Can I Sell My Interest in the Farm?
Top 50 Questions about Farmland
Hey, it's the Iowa land guy. And here's the top 50 questions that I get asked about farmland. Can I sell my interest in the farm? Oh, loaded question. So lots of questions that I have before I can answer that for you. Is it held in an LLC? Is it held in a partnership? Is it held as tenants in common? Do you have a shirt, certain shareholder interest in the farm?
Is it undivided interest in the farm? Meaning. Which acres do I own, or do I not own? We just own some undivided interest. Or is it, I own this 40 acres, but my brother owns that 40 acres, and my sister owns that 120 acres? So, couple of questions I have before we can answer that question. But, here is the rule for Iowa.
There's a thing called a partition action. What is a partition action? It is an action or a legal action you can take to say, Hey, I own more than 25 percent of the farm. So that's the number. You got to own more than 25 percent interest in the farm, but can I force the hand of my brothers and sisters to sell?
Um, so this is a question we get asked often is, Hey, I'm not as wealthy as my brother or sister. I'd like to cash out. But they want to keep mom and dad's farm or the interest in the farm that we have, but I really want to sell. Can I sell my side of the interest in this farm? You can, you need to get with an attorney and, uh, and, and talk with the farmland broker and kind of.
Plan how that's going to go. Now, if we start a partition action, it's going to go to a judge and the judge is going to say, is there an amicable way to split this ground first? Um, is there a way geographically or geospatially that, Hey, there's three brothers and sisters. Can we split this farm into three separate tracks that are equal in value, in size, in, uh, relativity?
Uh, can we split it up? Um, if we can, great. Let's split it up. We don't want anybody going to court. We don't want to, uh, make conflict in the family. However, it has come to where it's like, nope, there is no way to split it up. And that one brother or sister, uh, or, or interest holder in the farm forces the hands of all the other interest holders in the farm.
Okay? It makes it different if you're in a partnership. Oftentimes if you're in a partnership, you have articles of organization. When we created this partnership, what happens if we ever want to dissolve the partnership? Or how do we get out? So, that isn't a question I can answer. It's going to be in your articles of organization when you made that partnership.
Same with an LLC. How, if we got in, how do we get out? The, the more common one though for us is mom and dad passed away or grandpa passed away. And all the siblings were willed an equal share of the farm. If that's the case, you probably own it as, uh, uh, rights of survivorship here as tenants in common.
Tenants in common with an undivided interest. You all own an interest and it's, uh, 33%. Something like that. So, once we get some of those questions answered, we can help you answer questions of what that might look like. But, the base of the question, can I sell my partial interest? You sure can.
David Whitaker | Iowa Land Guy