All Things Habitat - Lets talk.....
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LAND OWNERSHIP
- Thread starter Boone
- Start date
bwoods11
5 year old buck +
That is a tough question, depends on many factors
Buckly
5 year old buck +
If your intent on keeping the interests then ask the others to redo the deed with provisions So that if someone wants out or dies then their interests is either given or offered to the other party’s so that no one else is added to the deed. If that’s not going to work, either offer to buy them out or ask if they want to buy you out. Otherwise just accept what comes, which I don’t see having good outcome down the road but, that’s entirely up to you.
Buckly
5 year old buck +
A lot of this is going to depend on what the other 4 people are willing to do. If you’re all good. With each other right now then I’d say it’s a good time to get a permanent long term situation set up. If somebody’s not on the same page then it’s maybe already too late. I’d get some lawyerly advice on trusts and such. Maybe there’s options they could present that you wouldn’t think of.
yoderjac
5 year old buck +
We formed an LLC for our land. The LLC owns the land and we own shares in the LLC. The member and operating agreements define all the details about how we operate.
Thanks,
Jack
It's the same as having a business owned by a couple people and 1 person wants to give half their share to a child,it needs to be specified how that all works.I have seen a couple things, Agree on a buy out price and have a stipulation that you sell your part for the same price back to the one wanting to sell for a price this prevents the seller from saying they will sell for an outrages price because they have to buy your share for that price.I have also seen where each party buys an insurance policy on the other person and that way if one passes then the policy will pay their family for their share of the land without forcing a sale.This only works if the deceased didn't have anyone that wanted to inherit the land.By far the best way is to legally divide the property so each person knows what they own but to sell they have to offer at appraised value first right of refusal
Tree Spud
5 year old buck +
Many have given you answers that that have nothing to do with your question as you have not defined your goals.
Your issue is that the property is "joint tenantship" which means equal ownership & responsibility for all 5 owners. Do you understand that every owner, when they die, pass on their ownership rights to their spouse and heirs? This could mean financial liability to your JT from an future owners. Divorced spouses or problem heirs (children) can really create issues in transfer of ownership or handling finances.
You and your partners may have good intentions now, unfortunately it will only take one partner or spouse/heir to gum up things.
I have been involved in 3 JT's and they all went south because original partners had a different visions than surviving heirs. They were the best situation (hunting club, lake front, etc.) ever until one partner felt his desires or family rights were being infringed. From that point, that person focused on getting some to take his side, which meant the JT only had two groups ... those who agreed and those who did not.
Good advice on the Attorney ... remember they never solve anything, they just submit billable hours ...
yoderjac
5 year old buck +
We used an attorney to establish our LLC. The member and operating agreements are fairly complex. You can handle things any way folks agree. There is a balance between liquidity and control. Here is what we decided on for a balance:
- Only the original owners have voting rights.
- If shares are sold or passed to others (will, death, or whatever), only the financial interest passes and no voting rights.
- This means folks with a financial interest only are obligated to pay for capital calls (there are procedures to reduce shares accordingly if they don't) and they share in any profits according to the number of shares they hold, but they are not involved in any decisions about how the property is managed.
- In order for someone with a financial interest to get voting rights, all of the share holders with voting rights have to vote them in.
Why did we do this? When we formed the LLC, all of owners had a reasonably close vision of how to manage the property. There are always some differences in specifics, but we were generally in agreement that we wanted to do QDM. We envisioned several possibilities. What if someone moved and sold to the highest bidder who had a very different management philosophy? That could really gum up the works. What if someone died and ownership passed to a relative that was against hunting altogether? Depending on the percentage ownership we could eventually lose hunting access all together.
The down side is that if you decide to sell your shares, you may not get the highest offer since you are only selling the financial interest, not voting rights. On the upside, that forces someone who wants to sell their interest to socialize the buyer with the other owners. As the other owners get to know the buyer, they gain confidence they the buyer has a similar management philosophy and is the kind of individual they want to be in business with. The potential buyer gains confidence that the existing owners will vote him in with voting rights. While this makes the investment less liquid, it provides some protection to the other owners.
I'm not suggesting this is the right balance for the OP or anyone else. However you construct it, you need to find a balance that works for you. After 10 years, so owners are happy with our agreement and others are not.
Thanks,
Jack
- Only the original owners have voting rights.
- If shares are sold or passed to others (will, death, or whatever), only the financial interest passes and no voting rights.
- This means folks with a financial interest only are obligated to pay for capital calls (there are procedures to reduce shares accordingly if they don't) and they share in any profits according to the number of shares they hold, but they are not involved in any decisions about how the property is managed.
- In order for someone with a financial interest to get voting rights, all of the share holders with voting rights have to vote them in.
Why did we do this? When we formed the LLC, all of owners had a reasonably close vision of how to manage the property. There are always some differences in specifics, but we were generally in agreement that we wanted to do QDM. We envisioned several possibilities. What if someone moved and sold to the highest bidder who had a very different management philosophy? That could really gum up the works. What if someone died and ownership passed to a relative that was against hunting altogether? Depending on the percentage ownership we could eventually lose hunting access all together.
The down side is that if you decide to sell your shares, you may not get the highest offer since you are only selling the financial interest, not voting rights. On the upside, that forces someone who wants to sell their interest to socialize the buyer with the other owners. As the other owners get to know the buyer, they gain confidence they the buyer has a similar management philosophy and is the kind of individual they want to be in business with. The potential buyer gains confidence that the existing owners will vote him in with voting rights. While this makes the investment less liquid, it provides some protection to the other owners.
I'm not suggesting this is the right balance for the OP or anyone else. However you construct it, you need to find a balance that works for you. After 10 years, so owners are happy with our agreement and others are not.
Thanks,
Jack
It's been owned by my grandpa for 60 years but he is 90 years old. Hes already deeded it to his 5 children. My mother passed away last yr and willed her share to me. All other children will eventually will theirs to their kids. We all for the most part would like the land to stay in the family for many years. I'm leaning towards an llc but getting everyone to agree is the hard part.
H20fwler
5 year old buck +
How many acres is the farm?
If everyone is like minded and easy to get along with it could all run smooth for a long time.
I think the trouble comes with different owners wanting to manage “their” share of the property in their own way. Like has been said some may not like hunting, someone could go through an ugly divorce, someone could get greedy or need money bad, someone might be slow to pay their share on taxes or expenses, someone might let anyone that asks hunt or run four wheelers all over the place, someone might want all their friends to be able to hunt too...the more owners the more muddy the water gets and more opinions on how to manage the place, and family can be the worst of all.
It’s a different situation to be in with everyone having equal rights to the place.
If everyone is like minded and easy to get along with it could all run smooth for a long time.
I think the trouble comes with different owners wanting to manage “their” share of the property in their own way. Like has been said some may not like hunting, someone could go through an ugly divorce, someone could get greedy or need money bad, someone might be slow to pay their share on taxes or expenses, someone might let anyone that asks hunt or run four wheelers all over the place, someone might want all their friends to be able to hunt too...the more owners the more muddy the water gets and more opinions on how to manage the place, and family can be the worst of all.
It’s a different situation to be in with everyone having equal rights to the place.
Bill
Administrator
Hate to say it but I'm with SD. You don't own any land. You're part of a headache. Hope I'm wrong but I don't see any long term joy coming out of this deal.
I have friend who's fathers left 5 kids his farm. One child has died and now three grand children own that share. One sibling lives in the old homestead. They decided to rent from the LLC and put in a winery. Somehow managed to borrow against the farm to pay for it. (Without the others even knowing it). Now everyone is in court and being forclosed on.
I know another family that was left a million $ beach home. All agreed to split expenses. Some didn't and eventually most didn't. The place fell into disrepair, when they finally unloaded it, a decent beach house had become a teardown and they got .50 cents on the dollar for what it would have been worth.
God bless grandpa for his best intentions but if someone isn't allowed to buy the others out it will be a mess eventually.
Sorry to sound negative but you really need to prepare for the worst so you're not heart broken over it later.
I have friend who's fathers left 5 kids his farm. One child has died and now three grand children own that share. One sibling lives in the old homestead. They decided to rent from the LLC and put in a winery. Somehow managed to borrow against the farm to pay for it. (Without the others even knowing it). Now everyone is in court and being forclosed on.
I know another family that was left a million $ beach home. All agreed to split expenses. Some didn't and eventually most didn't. The place fell into disrepair, when they finally unloaded it, a decent beach house had become a teardown and they got .50 cents on the dollar for what it would have been worth.
God bless grandpa for his best intentions but if someone isn't allowed to buy the others out it will be a mess eventually.
Sorry to sound negative but you really need to prepare for the worst so you're not heart broken over it later.
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