Multiple owners

Sole pro

prietor

Husband &

Wife Joint

Partnersh

ips

Estates

Trusts

Corpora

tion

Limite

d Liabilit

y Company

0%

5%

10%

15%

20%

25%

30%

35%

40%

Percent of Land by Type of Ownership

Distribution of Iowa Farmland by Age of Owner and Year

0%

5%

10%

15%

20%

25%

30%

< 25 25-34 35-44 45-54 55-64 65-74 > 75

1982 1992 2002 2007

Percent of Total Acres Owned and Percent of Category Rented

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Spouses SO - Male SO - Female Multiple

Percent of Acres Owned Percent of Owned Rented

Percent of Land in Each Region Owned by a Single Female over the Age of 75

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

NW SW N NC S NE E

Percent of Iowa Farmland by Residence of Owner

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Iowa Resident Non-Iowa Resident

1982 1992 2002 2007

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 rightsfee 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

• 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.

• 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

• 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

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

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.”