Party Entitled to Reimbursement of Expenses in Excess of Percentage of Ownership in Property

This week we wanted to bring your attention to an interesting decision out of the Appellate Division, Second Department, which in part, modified a lower court’s Order in a Partition Action, and directed the award of monies to reimburse a property owner for expenses he incurred in acquiring and maintaining the property, which expenses exceeded his percentage of ownership of the property.  
The relevant facts of, as well as a link to, the case are set forth below.

The Plaintiff/Appellant, Stephen Brady (“Brady”), and the Defendant/Respondent, Karen Varrone (“Varrone”), are respectively brother and sister and, in 1994 acquired title to a property in Nassau County together with Varrone’s husband.  The deed pursuant to which they took title to the property in 1994 did not specify their respective interests in the property and in January 2000, Varrone and her husband divorced.  In April 2001, Brady, Varrone and Varrone’s ex-husband executed a deed (the “2001 Deed”), transferring title to Brady and Varrone specifying that Brady owned a one (1/3) interest and Varrone owned a two-third (2/3) interest in the premises.

Brady vacated the property in 2002 and thereafter commenced this action to partition and sell the property in December 2005, basing his claim on his one-third (1/3) interest in the premises acquired in the 2001 Deed.  In granting Brady’s motion for Summary Judgment  on the cause of action for partition, the Supreme Court appointed a referee to determine the rights, shares, and interest that the various parties had in the property, and to take into account any income earned, and costs and expenses incurred, in connection with the property.   The referee found that the property should be sold, and recommended that Brady should receive one third of the proceeds of the sale and further confirmed that Brady had paid one half of the down payment, as well as one half of the mortgage payments during the period from the initial purchase of the property in August 1994 up to and beyond the conveyance of the property on April 5, 2001.   Therefore, on this basis, the referee recommended that Brady should be credited with payments he made in excess of his one-third interest in the premises from August 1994 to April 5, 2001, in the total amount of $34,942.95.  Notwithstanding the referee’s findings, the Supreme Court rejected the recommended award of $34,942.95 and issued an Order awarding $0.00 for any expenses incurred by Brady prior to the 2001 Deed and this appeal ensured.

In modifying the lower Court’s order to direct the award of the $34,942.95 to Brady recommended by the referee, the Appellate Court stated that “[c]ontrary to the determination of the Supreme Court, the plaintiff's recovery of payments, in excess of his interest in the property, that he made during the period prior to the tender of the 2001 deed were not foreclosed by the terms of the order of reference. In addition to directing the referee to ascertain the respective rights, shares, and interests of the parties, the order of reference required the referee to "take an account" of the costs and expenses incurred, and income earned, in connection with the parties' ownership of the property. This directive was sufficient to encompass the plaintiff's claims with respect to the period prior to the conveyance of the 2001 deed.” (citation omitted).

This case is an important reminder for co-owners that are individually contributing either to the acquisition or maintenance of a property, to keep accurate records of any and all expenses incurred in the event that such expenditures need to be proved in a future Partition action.

To view this case click the link: https://www.nycourts.gov/reporter/3dseries/2009/2009_06228.htm