Flouret v Sagland, LLC
Categories
Attorneys and Parties
Brief Summary
Whether real property owned entirely by a trust and a limited liability company (LLC) can qualify as "heirs property" under the Uniform Partition of Heirs Property Act (RPAPL 993) [equitable statute governing partition of certain family-held residential or agricultural property, enacted to protect families from predatory partition sales and imposing special notice and settlement procedures].
The Supreme Court held that the subject property was heirs property under RPAPL 993 and denied the plaintiff's summary judgment motion on that basis, without reaching the motion's merits.
The Appellate Division reversed the order denying summary judgment insofar as it rested on the determination that RPAPL 993 applied.
The statute's text and purpose limit heirs-property protection to qualifying human individuals and relatives. A trust and an LLC are not "individuals," cannot be "relatives," and property owned wholly by those entities, with no individual co-tenant holding title from a relative, does not meet the statutory definition of heirs property.
Background
The dispute concerns approximately 17.41 acres of undeveloped Suffolk County property used for residential or agricultural purposes. In 1969, brothers Stephen Perlbinder and Barton Mark Perlbinder acquired the property as tenants in common from a nonrelative. In 2020, Stephen conveyed his 50% interest to Sagland, LLC, whose manager is Stephen's daughter. In 2023, Mark conveyed his 50% interest to the Mark Perlbinder 2023 Irrevocable Trust, with Muffy Flouret, Mark's daughter, as trustee. Mark had commenced this partition-and-sale action in 2022, and after the 2023 transfer the parties stipulated to substitute Flouret, as trustee, as plaintiff. The defendant asserted that the property was heirs property under RPAPL 993 and that the plaintiff had not complied with that statute's procedures. The plaintiff moved for summary judgment, arguing that because the property was wholly owned by a trust and an LLC, RPAPL 993 did not apply and a partition sale was warranted.
Lower Court Decision
The Supreme Court, Suffolk County, denied the plaintiff's motion for summary judgment after concluding that the property was heirs property within the meaning of RPAPL 993. Because it found the statute applicable, the court did not address the substantive partition issue, including whether physical partition would cause great prejudice.
Appellate Division Reversal
The Appellate Division held, as a matter of first impression in that court, that trusts and limited liability companies are not "individuals" under RPAPL 993. Looking to the statute's plain language, related definitions such as "relative," "ascendant," "descendant," and "collateral," and the Legislature's anti-predatory purpose, the court concluded that the heirs-property statute protects human family owners, not sophisticated legal entities. The court rejected the argument that the trust and LLC should count because their trustee or manager happened to be relatives of the original owners. It therefore reversed the order and remitted the matter for a new determination on the merits of the plaintiff's summary judgment motion, including under RPAPL 901 [general New York partition statute that governs partition and sale where heirs-property protections do not apply and requires, among other things, a showing that physical partition would cause great prejudice].
Legal Significance
This decision establishes in the Second Department that RPAPL 993 does not extend to property held entirely by entities such as trusts and LLCs when no individual co-tenant owns a qualifying interest acquired from a relative. The ruling emphasizes strict adherence to the statutory text and reinforces that the heirs-property law was enacted to protect family landholders from predatory speculators, not to shield entity-owned property simply because relatives are involved in management or beneficial ownership.
For RPAPL 993 to apply, there must be at least one qualifying human individual co-tenant with the requisite family relationship and title history. Property owned solely by a trust and an LLC is not heirs property merely because relatives serve as trustee, manager, or beneficiary.