Might buy shared property, any wisdom?

[Richard]

The basic question is, do I want to try to buy into the farm?

Scenario:

Decades ago, my now father in law, his sister and his mother bought this farm. Mother died and left her 1/3 to my now father in law and his two sisters (one of which was NOT a part of original purchase).

All spouses have now died so current ownership is:

FIL 4/9 th’s (has 5 adult kids)
UIL 4/9 th’s (uncle in law, has 3 adult kids)
AIL 1/9 th (aunt in law has 4 adult kids)

They’re all in their mid 80’s and AIL is in final stages emphysema. Only the three houses (FIL, UIL and mine) are deeded separate from the farm, the rest of the land is common ownership. Once the “next generation” takes over, there will be 12 owners instead of today’s three. Above I say “kids”, ages range from 43 to low 50’s.

Farm is 250 acres on a lake and there is a developer who has been knocking on the door for 10 years trying to buy the land (under the radar I’m sure so “the market” doesn’t find out and he can nab it cheaply)

All parties are fine as far as finances go…except for AIL, she’s in assisted living and can use a cash infusion I’m sure. Then again, that’s one of my fears… the assisted living place will suck up all her newly found cash (should we buy her out)

There is a strong chance that when my FIL passes on, we might be forced to sell anyway because of estate taxes. Seems it depends on how farm is valued. (Been told by Attorney/CPA that land like this can be devalued as much as 30% max because of the multiple owners. That might save us.

I’d love to buy entire place but frankly, can’t swing a hit like that. If on the other hand, I can buy AIL out, we’d own about 25 acres and later in life, if we can get past estate taxes, wife will inherit another 22. Perhaps we can buy more later…

I guess one of my main questions is, just how dumb might it be to buy AIL out and perhaps, walk into this situation of multiple owners, possible estate tax situation and the ever present hawk developers bugging us?

I’ve tried to get FIL to put land into a trust, so far, no luck

All family kids get along and this was their childhood playground so I don’t THINK any would “force” a sale, but one never knows.

In a perfect world, I’d like to keep the land intact for many years to come, if for no other reason than this area is on the cusp of exploding in growth (on my side of lake).

Any thoughts are appreciated. This is outside my realm of experience (buying into common ground). I know there has to be some pitfalls, but I’ll have to decide since it’s family I’m dealing with, do the pitfalls outweigh the family ties.

 

[MarkV]

Wow Richard, that is going to be a lot of different personalities and agendas involved in one piece of property. From your past posts it sounds like the land is reaching a point with developers that it is going to have significant value. With twelve owners and only a couple of them living on the property it would seem like someone is going to want to sell which sure can get complicated if everyone does not agree.

Now if you could get the Aunts share and have the acreage resurveyed and deeded so the 25 acres around your house was solely yours that would be different. Of course that might well take away some of the development value in the long run. Tough call the way I see it.

MarkV

 

[RonR]

Richard, your post strikes a nerve with us. I hope your family issues turn out much better than ours..........

Grandpa was an a$$hole is about the nicest way to say it. He had two daughters and mentally abused them. Played one against the other. Actually told one (my current Mom-in-law) that he should have drowned her as he wanted a BOY to do work around the farm, which Mom did for years--driving tractors, working cattle, etc. The family was way disfunctional. No one trusted anyone.

Fortunately, Mom got out early, got her mind straight, and lead/leads a great life. She has NO good memories of the farm.

As grandpa aged, Mom was the close one to do all the DR runs, buying stuff, etc. Grandpa rewarded her with NOTHING.

Since grandpa didn't trust lawyers, he died without a will and with the farm & equipment ONLY in his name. The estate lawyer took about 6% of the total value of everything, so grandpa really messed up on that one!

Just prior to his death (cancer), he made Mom promise to keep the farm together. It consisted of two farmsted, one still with a house and outbuildings, the other in cultivation.

The other sister, who'd moved out of state, developed more of grandpa's tendencies of distrust, anger, resentment, etc. These two have 60+ years of bad baggage between them, and they've gone years without speaking to each other.

They each currently own an undivided 1/2 interest in this farm. Mom pays her half; Sister is always defaulting, dragging her feet, not wanting to keep the property up. The house & barn need new roofs big time--and sis won't kick in.

Mom's pushing to divide the property. She's still feeling guilt over the promise grandpa forced her into, but she figures she kept it together for 20 yrs, and now it's time to split it.

Of the four kids who will inherit it, only one wants the land, but the sis is being a continuing pain in the butt, so I'm sure it won't be divided until much later. By then, the beautiful farm house and outbuildings will be rubble...........

Sorry for the long rant, but it really bugs me--and I'm mostly an outsider on this, other than my wife keeps getting dragged into this stressful situation of that darned farm....................

I'd check with a good land attorney to see how you can put something together to keep transfer costs down and work it out to make the most people happy.

May your situation work out better.

Ron

 

[Richard]

RonR: All I can say is wow and I'm sad to hear that /forums/images/graemlins/frown.gif

Fortunately for me I guess, our "working base" is probably starting from a higher plane than your wifes grandfather left them.

I just don't get why people do/don't do some the things they do (like some of your examples) and furthermore, my own FIL who saw the estate attorney with me (along with uncle in law and his son...all at my expense) and they just left saying "ya, he brought up some good points and was a nice boy" ... not another word has been said about it, he's gone back to status quo and sticking his head in the dirt.

As a matter of record, if he chooses to sell, that's ok by me as it's his land. If he chooses NOT to sell, that's ok by me too. I just wish he'd decide and if he decides to keep it, then to make it as "transfer friendly" as he can so when his time comes, all the dirty work is done (my wife is his executrix so I'll be dealing with all this ultimately)

 

[kevincook]

Maybe I am just too sceptical but this sounds like a disaster waiting to happen. The simplest thing may be to subdivide the farm now with each current owner then owning their own piece. Good luck getting everyone to agree on how to subdivide the land. /forums/images/graemlins/crazy.gif

Somewhere along the line somebody is going to want to sell because they need the money for medial bills, college, etc. What if they sell their interest to somebody outside the family?

Good Luck,
Kevin

 

[fortyseven2n]

Richard,
I went through something along those lines myself.

This is a 50 acre tract where we are now building a house.

My Great Aunts died back in the early 1950's and the estate was never settled.

Mom and her sister each owned 1/3 and 1/30 share each , My Grandfather and his 2 brothers each owned 1/15 share each and a long lost cousin owned the other 1/15 share.

I made the same offer per acre to each of my relatives and was able to buy out all but one Uncle.He wanted more than everyone else.I think that it was just a case of bitter blood between some of them and had nothing to do with me.I just said to heck with him and sat on the land for 10 years.

One day my cousin called and said my Uncle wanted to settle up so I let him set the price and since it was resonable I bought his share as well.

Finally we tracked down the lost cousin and it turned out he was dead so I bought his share from his widow and finally we own the whole thing.

I still own a tract 50/50 with my Aunt and plan on buying her out after we get over the hump of building our house.

That just leaves one more piece to be settled up after that.

Mom and Dad owned a tract with a relative and wound up having to force a sale in order to settle it up.

Its called petition for partition.

You basically have to go before a judge and present an valid argument as to why a piece of land should be sold.If he agrees, then an auction sale is conducted on the courthouse steps.There is then 10 days after the sale that the bid can be upset and then you would have another auction sale and so on until no more upsets.

Gets the job done but with much potential for hard feelings.

Ron,since there are already bad feelings, this may be something to consider.

Either way I would recomend consulting a lawyer.

Good Luck !
Fortyseven2n

 

[CurlyDave]

In a perfect world, I’d like to keep the land intact for many years to come, if for no other reason than this area is on the cusp of exploding in growth (on my side of lake).

I would look on this from purely a financial standpoint. Sure, the land has emotional value also, but just look at the investment possibilities.

If it looks like you are going to get your investment back plus some return, go for it. If it looks like a losing proposition, sit on the sidelines.

Consult a lawyer first. You may may be surprised about some things. For instance, if something is not divisible, a single house for instance, even a minority owner can force the sale (or a buyout of his interest) of any jointly owned property. OTOH, this seems dividable. Maybe all an owner can do is force a division and then sell his/her piece.

If you could work out a solution where each owner got a piece you would end up with a fairly large area. If some owners then sell to developers this will only increase the value of the remaining undeveloped land.

In most states transfers between family members get special treatment, which might help on taxes, etc.

You will not have estate taxes on any part you buy. And, if your wife inherits part of the land, you will have estate taxes to deal with whether you buy part now or not. Estate taxes really are a separate consideration.

And, don't ever sell to a developer without putting the property on the market and seeing what the real value is.

 

[beenthere]

To answer your basic question, basically NO
The best scenario here will be a disaster, IMO and experience. The kids of the ailing owners are going to make a real mess of this.
My advice (not that it means a thing) would be to walk away from it at least in your mind and think about it as someone else's property and problem. Already there are too many 'shareholders' and their heirs, who can nix any sensible plan to dispose of this property to new owners.
The best scenario at the moment would be to put it up for sale, and divide the money among the shareholders so no one has an alterior interest. I doubt that will happen, as already there are too many to get to agree on one thing. Over time, it won't get any better.
If I was you, as soon as possible, I'd have an offer to purchase written up for my "25 acres" and hope that the present shareholders will all sign that offer, and then get a deed to the parcel free and clear. I doubt that will happen either, but it might be the only chance you have.
Regardless, this is a disaster waiting to happen, and the wisdom to avoid this disaster was passed up many years ago.
IMO. /forums/images/graemlins/wink.gif Good luck. At some point a third party will mediate the final dispersal, or it will go tax delinquent and the county will get it. /forums/images/graemlins/frown.gif

 

[Richard]

</font><font color="blue" class="small">( And, don't ever sell to a developer without putting the property on the market and seeing what the real value is. )</font>

As much as I admire & respect him, I do have to say... "if only I could get my father in law to understand that"

His feeling seems to be "well, if no one else is knocking on the door, they must not be interested in it"

My wife is trying to beat into his brain "Dad... they may not be knocking on the door because they may not know you might entertain selling it"

He is EXCLUSIVELY talking to a single entity about buying it and I think he's FINALLY "getting it" that the contra party might have vested reasons to NOT let word get out that discussions have gone on over the years (well DUHHH) I'm sure (sarcasim) they'd welcome some competition.

We on the other hand are trying to make him realize that if he decides to discuss selling it, he really needs to make it as public as possible.

I even mentioned to her (to mention to him) about possibly putting it up for some type of auction, sealed bid or other, subject of course, to his secret "minimum bid" of say, 10 million dollars. This way he can get public notice of interest of discussions AND get an idea of what "the market" might bring for it. Then he can decide if he wants to take the highest bidder or simply close this door.

I've also asked her why doesn't he develop it himself? That was his original intent. He can probably sell some of the backside of the farm as lots and use those proceeds to start funding other developement.

(the backside has about 1/2 mile of road frontage and could have numerous lots put on it)

The wife has asked me to build a shed and do some other things around the farm... she just doesn't realize that I'm NOT going to build anything (on someone elses land) that is in this state of disarray.

As far as looking at it from a financial perspective, I hate to sound greedy, but that is one clear reason I'm thinking this way. Indeed, as expensive as it may be, I might even entertain draining out my IRA account for additional capital if need be (though I highly doubt I'd do that, it would fly in the face of every conventional thought I've got)

Point being though, 40 years ago when he bought this, he bought 1,200 acres for $60,000.

Society has now caught up with us and are moving out our way. His 250 acres are worth at least 2 1/2 million. Split that by 4/9ths and he's got 1.1 million. Then you have capital gains...

Every year he can hold out is in my opinion, money in the bank. As far as I know, there is no single parcel on my side of the lake that is this large and owned by so few people. Furthermore THIS PLACE is about two parcels away and in my opinion, looking for us to be the next domino in it's path.

 

[riptides]

Wow!

Looks like your trying to be nice about this for all parties. Face it, reality is these are your in-laws. I doubt your going to be able to protect them for $$$'s coming at them.

I'd say try the buy out, hoping beyond hope that appropriate wills and estate planning has happened on your in-laws part.

It appears to me, that your one-step removed from the property, soon to be two (once the next-gen kicks in).

Any chance at powers of attorney?

-Mike Z.

 

[beenthere]

You write as if the FIL has control over the sale of this property. Is that the case, or is the UIL and AIL also 'in control'?
Sounds like you could leak the information out that the land might be buyable and get more offers. At least it might get the FIL thinking straight. Probably he isn't interested in stirring the pot, and will leave that to his heirs, as the others are doing.
I've put my property in a living trust that will be under the control of the oldest daughter when my wife and I are both gone. That way she can sell it, rent it, or divide it up as she sees best for 'the time'.

 

[Sigarms]

After going though being an executor for my Aunt out of state, I don't envy your "future" position.

You mentioned that every one seems to get along NOW, and I hate to say this, but wait.

Seems that the "more there is on the table" the crazier people can get.

Just an observation, but you mentioned this is your father in law. I could be wrong, but this could cause more trouble for you only for the fact that your not "blood".

Good luck.

 

[PitbullMidwest]

</font><font color="blue" class="small">( All family kids get along and this was their childhood playground )</font>

Buying up the family farm and then selling to developers could cause a family schism, are you prepared for that? The family farm may be the only inheritance these "kids" will get and it might be more valuable to them than the potential profit from selling.

I'm the son-in-law in a similar situation and learned a long time ago that when it comes to the farm, it's best if I find something else to do whenever the topic of inheritance comes up.

 

[kossetx]

RonR, While it may seem at first to be unfriendly, it is very common for a family member to sue for division of land. If no one can come to an agreement on a solution, let a judge decide. He will appoint a panel of locals to form a plan and he will set a decision. Just the mention of ligation may spur a settlement. Just remember you will have to go by the judges decision.

This happened in my family. One sister wanted to divide and my FIL and another sister saw no reason to. They sued and it was settled reasonable. There were no hard feelings between them other than the initial shock of being sued by a sibling.

 

[Richard]

Father in law is sort of the "kingpin" and as such, if he decides to sell the farm, the others (uncle in law & aunt in law) will follow suit.

If he decides to develop it, decides to hold it... they will follow that too.

That is, THEY will... no one has cast in stone that their offspring will "go along with the plan"

As it is, I've TRIED to get him to put this into a trust, indeed, I even offered to PAY for those expenses. So far, to no avail.

Wife is visiting with him later today, I told her to bring the trust idea back up /forums/images/graemlins/wink.gif

 

[RonR]

kossetx,

Mom has been to several land lawyers and is trying to work a deal so her son can buy the farm in total (he wants it to run cattle). Sis continues with the statement "I'll think about it"--which has been her mantra for close to 10 yrs now.

Mom might try to get the court to divide it, so she can sell her half, or she might just chuck it and put it in trust--so all the kids can deal with it..........

A bloody mess!

Ron

 

[dmccarty]

Richard,

This is a tough one.

My wife's family has the old family farm that is slowly gaining multiple owners as the older generations pass on. Its a mess. A friend at work has some land tied up where some want to sell and other don't. Its just a big mess.

My wife started work as a Real Estate Broker last year and in her limited time she is bumping into these situations as well. Right now she has some land up for sale that was inherited by 5 or six family members. Thankfully the land was subdivided so everyone got an equal piece. Some want to sell and some dont. It would be better if they would all sell due to easement and road issues. At least the family members are FRIENDLY towards each other. /forums/images/graemlins/grin.gif

I THINK I would say to run away from the property. BUT, you can't. You are in because of your wife. So what to do?

What really disturbs me is your FIL inaction with the property regarding inheritence as well as not wanting to advertise the land for sale. That is just asking to loose lots of money.

Can you get an agent to run comparables for you? My wife does these things all the time and it does not cost a cent. Course she hopes to get to sell the land some day but sometimes you do and sometimes you dont. If you can't or don't want to use an agent can you spend the dollars to get the land appraised to show your FIL? If he sees what the land is worth that might help him make decisions. And it certainly should keep him from being ripped off by the first buyer to knock on the door. If the value of the land is so much more than he realizes maybe it will cause him to rethink the Trust idea. Especially if he sees how much money will leave the family to go to the State and Federal government in taxes.

I hate to see people sell land like this. Its like watching someone sell timber to the first logger that knocks on the door.... /forums/images/graemlins/blush.gif And often its the elderly. We heard about a couple who had some land that a developer was after. They are elderly and some of the things we heard bothered us so the wifey ran down to have a chat with the couple. She ended up running comparables for them. The developers offer was not bad but it certainly was low. The couple does not know if they want to sell or not but at least they know what is a reasonable offer.

Later,
Dan

 

[BB_TX]

I don't have any advice. The right 3 people can and sometimes do get along on such matters. But 12 people, never. As others stated, this will turn into a nightmare and probably a break or multiple breaks in the family.

 

[Unclebuck257]

About a year ago, my MIL FINALLY got an old family ranch sold and settled. It was originally bought by her grandfather and his brother, each owning equally. By the time the serious idea of selling it came around, there were 12 grandkids (my MIL and her brothers and sisters and cousins) The serious idea of selling came about because IF the next generation of kids came along as heirs (my wife, her siblings, her cousins etc) there would have been about 36 people to agree on price, what to do, etc. My MIL and her generation knew that would be a real mess, so they decided to sell it while there was only 12 and they were basically in agreement.

Even then there was disagreement over keeping or not keeping mineral rights, and price per acre with and without, etc. Finally after three years and numerous offers, they all agreed to sell it to two of her cousins, at a reasonable price, and they all keep the mineral rights equally. Oh, and they ALL get along and have never had a problem between them either. At one point during this 3 years though, things started to get a little rough around the edges over price etc.

You are not actual blood in this and I can assure you that with money involved here, someone will accuse YOU of slanting this to your own benifit, no matter what you do, at the financial expense of the others. That's just human nature and my feeling is that you stay out of it.

 

[California]

I'm familiar with four similar situations and let's just say none of them turned out well.

After the death of a principal, some heirs suddenly reveal agendas they held secret for years because they weren't willing to battle it out with an ageing parent, aunt, etc. And they will make you dance to their tune now that they finally have the power to do so. Or one of them will tie everyones hands as the indecision that created this mess is passed down to new (non)decisionmakers.

If you and your wife are one among 12 parties who will inherit, the odds that every single one of the others, (spouses included) is both reasonable AND has the same needs and goals as you ... well that seems unlikely. Since you married into this family I don't think you can do anything, just watch as a train wreck approaches over several years.

Just this morning I got a knock on the door. My neighbor had died a couple of years ago and this guy was hired by the attorney as the second person who tried to help the heir clean out the house.

He said he just quit, she (the heir) was incapable of deciding or delegating the simplest issues. He said he had spent 9 hours total holding up old dresses etc for her decision, with literally nothing decided. And this is just a normal house with the usual furnishings, nothing the heir can really use since her own home is already cluttered.

This guy I saw today was the second person to be put through this torture. Previously another goodhearted neighbor had taken care of mail, lights, etc at the vacant house for two years with no pay and no thanks then was shunned by the heir because she 'wasn't doing enough' after some similar attempts to help sort out the stuff.

Good luck.