Land Ownership Issues

[HuskyCaucasian]

I was wondering if someone out there might know a bit about this. Here is the story...

My wife's ancestors bought land in Iowa back in the mid 1800s. Since then, it has been past down and divided to decedents. The land itself has not been divided, but the ownership shares have. They currently rent out the land and rental income is split based on the percent you own. There is no legal partnership or company. Just a simple handshake agreement.

Recently, a group of relatives who own 32% of the shares said they want to sell. They issued this demand... buy out our shares at market value or we will proceed with selling the entire farm (basically, everyone with a share would receive a percentage of the sale based on their ownership percentage). Needless to say this has honked off the other 68% who do not wish to sell or simply don't care one way or the other.

 

My question is: how is this legal? How can a minority ownership force the sale of something when the major does not wish to do so?

Secondly: Past precedent within the family has been to offer land to family members for well below market value. (Recently, my wife's cousin bought 10 acres for 1/3 market value, and this same guy who is forcing the sale bought his 50 acres for less than 1/3 market value) So, could it be argued that their demands are unreasonable given past precedent?

Edited January 2, 2008 by Athomeboy_2000

[NorthSideSox72]

I was wondering if someone out there might know a bit about this. Here is the story...

My wife's ancestors bought land in Iowa back in the mid 1800s. Since then, it has been past down and divided to decedents. The land itself has not been divided, but the ownership shares have. They currently rent out the land and rental income is split based on the percent you own. There is no legal partnership or company. Just a simple handshake agreement.

Recently, a group of relatives who own 32% of the shares said they want to sell. They issued this demand... buy out our shares at market value or we will proceed with selling the entire farm (basically, everyone with a share would receive a percentage of the sale based on their ownership percentage). Needless to say this has honked off the other 68% who do not wish to sell or simply don't care one way or the other.

 

My question is: how is this legal? How can a minority ownership force the sale of something when the major does not wish to do so?

Secondly: Past precedent within the family has been to offer land to family members for well below market value. (Recently, my wife's cousin bought 10 acres for 1/3 market value, and this same guy who is forcing the sale bought his 50 acres for less than 1/3 market value) So, could it be argued that their demands are unreasonable given past precedent?

What name(s) is(are) on the title? And if the titled names are all deceased, was there a decision made by probate or otherwise legally as to whose name the land is actually in?

 

Because as I understand it, the name on the title is everything.

 

[HuskyCaucasian]

What name(s) is(are) on the title? And if the titled names are all deceased, was there a decision made by probate or otherwise legally as to whose name the land is actually in?

Because as I understand it, the name on the title is everything.

I do not have that information. but my understanding is that the land has been passed down via a will. So an example is when my wife's great grandfather died, he passed his "share" to my wife's grandmother via a will and when she dies, her share gets divided between her 3 children.

This has happened so many times some people only own 10% share. It's fairly splintered.

Edited January 2, 2008 by Athomeboy_2000

[NorthSideSox72]

I do not have that information. but my understanding is that the land has been passed down via a will. So, when my wife's great grandfather died, he passed his "share" to my wife's grandmother via a will.

Then that is where you start - the person whose name is actually on the will. He/she owns the land, and the only exceptions to ownership are any legal agreements (documented) that he/she knowingly made. Follow the trail from there. If she didn't do anything legally documented to split the land, then its hers to do with as she pleases - as I understand it.

 

But if I were you, once you figure out where that trail ends, I'd talk to a lawyer (probably someone who works probate). In the meantime, if you want to stop the sale, if you find out whose name is on the title, you can always point out to them that only the owner of property can sell it. even if they tried, when the buyer's title search was done, they'd find the seller wasn't the owner, and that would be the end of that deal (unless the buyers are stupid enough to not buy title insurance).

 

[NorthSideSox72]

By the way, fair warning - I am not an attorney. I happen to have some experiences with real estate law, but the above posts from me are as far as i can take you. Once you've figured out who actually, legally has title or willed title to the land, you need to see a professional.

 

[HuskyCaucasian]

Then that is where you start - the person whose name is actually on the will. He/she owns the land, and the only exceptions to ownership are any legal agreements (documented) that he/she knowingly made. Follow the trail from there. If she didn't do anything legally documented to split the land, then its hers to do with as she pleases - as I understand it.

 

But if I were you, once you figure out where that trail ends, I'd talk to a lawyer (probably someone who works probate). In the meantime, if you want to stop the sale, if you find out whose name is on the title, you can always point out to them that only the owner of property can sell it. even if they tried, when the buyer's title search was done, they'd find the seller wasn't the owner, and that would be the end of that deal (unless the buyers are stupid enough to not buy title insurance).

thanks so much for the help.

It is my understanding that the ownership of the land is not really in dispute. It's document through wills who owns what share (they all co-own the land). The problem comes with how a 32% ownership can force the sale when 68% don't want to or are indifferent.

[NorthSideSox72]

thanks so much for the help.

It is my understanding that the ownership of the land is not really in dispute. It's document through wills who owns what share (they all co-own the land). The problem comes with how a 32% ownership can force the sale when 68% don't want to or are indifferent.

Yeah, that's beyond my level of understanding... but it sure seems like that would be against the legal documentation. I assume that an attorney was used as executor of the will with the division of ownership - that might be your best place to start.

 

[HuskyCaucasian]

Yeah, that's beyond my level of understanding... but it sure seems like that would be against the legal documentation. I assume that an attorney was used as executor of the will with the division of ownership - that might be your best place to start.

Yea, they have been using a lawyer to "manage" the land issues. However, they have become disenfranchised with him as he just doesn't seem to care about it anymore and he is getting old (doesnt even own a computer). So, they are going to consult another lawyer who might actually want to work this rather than just say "yea, whatever that guys says is ok".

 

My personal feeling is that what the guy is trying to do isnt legal, but he is hoping you wont try to fight it and just cave to his demands.

[kapkomet]

Got to find the title... until then, you're spinning your wheels.

 

You can actually sometimes find this on a county website having to do with property taxes...

[HuskyCaucasian]

The name on the deed is a now deceased relative who had no children. It's not the original owner, but a wife of a descendant.

[kapkomet]

The name on the deed is a now deceased relative who had no children. It's not the original owner, but a wife of a descendant.

Eww. This could get really ugly.

[HuskyCaucasian]

This is how it was just explained to me by my mother-in-law. (names changed to protect the innocent)

 

The land originally belonged to Mike and James -- (James) will and Mike's said it went to their wives for a life estate and then to the 6 heirs (my wife's grandmother and her brother and cousins) --- so that is why it is in the life estate. But, upon James' wife's death it immediately went to the 6 heirs - she has always gotten 50% of the proceeds of the farm rent and any other income (Mike's wife did too until she passed on and that is when the 6 heirs took that 50%). But, as soon as James' wife died it went to the others and we got a check for what was in the trust set up for her estate already -- so she no longer has the ownership in the farm --- that was all done in Mike and James' wills (which my wife's father has). The name on the deed of the land is James' wife.

 

Does that make sense?

[Soxbadger]

This isnt going to be something that can be answered on a message board in my opinion.

 

But, upon James' wife's death it immediately went to the 6 heirs - she has always gotten 50% of the proceeds of the farm rent and any other income (Mike's wife did too until she passed on and that is when the 6 heirs took that 50%). But, as soon as James' wife died it went to the others and we got a check for what was in the trust set up for her estate already -- so she no longer has the ownership in the farm --- that was all done in Mike and James' wills (which my wife's father has). The name on the deed of the land is James' wife.

 

The problem is without the document its almost impossible to know how the split of the 6 heirs was set up. Are they tenants in common, are they joint tenants?

 

Depending on the answer to that question you will get a strikingly different result.

 

tenancy in common

 

A way two or more people can own property together. Each can leave his or her interest upon death to beneficiaries of his choosing instead of to the other owners, as is required with joint tenancy. In some states, two people are presumed to own property as tenants in common unless they've agreed otherwise in writing.

 

joint tenancy

 

A way for two or more people to share ownership of real estate or other property. When two or more people own property as joint tenants and one owner dies, the other owners automatically own the deceased owner's share. For example, if a parent and child own a house as joint tenants and the parent dies, the child automatically becomes full owner. Because of this right of survivorship, no will is required to transfer the property; it goes directly to the surviving joint tenants without the delay and costs of probate.

 

Also as you said this is Iowa, so I really dont know anything about Iowa law. Also just as a disclaimer, this does not constitute legal advice.

 

 

[DrunkBomber]

This isnt going to be something that can be answered on a message board in my opinion.

The problem is without the document its almost impossible to know how the split of the 6 heirs was set up. Are they tenants in common, are they joint tenants?

 

Depending on the answer to that question you will get a strikingly different result.

Also as you said this is Iowa, so I really dont know anything about Iowa law. Also just as a disclaimer, this does not constitute legal advice.

Like he said it depends what kind of co-ownership it is. Either way if the title helps your case they might be able to only sell their percentage but even that is tricky. This is something a real estate lawyer could tell you in a second.

[HuskyCaucasian]

Just a quiick update: I have a friend who went to law school and is currently working for a firm that specializes in wills. I finally got a hold of him last night. He seems to think that one small group can not force the rest to sell. A sale needs 100% approval.

[Texsox]

Best of luck with this and from a situation I witnesses a dozen or so years ago, there will not be any easy answers. An attorney and his staff will spend a lot of time on painstakingly researched ever transaction that may or may not have implications. They may have to track down every interested party. Then a couple more attorneys will get involved who are representing one or a few of the parties. All this will result in legal fees, and I will be the first to say, they earn every cent. Then after each point is litigated, the profits that some people hoped to gain will be lost.

 

Couple possible solutions. If the majority can buy the minorities land, do so. And even offering sub market may be fair, based on the above. The minority may find someone willing to buy a share. You may be able to subdivide, and those that wish to sell could sell the land they received in the subdivide.

 

The subdivide will be hell. Prime frontage land is worth more than an interior. Land with water or water access may be more valuable. So one acre there may not equal one acre over there.

 

Good luck.

 

My only suggestion is starting with a licensed mediator who has done this sort of estate planning. I watched as a huge South Texas ranch was divided up for the kids and it went fairly well. I also watched as a small Wisconsin farm, worth one tenth, was sold and it took years and years, families not speaking to each other, and just a shame.

[HuskyCaucasian]

Couple possible solutions. If the majority can buy the minorities land, do so. And even offering sub market may be fair, based on the above. The minority may find someone willing to buy a share. You may be able to subdivide, and those that wish to sell could sell the land they received in the subdivide.

That is our first goal. Unforunetly, the asking prive is over $200,000 for their shares and there is no way any of us can afford that, even if we banded together. So, we are thinking of offering a much loawer bid (about half of what they want). At that price, we can at least make it feasible. I already committed to $20,000 (pending a loan approval)

 

The subdivide will be hell. Prime frontage land is worth more than an interior. Land with water or water access may be more valuable. So one acre there may not equal one acre over there.

Yea, i brought that up too since no one seemed to be suggesting it and they said what you said. it would be too hard and really not worth the effort int he end.

 

Thanks for the input!

 

[Texsox]

That's where a couple experts can really pay off. Concentrating on the one that went well, they brought in a sucession mediator and in turn the mediator brought in a couple experts on the various investements and properties. This was a wide spread ranching operation with land here and there, large and small tracts. They also had various natural resource issues. By the time they finished, there was four neet little bundles waiting to be picked. With very small trading, I always liked that area, how about we swap this for that, the deal was done.

 

A couple experts will really earn their money and hopefully keep the family peace.