If someone is selling a piece of farmland that they have 90% undivided interest in what does that exactly mean? Would they need to buy the remaining interest out before selling?
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Selling undivided interest in farmland
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Last: 4 yr ago by AggiePeeps06
Technically they could sell their 90% undivided interest. The problem with that is there is someone that owns the remaining 10% undivided interest and they have every right and use of the entire property as the 90% owner. Definitely isn't an ideal situation unless you have total trust and familiarity with the other 10% owner. Even then, I would avoid it.
Valuing the 90% undivided interest is tricky. It isn't as simple as obtaining an appraisal for the property and multiplying it by .90. An appraiser is going to discount the value of an undivided interest.
Best option would be to either have the 90% owner buy out the 10% owner or approach the 10% owner about selling their ownership and simultaneously close on the two interests. You could also have the two owners partition the property based on their ownership interest, but the 10% owner is unlikely to agree to this.
Valuing the 90% undivided interest is tricky. It isn't as simple as obtaining an appraisal for the property and multiplying it by .90. An appraiser is going to discount the value of an undivided interest.
Best option would be to either have the 90% owner buy out the 10% owner or approach the 10% owner about selling their ownership and simultaneously close on the two interests. You could also have the two owners partition the property based on their ownership interest, but the 10% owner is unlikely to agree to this.
You probably can't finance it. You would need the owner of the 10% interest to sign on your deed of trust, which he would be crazy to do.
Unless they have changed the rules, you are not going to be able to use the property as collateral. This means you pay cash, or you put up some other form of collateral (like allowing them to place a lien on another property of similar or greater value that is free and clear).
Check with Capital Farm credit or similar. This may only apply to homestead exemptions (but if you don't own another 200 acres somewhere, this will likely be considered your agricultural homestead in terms of TX homestead law), or they may waive the requirements for having such a high percentage of the place, but yeah.
You can file for partition, and have a panel of land jury commissioners partition the place up, but lawyer up if you want to head that direction. It is not in the favor of the 10% owner to lose access to 90% of the place. Also, his part will require access and 10% of the VALUE of the place, not acreage. If there is one part that is more valuable (river front, tank, homesite, portion that is out of flood plain), then get ready to either lose part of that, or lose more than 10% of total acreage.
This can be a mess. Unless it's a slam dunk, don't bother with it. Experience talking here. Hoping to get the final 25% resolved soon, the last party is finally willing to talk about selling out. This is after 15 years.
Check with Capital Farm credit or similar. This may only apply to homestead exemptions (but if you don't own another 200 acres somewhere, this will likely be considered your agricultural homestead in terms of TX homestead law), or they may waive the requirements for having such a high percentage of the place, but yeah.
You can file for partition, and have a panel of land jury commissioners partition the place up, but lawyer up if you want to head that direction. It is not in the favor of the 10% owner to lose access to 90% of the place. Also, his part will require access and 10% of the VALUE of the place, not acreage. If there is one part that is more valuable (river front, tank, homesite, portion that is out of flood plain), then get ready to either lose part of that, or lose more than 10% of total acreage.
This can be a mess. Unless it's a slam dunk, don't bother with it. Experience talking here. Hoping to get the final 25% resolved soon, the last party is finally willing to talk about selling out. This is after 15 years.
Has the other 10 percent owner been paying their taxes or using the property at all?
If not, it's possible under certain circumstances for the 90 percent owner to file adverse possession and claim the ten percent. InTexas anyway.
If not, it's possible under certain circumstances for the 90 percent owner to file adverse possession and claim the ten percent. InTexas anyway.
The other minority land owner is up to date on his taxes unfortunately. So what I gather is that the seller could sell his 90% interest, but the property wouldn't be as marketable due to the 10% landowner having 100% access to the property, correct? From a title perspective, would the 10% owner need to sign off on the seller selling his 90%?
I know the 10% owner isn't interested in selling and I don't blame him. He's got a good deal going right now. Also, I don't believe he'd agree to partition 10% of the property because he'd likely want to partition the 10% with the utilities.
I know the 10% owner isn't interested in selling and I don't blame him. He's got a good deal going right now. Also, I don't believe he'd agree to partition 10% of the property because he'd likely want to partition the 10% with the utilities.
Owning undivided interest in real property is a pain even if you have a great relationship with the co-tenant(s). You might not have experienced any problems but sooner or later issues will arise.
Nope.kmat95 said:
The other minority land owner is up to date on his taxes unfortunately. So what I gather is that the seller could sell his 90% interest, but the property wouldn't be as marketable due to the 10% landowner having 100% access to the property, correct? From a title perspective, would the 10% owner need to sign off on the seller selling his 90%?
I know the 10% owner isn't interested in selling and I don't blame him. He's got a good deal going right now. Also, I don't believe he'd agree to partition 10% of the property because he'd likely want to partition the 10% with the utilities.
We sold a piece of property we owned outright a few years back and the buyers financed half of it with Capital Farm Credit. I met the rep for them when he came out to evaluate the acreage and I asked him a 'what if' question.
If a property was owned evenly by 2 people, an undivided 50% for each, and one of them wanted to sell to a third party, would CFC finance it and how would they determine value of said acreage? He said they hesitate to do such but had run across 3 instances of that example in his career with them and told me the value of that half of the acreage would be 60%. Does that make sense? If total acreage is worth $4,000 per acre, an undivided half is worth $2,000 x 0.6
If a property was owned evenly by 2 people, an undivided 50% for each, and one of them wanted to sell to a third party, would CFC finance it and how would they determine value of said acreage? He said they hesitate to do such but had run across 3 instances of that example in his career with them and told me the value of that half of the acreage would be 60%. Does that make sense? If total acreage is worth $4,000 per acre, an undivided half is worth $2,000 x 0.6
What County and how many acres? I represent some buyers who have bought undivided interests in farmland in the past.
I have an undivided interest in Stonewall County 960 acres. I want to sell, but my cousin does not. he also does not want to partition the property.
So do you know buyers of undivided properties?
Bob
So do you know buyers of undivided properties?
Bob
I'm dealing with a very similar situation in the hill country. The seller suggested that I just buy his 50% and then I could do whatever I want with the property. He said if the other owner didn't like it, they could sue me and then we could just partition the property. Sounds like a headache
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