New York law (Real Property Actions and Proceedings Law, Article 9), the court will either divide the property physically (partition in kind) or order a sale and divide the sale proceeds when a division in kind is impractical. See the statute collection for partition rules: RPAPL Article 9 (Partition).
Basic rule: divide according to ownership share
As a starting point, net sale proceeds are divided according to each co-owner’s legal share in the property. If the deed names the owners as tenants in common with specified percentages, the court will allocate proceeds according to those percentages. If no shares are specified (for example, many joint tenancies or unspecified tenants in common), the court typically treats interests as equal unless evidence shows otherwise.
What is taken out of the sale proceeds before division
Before dividing the balance among co-owners, the court (or the court-appointed referee handling the sale) will pay or deduct, in roughly this order:
- Valid liens and mortgages that attach to the property (paid in priority order).
- Property taxes and municipal liens.
- Costs of the partition action that the court orders paid from proceeds (court costs, referee fees, advertising and auction costs, reasonable attorney fees if awarded by the court).
- Sale-related expenses (broker commissions and closing costs where applicable).
After those debts and costs are paid, the remaining balance is the net proceeds available for distribution to co-owners.
Adjustments and credits
The court can make equitable adjustments before final distribution. Typical adjustments include:
- Credits for mortgage payments or taxes one co-owner paid for the benefit of the property. A co-owner who paid the mortgage or taxes may get credited, or may claim a lien or reimbursement.
- Credits for money spent on necessary repairs or improvements (if the expenditure enhanced value or preserved the property).
- Debits for waste or improper use (a co-owner who damaged the property may be required to compensate the others).
- Accounting for rents and profits — if one co-owner occupied the property and received rental income (or if the occupant used it to the exclusion of others), the court can require an accounting and adjust distributions accordingly).
These adjustments are fact-specific. The court asks for evidence (receipts, bank records, proof of payment, signed agreements) and will make findings before ordering final division.
Example (hypothetical)
Two co-owners, A and B, each own 50%. The court orders a sale and the gross sale price is $400,000. Outstanding mortgage on the property is $80,000, closing and sale costs total $12,000, and court-ordered partition costs (referee and fees) are $3,000. Net proceeds after paying liens and costs = $305,000. Each co-owner’s share (50%) = $152,500.
If A can prove A paid $10,000 in qualifying improvements that increased value and B did not contribute, the court might credit A $10,000 (or otherwise adjust distribution), reducing B’s share accordingly.
How title form affects distribution
Joint tenancy is severed by a partition action; the case then proceeds as if the owners were tenants in common. The court will determine shares from the deed language and evidence of contributions. If owners agreed in a contract how proceeds are to be split, the court generally enforces that agreement.
Where to find the law
Key partition rules are found in New York’s Real Property Actions and Proceedings Law, Article 9. For the general partition authority and procedures see: RPAPL Article 9. Specific subsections govern sale by referee, payment priorities, and distribution procedures; an attorney can point to the exact subsections that apply to your facts.
Bottom line: the sale proceeds are first used to pay valid liens, taxes, and sale/partition costs. The remaining net proceeds are divided according to each co-owner’s legal share, subject to court-ordered credits or debits (contributions, repairs, rents, waste, etc.). Parties may also reach a private agreement allocating proceeds differently, which a court will usually honor if lawful.
Helpful Hints
- Gather documentation: deed, mortgage statements, tax bills, receipts for repairs/improvements, records of rent or occupancy, and any written agreements about ownership or contributions.
- Check the deed to confirm stated ownership shares and whether owners are joint tenants or tenants in common.
- Expect liens and mortgages to be paid from sale proceeds; confirm payoff figures before sale.
- Ask the court (or your attorney) for an accounting if another owner occupied the property or paid bills on behalf of the property.
- Consider mediation or settlement — parties often avoid court-imposed adjustments by negotiating who will buy out whom or how proceeds are split.
- Keep careful proof of any improvements, mortgage or tax payments you made — courts rely on records when allocating credits.
- Consult a New York real estate attorney when possible to review likely credits, liens, and the net distribution you should expect.
Disclaimer: This article explains general principles under New York law for educational purposes only. It is not legal advice and does not create an attorney-client relationship. For advice about a specific situation, consult a licensed New York attorney.