partition

Can anyone describe what exactly occurs when one files for partition of a property (single family home) in Florida?  Here is the situation:  One sibling wants to sell to get their money but has been holding out on selling their 1/3 share to two other siblings (one being myself) of a home that the three inherited, because that sibling wants the other two to pay 1/3 of the appraised value of the home at the time of our parent's death in early 2007, instead of "current" market value (I understand the housing market has dropped 20-30% in Florida the last two years?).  An attorney I met and consulted with said that one or both of the siblings wanting to buy the home could first threaten (to gain leverage) to file for partition, and/or actually do it, which I understand would lead to the home being appraised and put up for sale through the court, essentially making the one uncooperative sibling sell and take their share of what would most likely be a lower price.  But would this allow first buying option (based on the courts appraisal) to the two siblings wanting to buy the third out, or could the home essentially be "auctioned off" to the highest bidder (i.e. a stranger)?  The attorney I spoke to seemed to suggest that that the two siblings wanting to buy out the third would probably get the home since there are so many foreclosures right now, but I did not think of this last question until after our consult meeting and now I am hesitant to proceed with this legal action if there is a possibility we would still lose the home.  If that were to happen, the only one that would be happy would be the attorney(s)...  However I know of no other way to get the one sibling to "negotiate" - they are stuck on getting their 1/3 share based on early 2007 home values.  I was thinking of calling the same attorney to clarify this question, but decided to post my question here first and get others opinions.  Thanks.

When property is not divisible (likely applies to single family homes) it goes to public auction and is sold to the highest bidder. There's no option there.

Obviously, the other two siblings can pool resources and try to outbid the investors, but you would need cash to do it, and that might be problematic.

You can read the Florida partition statute at:

http://www.leg.state.f...

Partition lawsuits not only can result in a "fire sale" price for the property but likely generate a large amount of lawyer's fees.

As a matter of strategy, filing the partition lawsuit and serving it on sibling might make sibling more reasonable once the costs are revealed to him.

The opposite side of the coin is that the sibling may get ticked off enough to practice scorched earth warfare which results in the other 2/3 owners spending lots of money on lawyers and losing lots of money on sale.

Were I on the 2/3 side I'd try to get the 1/3 side to agree to an open market sale --each of you put executed deeds into escrow--get teh property listed --and agree to take the best price in say 60 days--and agree that you could buy it in if you matched said price LESS commissions  If it sells for higher than value at death the 1/3 person wins--if it seels for less--you all take a bit of a haircut--but either way it gets done!

rockyroad:

because that sibling wants the other two to pay 1/3 of the appraised value of the home at the time of our parent's death in early 2007, instead of "current" market value (I understand the housing market has dropped 20-30% in Florida the last two years?).

There is a website called zillow.com that will give you an estimate of what the house is worth. Perhaps you can show this to your sibling and split the difference in the value of the home.

You could easily spend more than than on lawyers fees.

Be careful. Zillow.com is not accurate for the most part. It says my home is worth 243K. The true value of my home is more around 200K. Your best bet is to ask 3-4 realtors to each do a CMA. This will not cost you anything.

Why does the other sibling believe he should get the value at the time of parents death?

Thank you Drew, that is an interesting idea.  I certainly know that taking it to court and involving attorneys won't make anyone but the attorney's happy.  Vadgue, I actually did happen to research zwillow.com (as well as other websites) the very night I made my first post above, but I also just had the home re-appraised (and of course, it is lower than the early 2007 value).  Cygnus, I don't have a good reason to tell you why my sibling was set on 1/3 share of value at time of my father's death; they just feel they were entitled to it.  However, I suspect that this same sibling may have consulted with their own attorney and realizes they are not entitled to that because they have been just plain silent about this property for the last 5 months.  I believe this sibling knows now that the property is basically considered an investment, and like any investment, the value goes up and down.  As my attorney put it, my father did not die at a good time for us as inheritors of his property.  Thanks all...

adjuster jack wrote: "...Partition lawsuits not only can result in a "fire sale" price for the property..."

I'm sorry, but can you tell me what you mean by "fire sale" price?  Thanks...

Fire sale means it will sell cheap and you'll bet a low net!

BTW if it was properly held as an investment property---worth say $900,000 as inherited and the values recently tumbled to say $700,000 then your $200,000 paper loss is deductible on your 1040 but I'll bet you did NOT handle it to account for a loss?

Drew:

your $200,000 paper loss is deductible on your 1040

No.

Not the "paper loss".

You have to actually sell the place and incur the loss before you can take a deduction.

And then the capital loss deduction is limited to 3,000 per year if that's the only capital loss you have.

 Drew said: "Fire sale means it will sell cheap and you'll bet a low net!"

 Okay, but if it "sells cheap", wouldn't that be agreeing with what the attorney (that I consulted with) said, which was that the home selling "cheap" would be to the two siblings' (that want to buy the third sibling out) advantage?   In other words, if the two siblings (who want to keep the home) "won the bid" for the house after it went to partition, and that bid is lower than the value of the home in early 2007 (which is what the third sibling is demanding his 1/3 share of), then  the two siblings are basically paying themselves but now can  buy the 3rd sibling out (for less than what they were originally demanding as their 1/3 share), realizing that there are still attorney expenses, filing fees, etc. to pay.  Does my question make sense?  Thanks.

Drew said "BTW if it was properly held as an investment property---worth say $900,000 as inherited and the values recently tumbled to say $700,000 then your $200,000 paper loss is deductible on your 1040 but I'll bet you did NOT handle it to account for a loss?"

Sorry I meant to respond to this as well...  The third sibling has not been cooperative in allowing us to lease the property (and I don't want to play with fire by trying to lease it out from under their nose), therefore the property cannot be considered an investment property at this time for tax deductible purposes, though heaven knows I'd like to see some return in income right about now...

I think I understand your question.

Sibling wants 1/3 of 200,000

You and other sib want to give him 1/3 of 150,000.

House goes to auction and a buyer bids 110,000.

You and other sib bid 111,000 and get the house.

Uncooperative sib gets screwed, and justly so.

Just be clear that if the property goes up for sale and the high bid is 110,000 that :

1. All owners MUST proceed forward to sell it.

2. Your right to match and buy it in w/o commission is clearly spelled out.

To hold the propery out of some sort of use or return simply because 1 heir has a bug up his tail is pure stupidity!

adjuster jack wrote: 

"I think I understand your question.

Sibling wants 1/3 of 200,000.  You and other sib want to give him 1/3 of 150,000.  House goes to auction and a buyer bids 110,000.  You and other sib bid 111,000 and get the house.  Uncooperative sib gets screwed, and justly so."

Yes, that is what the attorney I consulted with pretty much said.  Hate to do this to sibling #3 but I feel this sibling is being plain unreasonable..

Drew, could you elaborate on number 2 of your reply (something to do about matching price of bid without paying commission)?  Thanks.

My suggestion is one dependent upon your barter skills with sib who is stuck in the mud......if the written deal is to put it up for sale and a broker is used and say the commission is 6% but you have a written right to match the highest bid and terms then you 'd not have estate pay 6% but it would still get same net. But you need resources to pay ball---no need of estate to carry you if you are a weak buyer----

So encourage sib to knock himself out to get best deal out there for estate--if its super high, then you'd not exercise you right to buy it in----and he'll be happy with higher number. If it come in low--so  be it.

BTW, who is executor---executor has a lot of leverage to force the property to be sold and move this equation forward.