In a significant ruling, the Appellate Division of the Supreme Court of the State of New York clarified the definition of "heirs property" in the case of Flouret v. Sagland, LLC. The court determined that property owned solely by a trust and a limited liability company does not qualify as heirs property under the Uniform Partition of Heirs Property Act (RPAPL 993). This ruling has implications for how property ownership is treated in similar cases, particularly for families dealing with partition actions.
The court's decision affects property owners and families who may find themselves in disputes over inherited land. It underscores the importance of understanding how legal entities like trusts and limited liability companies are treated under New York law, especially in the context of partition actions.
Background
The case involves Muffy Flouret, acting as the trustee of the Mark Perlbinder 2023 Irrevocable Trust, and Sagland, LLC, a limited liability company. The dispute centers around a parcel of land located at 615 Daniels Lane in Suffolk County, New York. This property, approximately 17.41 acres, was originally owned by two brothers, Stephen and Barton Mark Perlbinder, who held it as tenants in common.
In 2020, Stephen transferred his 50% interest in the property to Sagland, LLC, which is managed by his daughter. Meanwhile, Mark transferred his 50% interest to the trust managed by Flouret, his daughter. This arrangement led to the property being owned entirely by a trust and a limited liability company. In January 2022, Mark initiated a partition action to sell the property, which was later amended to include Flouret as the plaintiff.
As the case progressed, the defendant, Sagland, LLC, argued that the property constituted heirs property under RPAPL 993, which provides certain protections for family-held land against predatory partition actions. Flouret contended that the property could not be classified as heirs property because it was owned by a trust and a limited liability company, entities that do not fit the definition of "individual" under the statute.
The Ruling
The court ruled in favor of Flouret, stating that trusts and limited liability companies do not qualify as "individuals" under RPAPL 993. Judge Donna-Marie E. Golia, along with her colleagues, emphasized that the statute was designed to protect human individuals from predatory entities attempting to force sales of inherited property.
The court stated, "Property wholly owned by such entities, and not owned by individuals who acquired title from a relative, cannot be 'heirs property' within the meaning of the statute."
As a result, the court reversed the lower court's decision that had denied Flouret's motion for summary judgment and sent the case back to the Supreme Court in Suffolk County for further proceedings. The ruling clarified that the protections intended by RPAPL 993 do not extend to properties owned entirely by legal entities.
Impact
This ruling has significant implications for property owners, particularly those involved in partition actions. It sets a clear precedent that properties owned solely by trusts or limited liability companies do not qualify as heirs property, thereby limiting the protections offered under RPAPL 993. This decision may influence future cases where property ownership involves similar entities, as it underscores the importance of individual ownership in determining heirs property status.
The ruling also highlights the legislative intent behind RPAPL 993, which was enacted to protect families from losing their ancestral homes to predatory real estate practices. The court's interpretation reinforces the need for individuals to hold ownership interests directly to benefit from the protections intended by the statute.
What's Next
The case has been remanded to the lower court for a new determination on the merits of Flouret's motion for summary judgment. It remains to be seen if Sagland, LLC will appeal the decision or if there are related cases pending that might further clarify the application of RPAPL 993.