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Q re Co-ownership Ohio farm

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jaeco69

Junior Member
What is the name of your state (only U.S. law)? Ohio

My sister and I inherited a small farm from my parents. They passed away 1997. We have used it as a rental property since then.

Typical situation I know, but I want to sell, she has said she does but keeps changing her mind. We were supposed to list it in February and now she tells me she wants to buy my half.

Petty, but I don't want to sell her my half, for selfish reasons I know. We've had it this long and I am afraid that the minute I sell to her someone will want to develop the 24 acres.

That aside, is there some kind of arrangement I could enter into with her..We do the deal, I sell to her with the condition of if that happens I retain a percentage of whatever proceeds there may be if she sells to a developer or whatever it may be?

If not, I will probably decide to sell to her anyway:)...but how should we handle this? Get it appraised and she just gives me half of the appraisal? Sometimes properties where I live anyway, sell for more than appraised value, although I've never understood how that could be.

Would we need a realtor to deal with this or we could do it through an attorney I imagine.

I have a condo that is a *shell* in an old factory that I want to improve and perhaps rent or live in. Could I use part of the proceeds from the sale of the farm and put towards the condo and then not have to pay so much capital gains tax? I already own the condo but I was going to get a loan to start developing it and if I sell the farm I won't have to.

I want to be fair to us both. I need to realize as much as possible from this sale. We are both near 70 and there's not a lot of time for financial mistakes.

Thanks!
 
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justalayman

Senior Member
Petty, but I don't want to sell her my half, for selfish reasons I know. We've had it this long and I am afraid that the minute I sell to her someone will want to develop the 24 acres.
Yep, petty and foolish. You’re afraid she will get something you’ll miss out on so it’s you frustrating the sale.

Sure you could engage her in the deal you want but there is nothing requiring her to agree. Why don’t you attempt to find a developer to sell it to.

Or simply split the property in half. That way it almost assures you realizing the benefit if a developer wants it since they would likely want the full acreage which makes each half more valuable when sold together.

You don’t need or want a Realtor or any real estate agent in the sibling to sibling transfer. You should use the services of an attorney.

I can’t tell you much about the tax implications other than I don’t believe you can shield the gains since it was not your residence.
 

adjusterjack

Senior Member
Petty, but I don't want to sell her my half, for selfish reasons I know. We've had it this long and I am afraid that the minute I sell to her someone will want to develop the 24 acres.
That's ridiculous.

The minute the two of you sell it to somebody else that somebody could immediately develop the 24 acres.

That aside, is there some kind of arrangement I could enter into with her. We do the deal, I sell to her with the condition of if that happens I retain a percentage of whatever proceeds there may be if she sells to a developer or whatever it may be?
I'm sure that there is "some kind of arrangement" that could accomplish that. You know your sister better than I do. I don't know her at all. But what you've already said about her convinces me that she isn't going to go along with the arrangement.

If not, I will probably decide to sell to her anyway...but how should we handle this? Get it appraised and she just gives me half of the appraisal?
Sure.

If that's what she'll agree to.

Sometimes properties where I live anyway, sell for more than appraised value.
And sometimes they don't.

Would we need a realtor to deal with this or we could do it through an attorney I imagine.
Realtor - most likely not.

Attorney - good idea.

I have a condo that is a *shell* in an old factory that I want to improve and perhaps rent or live in. Could I use part of the proceeds from the sale of the farm and put towards the condo and then not have to pay so much capital gains tax? I already own the condo but I was going to get a loan to start developing it and if I sell the farm I won't have to.
All I know is that kind of thing is known as a "1031 exchange" if it's eligible. You can research it on the IRS website:

https://www.irs.gov/newsroom/like-kind-exchanges-under-irc-code-section-1031

I want to be fair to us both. I need to realize as much as possible from this sale. We are both near 70 and there's not a lot of time for financial mistakes.
Then ask your sister if she has the cash to buy out your half or can she qualify for a loan to do it. While you are at it ask if she'll agree to an appraisal to figure out what your half is worth.

I agree that subdividing is a good idea if appropriate. That way you each get half of it without too much expense or hassle and you can each do what you want with your half.
 
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jaeco69

Junior Member
Thanks for the replies.

I agree that what I said seems petty and is...but I had to get it off my chest.

She is willing to sell to me but agreement on a price is what will be the issue. That is where I thought it could come in about some kind of agreement. Let's say property is appraised at $350,000 and she is only able/willing to pay 300,000, maybe in return for her not being able to buy at the appraised value, we could come up with some arrangement with me taking less than appraised value.

It may seem at this point with my comment that I'm holding up the sale as someone mentioned. If I am, it's only since yesterday. I've been trying to get this property sold for the last 10 years and we had agreed to put it on the market in March and last night she decided she wants to buy my half. That's fine....I just have to readjust the plan and the thinking and try to finally get this sold, or at least my half sold.

Thanks...
 

justalayman

Senior Member
That's ridiculous.

The minute the two of you sell it to somebody else that somebody could immediately develop the 24 acres.



I'm sure that there is "some kind of arrangement" that could accomplish that. You know your sister better than I do. I don't know her at all. But what you've already said about her convinces me that she isn't going to go along with the arrangement.



Sure.

If that's what she'll agree to.



And sometimes they don't.



Realtor - most likely not.

Attorney - good idea.



All I know is that kind of thing is known as a "1031 exchange" if it's eligible. You can research it on the IRS website:

https://www.irs.gov/newsroom/like-kind-exchanges-under-irc-code-section-1031



Then ask your sister if she has the cash to buy out your half or can she qualify for a loan to do it. While you are at it ask if she'll agree to an appraisal to figure out what your half is worth.

I agree that subdividing is a good idea if appropriate. That way you each get half of it without too much expense or hassle and you can each do what you want with your half.
There is no reason to engage a Realtor for this. A Realtor is going to expect a ~6-7% fee for doing what a real estate lawyer will do (and where a lawyer will actually do more) for generally much less as they charge a flat fee or hourly. Almost certainly will be less that a Realtor.

A Realtor, for lack of a better description, is a salesman. There is no need for a salesman here. They cannot appraise the property. They cannot give legal advice. They cannot create legal documents (limited to filling in templates and cannot give advice on filling it out even). While a realtor can arrange title insurance and closing and such, a lawyer will do the same but also be able to do more, for most assuredly less money.

This isn’t to argue your post as you said a Realtor is most likely not needed. I used your post as a lead in as to why a Realtor or real estate agent is not preferred or even needed.
 

xylene

Senior Member
You must think VERY LOW of your sister for some deal where you get to sell but keep a right to future profits.

That's low.

You think the land is worth so much, buy her out.
 

HRZ

Senior Member
Valuation of farmland can be all over the map ...sort of,depends ....older friend was just offered. $2 million per acre for her farm, and she turned it down ...but it abuts a good size road , offer me $10,000 an acre for my farm and it's a deal. Contact three local realtors who deal n farms ..and you might get three very different numbers ...

OK so hold an internal auction ...winner takes it ...but make sure there is a big serious cash pot that winner loses if they fail to,close in say 60 days . say 15%?
 

justalayman

Senior Member
Valuation of farmland can be all over the map ...sort of,depends ....older friend was just offered. $2 million per acre for her farm, and she turned it down ...but it abuts a good size road , offer me $10,000 an acre for my farm and it's a deal. Contact three local realtors who deal n farms ..and you might get three very different numbers ...

OK so hold an internal auction ...winner takes it ...but make sure there is a big serious cash pot that winner loses if they fail to,close in say 60 days . say 15%?
I was taught there are three basis for valuation of property;

1. Location
2. Location
3. Location

That is both meant to be impactful through redundancy but also that there are levels of location that make a difference. I’ve seen different sides of a street impact value. Obviously location in relation to roads, infrastructure, and other development all make a difference in value.



I understand the op’s concern but in worrying that his sister may have a buyer in her back pocket without proof is just going to make the op go mad.

He has the option of selling or not. He gets to determine price he wil accept.

Just remember; sis may have no big dreams or ideas here

My grandmothers farm was held for decades because the siblings couldn’t agree on price. After all that time the ended up selling it for 1/2 of what they were offered nearly 20 years prior.

And the executors who had been paying the taxes out of pocket all those years got repaid first. Not a lot left for anybody in the end.

Don’t let your fear of sis making a buck cause you to lose it all. Figure out what you are willing to accept and let sis know. If she refuses then either agree to put it on the market, let it set until somebody just gives up, agree to partition the land or one of you sue to partition it.

At 70, it may come down to both of your heirs having to deal with this same issue if you don’t do something soon.
 

FarmerJ

Senior Member
Is there any of your other family members who actually might want to own it and live there ? Reason I ask is because a real estate attorney could help the two of you preserve the farm ( like a title restriction ) by requiring that who ever of the two of you who buys the other out decides to sell in the future must offer the property to remaining family members ( like a first right to refuse to buy - to first option to buy with a time line set like 6 months to complete the deal or it would go to open market I suggest this because maybe one of the both of you has children or grandchildren that didn't ever tell you but given the chance might be happy to have it. A real estate atty could set it up. ( years ago I would have been happy to have had my grammas home in north east mpls but do to years and years of her listening to my dads bad advice she couldn't imagine the possibilities instead of her ending up in a nursing home as quickly as she did.)
 

jaeco69

Junior Member
No, no other family members that I'm aware of anyway.

First step is I guess an appraisal and go from there. I'd just like to get this resolved/sold.

thanks for the replies!
 

jaeco69

Junior Member
New Q

We have agreed to sell it on the market. The title/deed was originally in my sister's name and mine but about five years ago she turned her half ownership into an LLC.

Will her half need to be put back in her name before we sell or exactly what needs to be done? She called the auditor's office and they said she needed to contact an attorney. My half is still in my name only, the way the deed was originally....only her half has changed.

If she has to change it, will it be time-consuming or difficult to do? Just wondering what is involved because we'd like to get the house on the market in February.

Thanks for any assistance or direction!
 

xylene

Senior Member
We have agreed to sell it on the market. The title/deed was originally in my sister's name and mine but about five years ago she turned her half ownership into an LLC.

Will her half need to be put back in her name before we sell or exactly what needs to be done? She called the auditor's office and they said she needed to contact an attorney. My half is still in my name only, the way the deed was originally....only her half has changed.

If she has to change it, will it be time-consuming or difficult to do? Just wondering what is involved because we'd like to get the house on the market in February.

Thanks for any assistance or direction!
Is there some reason you don't believe the auditors office that she needs an attorney? Yes, this could add expense and time, so she should act soon.
 

jaeco69

Junior Member
?? No, I believe she probably does need an attorney. I didn't mean to imply she didn't but I thought this forum was for legal advice. I must be in the wrong forum I guess...sorry. I just was hoping to get an idea of what might be involved in taking care of this, if it would be time consuming, etc. Thanks.
 

xylene

Senior Member
You have joint ownership, individual and LLC, it may take extra time and cost a bit extra. You and she need to be working with a real estate lawyer and a Realtor as your plan to and then market the property. This is nothing insurmountable. Being proactive and keeping moving this forward will really help with your shared goal of selling the property.
 

justalayman

Senior Member
Is your sister the only member of the llc? If so it isn’t overly problematic for her to divest property held by her single member llc. If it isn’t a single member llc, that could change things A LOT.
 

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