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Multiple owners

Multiple owners. Kinds of Property. Real; land and whatever is built on it or attached to it Personal Tangible ; livestock, machinery, … Intangible; stocks, bonds, bank accounts, …. Elements of Ownership. Degree of interest or control; bundle of rights fee simple, life estates, etc.

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Multiple owners

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  1. Multiple owners

  2. Kinds of Property • Real; land and whatever is built on it or attached to it • Personal • Tangible ; livestock, machinery, … • Intangible; stocks, bonds, bank accounts, …

  3. Elements of Ownership • Degree of interest or control; bundle of rights fee simple, life estates, etc. • Relationship of the owners • Tenancy in common; • This is the least used possibly due to misunderstanding • Undivided interest that you can pass on to your heirs • Not necessary that each party own the same amount

  4. Joint tenancy; • Undivided interest that passes back to the other owners upon death. It doesn’t matter what a will says, if the property is held joint tenants then the property still reverts to the other owner(s) • Tenancy in common favored in the Iowa law, if a will doesn’t specify then it will revert to tenants in common.

  5. Tenancy in entirety and community property used in other states • Which is best depends on circumstances • Jt. Tenancy lets you keep the property in the immediate family; creates problems if the order of death isn’t the ‘natural’ expectation • Tenants in common lets you pass the property to your heirs

  6. Remedies for co-tenant • Sell undivided interest • Voluntary partition • Court ordered partition • Selling is difficult due to few buyers, limited financing availability, other owners, etc. • If court can’t divide property equally it will sell it and divide the money

  7. Valuing Undivided Interests • Start like any other appraisal; define the problem, determine the objectives and determine the highest and best use. • Value the property as if it was normal • Then value undivided interest • Size, type of operation, other parties involved, what happens to HBU after partitioning, and so forth • What is the appropriate discount rate

  8. Valuing a Partition • Dividing the property equally should be the focus of the appraisal; equal will not necessarily be in terms of acres but rather dollars • Appraiser has to determine what is the best way to divide the property • “Appraisers must have vision to consider the property before and after the division and make the most equitable division possible.”

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