When Do Inherited Property Rights Vest In New York?

Title to inherited property automatically vests in the heirs of a decedent who dies intestate in New York, however, such vesting of title is subject to the rights granted to the administrator to manage and dispose of it for purposes of distribution to beneficiaries of the estate.

An April 2020 case from New York’s Kings County Supreme Court, Rainford Mgt. Corp. v. 207 Van Buren LLC, untangled a chain of deeds and intestate beneficiaries to determine who owned the real property at issue in this dispute.

The Facts of the Case

Rainford Management Corporation and LCD Holding Corp., Plaintiffs, sought a judgment declaring that they are the owners of an undivided share or interest in fee simple absolute of the real property known as 207 Van Buren Street in Brooklyn (the “Property”).    Plaintiffs also sought to set aside the deed purporting to transfer the property to defendant, 207 Van Buren LLC.

The Property was purchased by Estelle Gray and her daughter, Clifford Mae Gray, in 1981.  Each owned an undivided 50% interest.

Estelle died intestate survived by Clifford and seven other children: Anita, Barbara, Cheryl, Colleen, Sevonne, Terry, and Rosalind.  This means that Estelle’s children, as her intestate beneficiaries, became inherited the property under New York law and became owners of her share of the Property.  A small estate affidavit in relation to the settlement of Estelle’s estate was filed in Surrogate’s Court, Kings County in 1998.

Anita, one of Estelle’s daughters, died in 1999.  Anita was survived by her daughter, Kimberly.  Rosalind, another one of Estelle’s daughters, died in 2013, survived by her husband Bobby and three children: Stacy, Eric, and David.  A small estate affidavit for Rosalind’s estate was filed.

In 2017, Clifford (the daughter who initially purchased the Property with Estelle), individually, and Clifford and Barbara (another one of Estelle’s daughters), “as the sole heirs and distributes of Estelle Gray, deceased” executed a deed purporting to transfer the Property to the Defendant for $1,275,000.  This deed ignored the ownership rights of Estelle’s other children and their heirs.

Gray v. Gray Action

Upon learning of the 2017 sale, Sevonne, Cheryl, Rosalind, and Anita “and/or their lawful heirs, successors, beneficiaries” sued Clifford, Barbara, and Defendant for damages and a quiet title declaration that they were also heirs of Estelle Gray with an interest in the Property (Gray v. Gray Action).

During the Gray v. Gray action, Anita’s daughter Kimberly obtained letters of administration for the Anita’s estate.  Stacy obtained letters of administration for Rosalind’s estate.  The caption was amended to substitute the administrators of the estates in for Anita and Rosalind, respectively.

The parties to the Gray v. Gray action executed a settlement agreement in 2019.  In exchange for money, the plaintiffs executed quitclaim deeds and general releases relinquishing their interests in the Property to Defendant.

In March 2019, Sevonne Gray was granted full and unrestricted letters of administration for the estate of Estelle Gray.  Sevonne applied to the Surrogate’s Court pursuant to SCPA Article 19 for an order approving the prior disposition of the Property to Defendant.

The Surrogate’s Court then issued an order, entitled “Order Approving the Prior Disposition of Real Property,” granting Sevonne Gray’s SCPA article 19 application.  The Article 19 Order stated “that the prior disposition and transfer of the [Property] to 207 Van Buren LLC for the consideration amount of $1,275,000.00 is hereby approved” and also authorized Sevonne Gray as administrator to confirm and consent to “said prior transfer/disposition by executing a quit-claim deed and general release to 207 Van Buren LLC”

The Rainford Deed And The Current Action

While the Article 19 petition was pending, Bobby (Rosalind’s surviving spouse, who had consented to Sevonne’s appointment as administrator of Estelle’s estate), executed a bargain and sale deed purportedly conveying “any and all of his interest” in the Property to Plaintiffs for $20,000 [“Rainford Deed”].

Rainford Management Corporation and LCD Holding Corp., Plaintiffs, filed an action against Defendant, 207 Van Buren LLC, seeking a judgment declaring that they are the owners of an undivided share or interest in fee simple absolute of the Property.    Plaintiffs also sought to set aside the August 2017 Deed.  Defendant moved to dismiss the Complaint.

A Grantor Cannot Convey More Than They Own

The grounds for Defendant’s Motion to Dismiss was Real Property Law §245, which states that:

A greater estate or interest does not pass by any grant or conveyance, than the grantor possessed or could lawfully convey, at the time of the delivery of the deed.

Defendant argued that the Rainford Deed was invalid or void because Bobby had no interest in the Property at the time he executed the Rainford Deed.  The beneficiaries of the estate of Estelle Gray, including Stacy, as administrator of Rosalind’s estate, had executed quitclaim deeds prior to the Rainford Deed transferring all of their respective interest in the Property to Defendant.

 

SCPA 1902

Pursuant to SCPA § 1902, the Surrogate’s Court, upon application of “[a]ny person entitled either absolutely or contingently to share as beneficiary in the estate” may dispose of an intestate decedent’s inherited real property for any of the reasons enumerated in New York SCPA § 1902, including in order to pay estate expenses, to effect distribution of the respective shares of the estate, or “[f]or any other purpose the court deems necessary”

A transfer that occurs pursuant to SCPA article 19 constitutes a judicially ordered sale by the Surrogate’s Court. In ordering the sale, the Surrogate’s Court “directs that the decedent’s interest in the real property be sold and conveyed unencumbered by the interests of the estate beneficiaries and/or their judgment creditors.”

As summarized by the court:

In this case, following the initial transfer in 2017, the beneficiaries of the estate of Estelle Gray, including Stacy Alston, as administrator of the estate of Rosalind Rice, executed a quitclaim deed in January 2019 conveying their interests in the Property to Defendant. Stacy Alston was authorized to act as administrator of the estate of Rosalind Rice following the issuance of letters of administration pursuant to waivers of citation and consent executed by all beneficiaries, including Bobby Rice…

Shortly thereafter, Sevonne Gray, following the issuance of letters of administration authorizing her to act as administrator of the estate of Estelle Gray, executed an additional quitclaim deed conveying the entirety of Estelle Gray’s original 50% interest in the Property to Defendant. Said transfer and disposition of the Property was then judicially approved in the Article 19 Order in the estate proceeding on the ground that it was in the best interest of the estate and beneficiaries.

 

Does Title To Inherited Real Property Automatically Vest In The Heirs Of An Intestate New York Decedent?

Yes, title to inherited real property automatically vests in the heirs of a decedent who dies intestate in New York.  However, such vesting of title to inherited property is subject to the rights granted to the New York administrator to manage and dispose of it for purposes of distribution to beneficiaries of the estate.

Here, Plaintiff Rainford’s arguments were premised upon the claim that their interest was superior to Defendant Van Buren’s interest on the ground that it derives from Rosalind and vested immediately in Bobby, and therefore was not subject to disposition by the administrator of Rosalind’s estate or the Surrogate’s Court.  The argument was rejected by the Kings County Supreme Court, because the quitclaim deeds and the Article 19 Order from the Surrogate’s Court, which approved the prior disposition of the Property and quitclaim deed executed by Sevonne Gray, encompassed any interest that Bobby Rice had in the Property that the Rainford Deed purported to convey.  Therefore, Bobby had no interest to convey at the time he executed the Rainford Deed.

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Inna Fershteyn

Westchester County

Anthony Nigro

Nassau County

Cyrus Shaw

Erie County

Ruth P. George

Queens

Rudolf Karvay

Suffolk County

Marc Weissman

Rockland County

Ari J. Zaltz