Detailed Answer
When co-owners of real property in New York cannot agree on a buyout price, several pathways exist to resolve the impasse:
1. Private Negotiation and Appraisal
Co-owners often start by hiring an independent, court-qualified appraiser to assign a fair market value to the property. Each co-owner can then use that appraisal to structure a buyout offer. This approach remains informal but can succeed if both sides accept the appraiser’s figure.
2. Mediation or Arbitration
If direct negotiation fails, co-owners may agree in writing to engage a neutral mediator or arbitrator. Mediation promotes voluntary settlement via facilitated discussions. Binding arbitration can produce a final buyout price, enforceable under New York’s arbitration statutes (CPLR §7501).
3. Partition Action in Court
When private methods fail, any co-owner can file a partition action under New York Real Property Actions and Proceedings Law (RPAPL). Two primary outcomes exist:
- Partition in Kind (division of land). Under RPAPL §902 (RPAPL §902), the court divides the parcel physically if division is practicable and equitable.
- Partition by Sale (forced sale). If in-kind division is impractical or inequitable, the court orders a public sale under RPAPL §914 (RPAPL §914). After sale, net proceeds distribute among co-owners per their ownership shares.
During a partition action, a court-appointed referee conducts the sale or oversees the division under RPAPL §911 (RPAPL §911). Co-owners may still negotiate a buyout or settlement at any time before entry of final judgment.
4. Buyout Clauses in Ownership Agreements
If co-owners established a written agreement or operating agreement containing a “shotgun clause” or predetermined valuation method, they can trigger that clause. Courts generally enforce such contractual provisions, speeding resolution and avoiding litigation costs.
Disclaimer: This article provides general information about New York property law and does not constitute legal advice. You should consult a licensed attorney for guidance on your specific situation.
Helpful Hints
- Review any co-ownership agreement for buy-sell clauses before pursuing court.
- Obtain a court-qualified appraisal to support negotiation or arbitration.
- Weigh mediation as a cost-effective, private alternative to litigation.
- Understand that partition by sale often yields lower net proceeds due to auction pricing and fees.
- Consult an attorney early to preserve rights and avoid procedural pitfalls.