Professional Assistance for Land Divisions

Professional Assistance for Land Divisions

This may present significant challenges to the decision-making process regarding operation, stewardship, and potential sale of the farm should that be in the best interest of the family.  One solution to this challenge is to equitably divide the farm into parcels owned exclusively by each family member.  This places the full bundle of rights in the control of each member which allows them the ability to do as they wish in regard to the future of their parcel.  This appears to be a simple solution but in everyday circumstances rarely is.

Should the farm have no improvements, all one type of land class, and all equal field sizes and shapes, most families may be able to reach an agreeable division with no outside assistance.  Additionally, divisions are much easier to achieve when there are fewer rather than more interests.  When more resulting parcels are required, the variances in the above items become more and more difficult to distribute equitably.

As real estate appraisers, we are equipped to assist in providing a solution to this challenge being faced by those facing ownership dilution from growing ownership interests.  The first step is to establish the market value of the farm as it exists in whole.  Once established, we apply objective measures to the land and improvements which allow allocation of value to each interest.  A simple example would be that 80 acres of high-quality tillable farmland may be equivalent in value to 120 acres of lower quality land or land that has mixed classes such as timber and cropland together.  Detailed analysis of soils and farm efficiency allows the professional to allocate the whole value of the farm equitably to each interest.  Divisions will rarely, if ever, result in exactly equal amounts of value for each interest and may result in small amounts of cash exchange to balance perfectly if that is the goal.  Additionally, improvements on the farm present their own challenges and cannot practically be divided as they are typically located in close proximity to each other.

As stated before, the professional makes their proposed division of the property based on objective information and analysis. Once presented, family members may have wishes as to the final results that require modification to the proposal. The overarching goal of having professional assistance is to avoid legal proceedings in dividing the land.  But equally as important is maintaining family relationships which are priceless.  Have a joyful Thanksgiving this year!  

Auction Calendar