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S Illinois | The partition sales I am familiar with usually requires a lawsuit to be brought and for a judge to declare the need for a partition sale of the property as a whole. Family inheritance squabbling is probably the most common, but I have seen unrelated parties go through a partition sale. This usually comes about when one party wants to sell but either the other owners don't want to give fair value or all other outside parties want a substantial discount for the share being sold. Whole property partition sales are the only option when the property as a whole is worth much more than divided which it sounds like yours is.
Basically in the non-family example, 40 acres were owned by 3 people. One wanted to sell so that they could go purchase another piece of property, but the other two did not. The 2 additional owners did not want to give fair value for the 13.33 acres. So with no practical way to divide 40 acres 3 ways equally(tract cut up by drainage ditches), a partition suit was initiated. I don't remember quite all of the court related details involved including: court costs, commissioner appointment, market value assessment, but an auction was ordered. The other two owners did purchase the property at auction. So the person initiating the suit got fair market value for their interest minus the suit/sale cost. From a value standpoint, those court costs were the discount that was needed to properly value partial ownership of the parcel.
Hard feelings are the biggest problem with partition suits because disagreements are always what precipitates the need for the sale in the first place. That is why this route is only appropriate when looking at this from a non-emotional purely economic viewpoint. | |
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Undivided interest discount in real estate
