Detailed Answer — How a co-owner in New York can get money instead of a piece of the property
This answer explains the common ways a co-owner (tenant in common or joint owner) can receive monetary compensation instead of a physical portion of real property under New York law. It assumes no prior legal knowledge. This is general information and not legal advice.
Basic concepts
When two or more people own real property together, each owner has a present ownership interest. If one owner wants cash rather than a share of the land or building, there are two main ways to obtain money:
- Private buyout or negotiated settlement between the co-owners.
- Court-ordered partition by sale (or partition in kind if the court instead divides the property physically), which produces sale proceeds that are distributed as money.
New York law allows an owner to bring a partition action asking a court to divide the property or order a sale and distribution of the proceeds. See New York Real Property Actions and Proceedings Law (RPAPL), Article 9. For the statute text, see RPAPL §901 and the RPAPL Article 9 index at https://www.nysenate.gov/legislation/laws/RPAPL.
Option 1 — Private buyout (preferred when parties can cooperate)
Steps to follow:
- Get an independent appraisal to establish fair market value.
- Each side calculates their share: account for ownership percentage, outstanding mortgage balance, unpaid taxes, liens, and credits (e.g., one co-owner paid more mortgage or made improvements).
- Negotiate a buyout price: either the buying co-owner pays the seller the agreed cash amount, or they split proceeds if a third-party sale is used.
- Document the deal in writing with a purchase agreement, release of interest, and closing instructions. Record any deed changes with the county clerk after closing.
Benefits: faster, cheaper, and gives parties control over price and timing. Use escrow and a title company or closing attorney to handle payoff of mortgages and to ensure clear title transfer.
Option 2 — Partition action leading to a sale (when negotiation fails)
If co-owners cannot agree, any co-owner may file a partition action in New York Supreme Court asking the court to divide the property or order a sale and distribute proceeds. The court determines whether partition in kind (physically dividing the property) is practical; if not, the court orders a sale and divides proceeds among owners.
What to expect in a partition action:
- The plaintiff files a complaint and serves co-owners.
- The court may appoint referees, order appraisals, and consider liens, mortgages, and equitable claims between owners.
- Costs of the action, appraisal, referees’ fees, and sale expenses come out of sale proceeds before distribution.
- The court distributes net proceeds according to ownership shares after crediting payments made by owners (mortgage payments, improvements, taxes), subject to proof and judicial adjustment.
Authority: RPAPL Article 9 governs partition actions in New York; see RPAPL §901 and related provisions at the RPAPL index: https://www.nysenate.gov/legislation/laws/RPAPL.
Accounting, credits, and debits
When proceeds are distributed (either by private settlement or court sale), the following commonly affect how much each co-owner receives:
- Mortgage payoffs, property taxes, and recorded liens are usually paid from sale proceeds first.
- Claims for contribution: if one co-owner paid more than their share of mortgage, taxes, or made improvements, they can seek credit or reimbursement. The court may adjust distributions to reflect equitable contributions.
- Rents and profits: a co-owner who excluded another or collected rents may owe accounting.
The partition process and equitable accounting can be complex; documentary proof (bank statements, receipts, invoices, mortgage records) helps establish credits or debits.
Tax and practical considerations
- Capital gains taxes may apply to any gain on the sale. Parties should consult a tax professional.
- Buyouts using financing require appraisal and lender approval.
- Delays, attorneys’ fees, and court costs can reduce net proceeds; settlement often preserves more value.
When the court may prefer sale over division
The court generally orders partition in kind only when the property can be fairly divided without prejudice to the owners. If division is impractical or would significantly reduce value (for example, a single-family home, apartment building, or parcel that cannot be subdivided), the court typically orders sale and distribution of proceeds.
Practical checklist for a co-owner who wants money instead of property
- Ask the other co-owners if they will buy you out; start with a written proposal.
- Order a neutral appraisal to set fair market value.
- Gather records proving contributions, mortgage payments, and improvements.
- Consider mediation to reach a faster settlement.
- If negotiation fails, consult a real estate litigator about filing a partition action in New York Supreme Court.
- At settlement or after sale, use escrow/title professionals to handle payoffs, deed transfers, and recordings.
Summary: A co-owner seeking cash can try a private buyout using appraisal and settlement documents. If co-owners cannot agree, file a partition action under New York law; a court can order a sale and distribute money. Keep clear records and consider tax consequences.
Disclaimer: This is general information only and not legal advice. It does not create an attorney-client relationship. For advice tailored to your situation, consult a licensed New York attorney.
Helpful Hints
- Get a licensed appraiser early — valuation is central to any buyout or sale.
- Document every payment related to the property (mortgage, taxes, repairs) to support claims for credit.
- Use mediation before litigation — it usually saves time and money.
- Check title and recorded liens before agreeing to any buyout to avoid unexpected debts.
- Understand that court-ordered partition is public and can be slow; negotiate privately if possible.
- Consult a tax advisor about capital gains and basis adjustments before completing a sale or buyout.
- Hire a closing agent or title company to ensure proper payoff of liens and recording of deed transfers.