Partition is “the act or proceeding by which co-owners of property cause it to be divided into as many shares as there are owners, according to their interests therein, or if that cannot be equitably done, to be sold for the best obtainable price and the proceeds distributed according to the respective interests.” Chiang v. Chang, 137 A.D.2d 371, 373 (1st Dep’t 1988) (citation and internal quotation marks omitted). Partition actions are governed by Article 9 of the Real Property Actions and Proceedings Law (“RPAPL”). RPAPL § 901 provides, inter alia, that a “person holding and in possession of real property as joint tenant or tenant in common, in which he has an estate of inheritance, or for life, or for years, may maintain an action for the partition of the property, and for a sale if it appears that a partition cannot be made without great prejudice to the owners.” RPAPL § 901(1).
Addressing partition from an historical perspective, the First Department, in Chiang, recognized that “judicial partition” statutes “have existed in this country since the time of colonial governments” and, therefore, “so ancient is the history of judicial partitions, and so favored are partitions that it is now beyond contention that, independent of any statute, a court of equity has the inherent power to issue a decree of partition or require the sale of jointly owned property.” Id.
“The actual physical partition of property is statutorily authorized as the preferred method and is presumed appropriate unless one party demonstrates that physical partition would cause great prejudice to the owners, in which case the property must be sold at public auction.” Snyder Fulton Street, LLC v. Fulton Interest, LLC, 57 A.D.3d 511, 513 (2nd Dep’t 2008) (citations omitted). The appropriateness of physical partition, as opposed to sale, is a fact question that is determined by analyzing “whether the whole property, taken together, will be greatly injured or diminished in value if separated into parts, in the hands of different persons, according to their several rights or interests in the whole: in other words, whether the aggregate value of the several parts when held by different individuals in severalty would be materially less than the whole value of the property if owned by one person.” Id. (citation, internal quotation marks and ellipses omitted).
A party asserting a partition and sale cause of action, “establishe[s] his prima facie entitlement to judgment as a matter of law by demonstrating his ownership and right to possession of the subject property and by showing that a physical partition would lead to great prejudice.” Goldberger v. Rudnicki, 94 A.D.3d 1048, 1050 (2nd Dep’t 2012) (citation omitted). “The right to partition is not absolute, however, and while a tenant in common has the right to maintain an action for partition pursuant to RPAPL 901, the remedy is always subject to the equities between the parties.” Id. (citations omitted); see also Tsoukas v. Tsoukas, 107 A.D.3d 879, 880 (2nd Dep’t 2013). For example, despite the moving party on a summary judgment motion having a name on the deed, and otherwise demonstrating a prima facie case for partition, the opposing party raised triable issues of fact “as to the parties’ respective interests, rights, and shares in the property through her sworn affidavit in which she averred that, inter alia, the defendant did not make any contributions toward the purchase price or maintenance of the property and that the defendant’s name was on the deed as a matter of convenience.” Mi King Chew v. La Chea, 175 A.D.3d 675, 676 (2nd Dep’t 2019) (citations omitted).
On September 25, 2024, the Appellate Division, Second Department, decided 459 Washington Avenue, LLC v. Atkins, a case in which the Court addressed the issue of whether individual members of an LLC can partition real property owned by the LLC in which the individual parties are members. The complaint in 459 Washington alleges that the individual plaintiffs and the defendant “were the sole ‘owners’ of the plaintiff 459 Washington Avenue, LLC (hereinafter the LLC), and that [the individual plaintiffs], and the defendant held title to the property as tenants in common, each possessing a one-third undivided interest.” “Irreconcilable acrimony” amongst the parties precipitated the commencement of a partition action.
In their motion for summary judgment, the plaintiffs submitted, inter alia, a deed to the subject property by which the property “was conveyed to the LLC, which the plaintiffs contended represented the current ownership of the property.” In response, the defendant argued that “the evidence submitted on the plaintiffs’ motion established that the property was owned by the LLC and not by tenants in common or a joint tenancy, and, therefore, partition was not an available remedy.” The defendant appealed from a grant of summary judgment in favor of the plaintiffs.
The Second Department reversed and, in so doing stated:
The evidence submitted by the plaintiffs on their summary judgment motion established that, contrary to the allegations in the complaint, the property was owned exclusively by the LLC and not by [the individual plaintiffs], and the defendant as tenants in common. Essentially, the plaintiffs contended that the three individual parties held equal membership interests in the LLC, which owned the property. “A membership interest in the limited liability company is personal property. A member has no interest in specific property of the limited liability company” (Limited Liability Company Law § 601). Thus, the individual parties hold no ownership interest in the property. Further, even assuming that the plaintiffs had established that the individual parties held equal membership interests in the LLC, there is no allegation or evidence that the LLC has been dissolved or that the LLC’s affairs have been properly wound up (see id. § 703). Accordingly, this action, inter alia, for partition and sale of the LLC’s property cannot be maintained (see Daly v Messina, 51 AD3d 856, 857 [2nd Dep’t 2008]; Greshin v Sloane, 138 AD2d 569, 570 [2nd Dep’t 1988]; see also Sealy v Clifton, LLC, 68 AD3d 846, 847 [2nd Dep’t 2009]). [Hyperlinks added.]
