ASSEMBLY JUDICIARY COMMITTEE

STATEMENT TO

SENATE, No. 1400

STATE OF NEW JERSEY

DATED:  MAY 8, 2025

      The Assembly Judiciary Committee reports favorably Senate Bill No. 1400.

      This bill, titled the “Uniform Partition of Heirs Property Act,” would provide an alternative process for handling partition actions filed in court concerning real property with multiple owners, at least one of whom had acquired title to the property from a relative.  The bill is based on the 2010 uniform act drafted and approved by the Uniform Law Commission.

Current Law and Bill Intent

      Currently, any real property held by multiple owners as tenants in common (cotenants) may be subject to a partition action filed in Superior Court, which may result in (1) a partition in kind, which is the physical division of the property proportionate to individual owners’ interests, or (2) partition by sale, for which individual owners are compensated out of the total purchase price proportionate to their interests. See N.J.S.2A:56-1 et seq. 

      This bill would preempt parts of the existing partition law in order to create new requirements for the partition process.  The intent is to provide greater protections for the interests of cotenant property owners who may object to another owner’s action seeking to partition “heirs property.”

Eligible Property

      The bill would apply to “heirs property,” which is defined under the bill as any property held by coteneants that meets the following characteristics:

      - there is no agreement in a record binding all the cotenants which governs the partition of the property;

      - one or more of the cotenants acquired title from a relative, whether living or deceased; and

      - any one of the following applies: 20 percent or more of the interests are held by cotenants who are relatives; 20 percent or more of the interests are held by an individual who acquired title from a relative, whether living or deceased; or 20 percent or more of the cotenants are relatives.

Appointment of Special Master or Commissioner

      When a partition action is filed, the court would make a determination, based on information contained in the pleadings or any other information provided to the court pursuant to the Rules of Court, whether the subject property is “heirs property.”  If so determined, the court would appoint a special master to generally oversee the process and may, when appropriate, appoint a commissioner or commissioners.  Any such appointed commissioner would be required to be disinterested, impartial, and not a party to or participant in the partition action.

Posting of Notice

      The bill also provides that if the court determines that the property may be heirs property, the court would order the plaintiff to post, and maintain while the action is pending, a conspicuous notice on the property that is the subject of the action in accordance with the Rules of Court.  That notice would state information about the partition action and the common designation by which the property is known, and the court could also require the party to include the party’s name and the known defendants (other cotenants).

Valuation of the Property

      An appointed special master would direct a disinterested real estate appraiser licensed in the State to make a determination of the property’s fair market value, assuming sole ownership of the fee simple estate.  If the cotenants have agreed to the property’s value or to another valuation method, the special master could accept that value or the value produced by the agreed upon method.  If an appraisal is conducted, the completed appraisal would be distributed to the parties in the action and filed with the special master.  Within 30 days after the appraisal is filed, any party could file an objection with the special master.  Thereafter, following notice of a hearing, the special master could conduct an appraisal hearing to determine the fair market value of the property, during which the special master could consider evidence offered by any party in addition to the real estate appraisal on file.

Buyout Period Notice

      If any cotenant requests a partition by sale after the determination of the property’s value, a notice would be sent within 45 days by the party who filed the partition action to all parties and the special master indicating that any cotenant, except a cotenant that requested partition by sale, could buy all of the interests of the one or more cotenants requesting the sale.  Within 30 days thereafter, any eligible cotenant or cotenants could then elect to buy all of those interests by giving notice of such to the parties and the special master.  The purchase price for each of the interests of a cotenant requesting the partition by sale would be the determined value of the entire parcel of property multiplied by the cotenant’s fractional ownership of the entire parcel.

      At the conclusion of the buyout notice period, the bill provides for the following:

      (1) If only one cotenant elected to buy all the interests of the cotenants that requested partition by sale, the cotenant would notify all the parties and the special master in writing;

      (2)  If more than one cotenant elected to buy all the interests of the cotenants that requested partition by sale, the special master would allocate the right to buy those interests among the electing cotenants based on each electing cotenant’s existing fractional ownership of the entire parcel divided by the total existing fractional ownership of all cotenants electing to buy, and send written notice to all the parties of that fact and of the price to be paid by each electing cotenant; and

      (3)  If no cotenant elected to buy all the interests of the cotenants that requested partition by sale, the special master with notice to the parties would report in writing to the court, and the court would resolve the matter by ordering a partition in kind or partition by sale.

      In situations when one or more cotenants elected to buy the available interests, each such cotenant would be required to pay their apportioned price within 30 days with notice to the special master. 

Payment and Reallocation of Interests

      Upon timely payment by all purchasing cotenants, who deposit their money in the Superior Court Trust Fund, the special master would issue an order reallocating the interests amongst the remaining cotenants and the money held by the trust fund would be disbursed, in accordance with procedures set forth in the Rules of Court, to the one or more cotenants who have been bought out. 

      If no one made timely payments, the special master would report this to the court, which in turn would resolve the matter by ordering a partition in kind or partition by sale.  If only some made timely payments, those paying cotenants could file a motion with the special master to determine the outstanding interests and their purchase price, and one or more such cotenants could thereafter pay, based upon a new special master order, for the recalculated remaining interests within 30 days following issuance of the order.  After this new 30-day period, if there remained any interests for sale that are not purchased, the court would resolve the matter by ordering a partition in kind or partition by sale.

Conditions for Partitions in Kind

      Whenever at the conclusion of the one or more buyout periods described above there remain any unpurchased interest from a cotenant that requested the partition by sale, or any cotenant remains that has requested a partition in kind, the special master would report to the court a recommendation to proceed with a partition in kind.  The court would order the partitioning of the property into physically distinct and separately titled parcels, unless the court found that such partitioning would result in great prejudice to the cotenants as a group; the determination of “great prejudice” would be based on such factors as whether the property could be divided practicably amongst cotenants, whether doing so could decrease the aggregate values of the resulting parcels versus selling the property as a whole, and any cotenant’s sentimental attachment to the property, including attachment arising because of any ancestral, unique, or special value to the cotenant.  In a case in which a partition in kind would result in great prejudice, the court would order a partition by sale, unless no cotenant requested such action, resulting in the dismissal of the case and no further partitioning of the property.

Conditions for Partition by Sale

      Any partition by sale would be an open-market sale unless the court finds that a sale by sealed bids or an auction would be more economically advantageous and in the best interest of the cotenants as a group.  Any open-market sale would proceed under a licensed real estate broker, either agreed to by the parties or, absent agreement, appointed by the court.  The real estate broker would be provided a reasonable commission on the sale as determined by the court. 

      The broker would offer the property for sale in a commercially reasonable manner at a price no lower than the previously determined value of the property, and on the terms and conditions established by the court.  The broker, after receiving an offer to purchase the property, would file a report with the court containing information about the purchase price, name of each buyer, terms of the proposed sale, including the terms of any financing, any amounts to be paid to lienholders, and other material facts relevant to the sale.  Thereafter, the purchase could be completed in accordance with applicable State law and payments distributed based upon the former cotenants’ various interests in the property.

Effective Date

      This bill would take effect on the 30th day following enactment, and apply to any partition actions filed on or after that date.

      As reported by the committee, Senate Bill No. 1400 is identical to Assembly Bill No. 5448, which was also reported by the committee on this date.