UPHPA Good-Faith Negotiation Requires Consideration of RPAPL 993(9) Equities; Failure Mandates Dismissal

Comprehensive Commentary on Laurelton Estates, LLC v. Prince, 2025 NY Slip Op 05226 (2d Dep’t Oct. 1, 2025)

Introduction

This Second Department decision is a significant, clarifying precedent on the Uniform Partition of Heirs Property Act (UPHPA), codified in New York at RPAPL 993. The case involves a classic collision between an investor who acquired a majority interest in legacy family property and a remaining family co-tenant seeking to preserve her home. The core issue: what “good faith” negotiation requires at the UPHPA’s mandatory settlement conferences, and what the consequence is if the plaintiff fails to negotiate in good faith.

The court holds that, in heirs-property partition actions, “good faith” under RPAPL 993(5)(e) is measured by the totality of the circumstances and necessarily includes considering the equitable factors listed in RPAPL 993(9)(a) during settlement negotiations. Critically, if the court finds the plaintiff did not negotiate in good faith, RPAPL 993(5)(f) mandates dismissal of the partition action. The Appellate Division affirms dismissal here, also upholding the confirmation of a referee’s report finding lack of good faith, and vacating earlier orders that had advanced the case toward partition and sale.

Case Background and Procedural Posture

• The property: a Queens home purchased in 1970 by defendant’s mother, owned for over 50 years within the family. Defendant grew up there; her son still resides at the property.
• Ownership chain: After divorces and intestacy events, the plaintiff investor acquired, in 2019–2020, a 75% interest via purchases from nonresident stakeholders for a total of about $136,000 ($70,000 for a 50% share through a predecessor entity, and $66,000 for a 25% share), leaving defendant with 25%.
• Action: In August 2020, plaintiff commenced an action for partition and sale. Early on, the court granted limited summary judgment determining the parties’ percentage interests and appointed a referee. A first referee’s report recommended charging defendant $2,000 per month for use and occupancy (U&O), and, in January 2022, the court confirmed that report and directed judgment of partition and sale.
• UPHPA settlement conferences: In August 2022, before entry of judgment, the court directed mandatory UPHPA settlement conferences. Multiple sessions were held between September 2022 and May 2023. The court-appointed conference referee (Daniel Gordon) ultimately found plaintiff failed to negotiate in good faith under RPAPL 993(5)(e) and recommended dismissal of the action under RPAPL 993(5)(f).
• Supreme Court ruling: The court accepted the referee’s conclusions, denied plaintiff’s motion to reject the report and for a valuation hearing under RPAPL 993(6), confirmed the referee’s report, vacated the earlier orders, and dismissed the action.
• Appeal: The Appellate Division (Wan, J.) affirms.

Summary of the Opinion

The Second Department affirms dismissal of the partition action. It holds:

• RPAPL 993 (UPHPA) governs and supersedes the general partition statute (RPAPL 901) for heirs-property filed on or after December 6, 2019. There is no dispute the property qualifies as heirs property.
• “Good faith” under RPAPL 993(5)(e) is assessed by the totality of the circumstances and must include consideration of the equitable factors listed in RPAPL 993(9)(a)—even though those factors also guide the court’s remedial decision whether to order partition in kind versus sale. The court rejects plaintiff’s argument that those factors are irrelevant to negotiations.
• Although foreclosure settlement jurisprudence under CPLR 3408 offers a “totality” framework, the UPHPA is distinct in purpose and remedy. Under RPAPL 993(5)(f), if the plaintiff fails to negotiate in good faith, dismissal is mandatory—unlike CPLR 3408, where dismissal is not an enumerated sanction.
• The record substantially supports the referee’s finding that plaintiff did not negotiate in good faith. Plaintiff’s offers were built around strict market metrics (appraised value, percentage interests, tax arrears, and a pre-conference U&O award) but failed to account for the statute’s equitable factors favoring the defendant heir, including multigenerational ownership, sentimental and residential attachment, harm from displacement, contributions to upkeep, and the price/terms by which plaintiff acquired its interest.
• Plaintiff’s pre-settlement motion practice and its reliance on a pre-conference U&O determination as negotiation leverage undermined good faith under the UPHPA context.
• Result: The court affirms denial of plaintiff’s motion to reject the referee’s report and for a valuation hearing, confirms the referee’s report, vacates the earlier summary judgment/order-of-reference and confirmation-of-report orders, and affirms dismissal with costs.

Detailed Analysis

1) Precedents and Authorities Cited

• Referee report standards:
  • Ocwen Loan Servicing, LLC v Coles (223 AD3d 678) and Citimortgage, Inc. v Kidd (148 AD3d 767): A referee’s findings are advisory; courts confirm when substantially supported by the record and when issues and credibility are clearly resolved.
  • HSBC Bank USA, N.A. v Delgado (211 AD3d 920): Aligns with the same standard for confirmation.
• General partition baseline:
  • Manganiello v Lipman (74 AD3d 667) and RPAPL 901(1): Normally, co-owners may seek partition in kind or by sale. But UPHPA (RPAPL 993) supersedes the default regime for heirs property.
• UPHPA context and purpose:
  • Legislative history (Senate Introducer’s Memorandum): Aimed at curbing predatory partition schemes that dispossess families through forced sales at below-market outcomes. The court invokes these policy goals to interpret “good faith.”
  • Maspeth Place Corp. v Walcott-Francis (74 Misc 3d 1204[A], 2022 NY Slip Op 50040[U]) and Pachter v 3063 Brighton 8 Props. LLC (69 Misc 3d 1201[A], 2020 NY Slip Op 51108): Trial-level applications of RPAPL 993 emphasizing the statute’s procedural protections (settlement conferences, appraisals) and the court’s ability to hold motions in abeyance during the conference process.
• Good-faith analogies from foreclosure settlement practice:
  • Deutsche Bank Natl. Trust Co. v Futerman (232 AD3d 656) and Wells Fargo Bank, N.A. v Meyers (108 AD3d 9): “Totality of the circumstances” informs good-faith assessments and can include pre-conference conduct; however, the remedial framework under CPLR 3408 differs significantly from the UPHPA.
  • Investors Bank v Brooks (211 AD3d 921): Confirms inclusion of pre-conference conduct in evaluating overall good faith.
  • In re Hosking (SDNY 2016): Observes “good faith” is context-sensitive, underscoring the court’s caution in importing foreclosure standards wholesale.

These authorities frame both the deference to the settlement referee’s fact-finding and the tailored, statute-specific definition of good faith under RPAPL 993—distinct from foreclosure cases.

2) The Court’s Legal Reasoning

The decision proceeds from the structure and text of RPAPL 993 and its protective purpose:

• UPHPA applicability and supremacy
  • RPAPL 993(3)(a) applies to partition actions filed on or after December 6, 2019. The property undisputedly qualifies as “heirs property” under RPAPL 993(2)(e). Therefore, UPHPA controls and supersedes general partition practice (RPAPL 901).
• Mandatory settlement conferences and court control over motion practice
  • RPAPL 993(5)(a)–(d) mandates conferences intended to facilitate a negotiated resolution “pertaining to the relative rights and obligations of the parties.” Under RPAPL 993(5)(g), the court may hold most motions in abeyance during the conference process (with narrow exceptions), aligning procedure with the statute’s settlement-first design.
• “Good faith” under RPAPL 993(5)(e)
  • Although “good faith” is undefined, the court adopts a “totality of the circumstances” approach and, crucially, holds that parties must actively consider the equitable factors listed in RPAPL 993(9)(a) during negotiations. The court grounds this in the statute’s text and protective aim.
  • RPAPL 993(9)(a) factors include: length of family ownership; sentimental/ancestral attachment; current lawful residential use and harm from forced displacement; contributions to taxes, insurance, maintenance, and improvements; the price/terms/conditions by which interests were acquired; and any other relevant considerations. RPAPL 993(9)(b) requires weighing the totality—no single factor is dispositive.
  • Thus, “good faith” here is not limited to appearing with settlement authority or exchanging numbers; it demands meaningful engagement with the statute’s equity-centered factors that protect family heirs.
• Distinct remedy from foreclosure settlement law
  • While CPLR 3408 (foreclosure) also uses a “totality” rubric for good faith, its sanctions are discretionary and do not include dismissal. By contrast, RPAPL 993(5)(f) provides that if the plaintiff fails to negotiate in good faith, “the partition action shall be dismissed.” This mandatory consequence reflects UPHPA’s strong anti-dispossession policy.
• Application to the facts
  • Negotiation record: The parties agreed on an appraisal of $695,000 and acknowledged $82,720.94 in tax arrears. Defendant offered to buy plaintiff’s interest for up to $300,000; plaintiff countered with buyout offers the court viewed as low for defendant’s interest and demanded $500,000 to sell its own interest—anchored in market valuation and a pre-conference U&O award, not the 993(9) equities.
  • Failure to consider 993(9) factors: Plaintiff’s offers did not meaningfully account for the family’s five-decade ownership, defendant’s sentimental and residential attachment, the harm of losing a family home, contributions to upkeep, or the steep discount at which plaintiff acquired its interest (about one-quarter of the appraised value of its 75% share), which would be flipped into substantial profit if plaintiff’s sale demand were accepted.
  • Use and occupancy leverage: Plaintiff’s reliance on a pre-settlement referee report and order awarding U&O, obtained through motion practice “as if this was a regular partition action,” was deployed as negotiation leverage. Even though the statute does not automatically stay motions, using such orders to drive settlement against the UPHPA’s equity-centered framework weighed against good faith.
  • Deference to referee: The conference referee observed the negotiations first-hand and made credibility assessments. The Appellate Division confirms the report was substantially supported by the record, warranting confirmation.

3) Impact and Significance

This decision is a leading, published appellate construction of RPAPL 993’s “good faith” requirement. Its practical and doctrinal impacts are substantial:

• Redefining “good faith” for heirs-property partitions
  • Negotiations must explicitly integrate 993(9)(a) equitable factors. Offers premised solely on market arithmetic (percentage x appraisal ± liens/U&O) risk a judicial finding of bad faith.
  • Parties should document how proposals address familial duration, sentimental/ancestral ties, current residential use and potential harm from displacement, contributions to taxes/maintenance, and the price/terms of acquisition.
• Mandatory dismissal as enforcement mechanism
  • Unlike foreclosure practice, UPHPA imposes mandatory dismissal if the plaintiff fails to negotiate in good faith. This creates strong incentives for plaintiffs, especially investors, to meaningfully engage with UPHPA’s protective equities.
  • Dismissal may be without prejudice (the opinion does not specify), but the immediate effect is to halt the partition attempt and preserve the status quo for the heir occupant.
• Court management of motion practice
  • Courts retain discretion to hold motions in abeyance during conferences. This case signals that pre-conference orders (e.g., U&O awards) used as leverage can undercut UPHPA’s settlement purpose and be weighed against the movant on the good-faith inquiry.
• Investor conduct and risk management
  • Speculators who assemble majority interests in heirs property must calibrate negotiation strategies to the UPHPA’s equities, including acknowledging discounted acquisition prices and offering terms that accommodate the heir’s continued residence or buyout capacity.
  • Failure to tailor offers to the statutory factors risks dismissal, sunk costs, and reputational harm.
• Guidance for referees and trial courts
  • Referees overseeing UPHPA conferences should evaluate and report whether parties considered 993(9) factors. Trial courts should be prepared to vacate earlier non-UPHPA-conforming orders if they were pursued and leveraged in ways incompatible with the statute’s settlement-first framework.

Complex Concepts Simplified

• Heirs property (RPAPL 993(2)(e))
  • Generally, real property held in tenancy-in-common without a binding agreement governing partition, with a substantial portion of interests held by relatives or derived from intestacy. UPHPA’s protections apply to such property.
• Partition in kind vs. partition by sale
  • Partition in kind physically divides the property among co-tenants. Partition by sale sells the property and divides proceeds. UPHPA encourages non-sale resolutions and requires courts to weigh equitable factors before ordering sale.
• Mandatory settlement conference (RPAPL 993(5))
  • A court-managed negotiation process early in the case. Parties must appear with settlement authority and negotiate in good faith, considering specified UPHPA options (e.g., tenancy-in-common agreement, co-tenant buyout, partition in kind, open market sale) and the 993(9) equitable factors.
• Good faith under UPHPA
  • Measured by the totality of circumstances, including whether parties meaningfully considered 993(9) equities during negotiations—not merely whether they showed up or exchanged numbers.
• Use and occupancy (U&O)
  • Charges a co-tenant in exclusive possession for the value of occupancy. In heirs-property cases, seeking and wielding U&O determinations as pre-conference leverage can reflect poorly on good faith when not balanced against UPHPA equities.
• Referee’s role and report
  • The settlement referee monitors negotiations and reports findings on good faith. The report is advisory but is confirmed if supported by the record and if credibility and issues are clearly addressed.

Practice Guidance and Takeaways

• Identify heirs property early and plead RPAPL 993. Request the mandatory settlement conference promptly; be prepared to defer non-exempt motion practice.
• Build offers that show the work: explain how the proposal accounts for 993(9) factors, including:
  • Family duration and sentimental/ancestral attachment;
  • Current residential use and concrete harms of displacement;
  • Contributions to taxes, insurance, maintenance, and improvements;
  • The price, terms, and conditions of how the offering party acquired its interest;
  • Any other relevant equities (e.g., community ties, disability, schooling, unique property attributes).
• Consider creative terms that embody UPHPA’s protective purpose, such as:
  • Extended closing periods, seller financing, step-up payment structures, or third-party financing facilitation for an heir’s buyout;
  • Temporary licensing or leasebacks to avoid displacement shocks;
  • Adjusted pricing acknowledging discounted acquisition by the investor.
• Avoid treating the conference as a standard partition numbers exercise. Overreliance on appraisals plus percentage shares, tax prorations, and U&O—without integrating UPHPA equities—can be fatal to plaintiff’s case.
• Document good faith. Provide written term sheets that expressly address 993(9) factors and memorialize flexibility shown during conferences.

Conclusion

Laurelton Estates, LLC v. Prince is a pivotal appellate interpretation of New York’s UPHPA. It cements three critical rules. First, “good faith” negotiations in heirs-property partitions require meaningful engagement with the equitable factors in RPAPL 993(9). Second, foreclosure settlement norms cannot be imported wholesale: the UPHPA’s distinct purpose and remedy—mandatory dismissal for a plaintiff’s failure to negotiate in good faith—reflect a stronger protective posture. Third, pre-conference tactical motion practice that is later used as leverage may undermine the good-faith mandate.

Going forward, litigants and courts must treat UPHPA conferences not as perfunctory or purely economic bargaining sessions, but as equity-centered processes designed to safeguard longstanding family ownership and prevent dispossession through predatory partition practices. Offers, counteroffers, and the entire posture of negotiations will be scrutinized for whether they genuinely reckon with the statute’s enumerated equities. Where they do not, dismissal will, and under the statute must, follow.