RPAPL 993: Heirs Property Partition, Buyouts, and Sales in NY

RPAPL 993, New York’s Uniform Partition of Heirs Property Act, protects families from losing inherited land to a forced auction when one co-owner, often an outside investor who bought a small fractional share, files a partition action. Signed into law on December 6, 2019, the statute slows the process down, gives the remaining family members the first right to buy out the person who wants out, presumes that land should be physically divided rather than sold, and requires any unavoidable sale to go through the open market instead of a courthouse auction.¹

Does Your Property Qualify

Not every co-owned property gets RPAPL 993’s protections. The court applies the statute only when the property, at the time the partition action is filed, meets all four of these conditions:²

It is held by tenants in common.
No written agreement among all the co-tenants already governs how partition would work.
At least one co-tenant acquired their share from a relative, living or deceased.
It is used for residential or agricultural purposes. Commercial and industrial parcels are out.

On top of that, the property has to satisfy at least one of four additional tests: relatives hold 20 percent or more of the interests; someone who got title from a relative holds 20 percent or more; 20 percent or more of the co-tenants are related to each other; or a co-tenant who acquired title from a relative actually lives on the property. That last one matters. A single family member living on inherited land can trigger the act’s protections regardless of the ownership split.

“Relative” is read broadly, covering connections by blood, marriage, adoption, or other operation of New York law, which sweeps in ancestors, descendants, siblings, aunts, uncles, and cousins.

The Settlement Conference Comes First

Once the court finds that the property qualifies, it must hold a mandatory settlement conference within 60 days after a request for judicial intervention is filed, or on a later date the parties agree to.² Every co-tenant is brought in to talk through their rights and obligations before the case moves toward valuation and sale.

The conference exists so that families can resolve things on their own. Co-tenants can agree to a voluntary buyout, set up a family trust, or work out a division plan. The court can appoint an independent referee to keep the discussion productive. Many heirs don’t fully understand what they own or what a partition action threatens, and this early forum keeps someone from losing property simply because they missed what was happening.

How the Court Sets Fair Market Value

If the conference doesn’t resolve the case, the court has to establish the property’s fair market value before any buyout or sale can proceed. The statute runs through options in order.² If every co-tenant agrees on a value or on a method, the court uses that. If they don’t agree but the cost of a formal appraisal isn’t justified compared to the property’s likely value, the court holds an evidentiary hearing and sets the number itself. Otherwise, the court orders a formal appraisal by a disinterested, New York-licensed appraiser.

One detail does a lot of work here: the appraisal must assume sole ownership of the entire property in fee simple. No minority-interest discount gets applied to anyone’s fractional share. Without that rule, each co-tenant’s piece could be marked down heavily just because it’s fractional, and the whole buyout mechanism would collapse.

After the appraiser files a sworn report, every party is notified and gets a chance to object. The court then holds a hearing to determine the final fair market value and can consider additional evidence beyond the appraisal.

Buying Out the Co-Tenant Who Filed

This is where the statute changes the game. Any co-tenant who requests partition by sale is treated, by filing that request, as having agreed that the remaining co-tenants can buy their interest at the court-determined value.² An investor who bought a 10 percent share hoping to force an auction can be cashed out instead at full market value, and the land stays with the family.

The price is the departing co-tenant’s proportional share of the court-determined value. A 15 percent interest in a property valued at $400,000 is worth $60,000. When more than one family member wants to participate in the buyout, the right to purchase is allocated based on their existing ownership percentages. Because the appraisal assumed a whole, unencumbered property, the departing owner gets a fair number, not an auction-floor number.

If No One Buys Out: Divide the Land or Sell It

If the buyout doesn’t happen, the court chooses between physically dividing the land (partition in kind) and ordering a sale (partition by sale). RPAPL 993 strongly presumes physical division. A sale is permitted only if partition in kind would cause “great manifest prejudice” to the co-tenants as a group.² That is a deliberately high standard, and it reverses the old courthouse default of ordering sales because they were easier to administer.

To decide whether that standard is met, the court must weigh all of these factors:

Whether the land can realistically be split into separate parcels.
Whether dividing it would make the combined value of the pieces materially less than selling the whole.
How long the co-tenants and their predecessors have owned or possessed the property.
Any ancestral, historical, or special value a co-tenant attaches to it.
Whether a co-tenant lives on the property or uses it in a way a sale would disrupt.
Whether co-tenants have paid their share of taxes, insurance, maintenance, and improvements.
The price, terms, and circumstances under which a non-relative co-tenant acquired their interest. This factor exists specifically to scrutinize speculative purchases.
Any other relevant factor.

No single factor controls. A family that has lived on and cared for a parcel for generations has strong footing against a forced sale even when the land doesn’t split into tidy equal pieces. A co-tenant who bought in cheaply from a stranger and never contributed to upkeep is on much weaker ground.

If a Sale Is Ordered, It Goes to the Open Market

When a sale really is unavoidable, the statute adds one more layer. The sale must occur on the open market rather than at a judicial auction, unless the court specifically finds that sealed bids or an auction would be more economically advantageous for the co-tenants as a group.² Traditional partition auctions produced sale prices well below market value because the buyer pool was small, the timeline was compressed, and speculators knew they could bid low.

The parties get 10 days to agree on a licensed real estate broker. If they can’t, the court appoints one. The broker lists the property at no less than the court’s determined fair market value and markets it in a commercially reasonable manner. If an offer at or above that value comes in within a reasonable time, the sale proceeds. If none does, the court can extend the listing, approve the highest outstanding offer, or, only as a last resort, order sealed bids or an auction.

A co-tenant who ends up as the buyer gets a credit against the purchase price equal to their share of the proceeds. Own 25 percent and buy the property, and you effectively pay 75 percent.

Funding a Buyout

Buyout rights only help if the remaining family members can actually come up with the money. For families with agricultural land, the USDA’s Heirs’ Property Relending Program is designed for exactly this problem. It funnels money through approved lenders to heirs for the specific purpose of resolving title issues. Eligible borrowers must be family members or heirs-at-law related by blood or marriage to the previous owner and must agree to complete a succession plan. The loans can cover buying out other heirs’ fractional interests, along with closing costs, appraisals, title searches, surveys, mediation, and legal services.³ The funds cannot be used for land improvements, building repairs, or operating costs.

Separately, under Section 12615 of the 2018 Farm Bill, heirs property operators who can’t produce standard ownership verification or a lease can submit alternative documentation to establish a USDA farm number, which opens the door to disaster payments, lending, and other federal agricultural programs.⁴

Taxes on What You Receive

Any co-tenant who gets money through a buyout or partition sale needs to think about federal tax. What matters is your “basis” in the property, because that determines how much of what you receive is taxable gain.

If you inherited your share, your basis is generally the property’s fair market value on the date the previous owner died, not what they originally paid. That is the stepped-up basis rule under 26 U.S.C. § 1014.⁵ If your grandparent bought a property for $20,000 and it was worth $300,000 when they died, your basis is $300,000. That often reduces or eliminates capital gains tax on a buyout or sale.

Each co-tenant’s tax picture is personal. Two people selling in the same partition action can have very different bills depending on when they inherited, what the property was worth then, and whether they qualify for exclusions like the primary residence exclusion. A co-tenant who has lived there as a primary home may owe nothing; a sibling who inherited recently and never lived there may owe capital gains tax on any appreciation since the date of death. Courts don’t adjust partition sale proceeds to account for individual tax consequences, so the math is yours to run before the money moves.

1
New York City Bar Association. Support for the Uniform Partition of Heirs Property Act
2
New York State Senate. New York Real Property Actions and Proceedings Law 993 – Uniform Partition of Heirs Property Act
3
USDA. USDA Announces First Three Lenders for Heirs’ Property Relending Program
4
Farmers.gov. Heirs’ Property Landowners
5
Office of the Law Revision Counsel. 26 USC 1014 – Basis of Property Acquired From a Decedent