Reader Question: I inherited a large commercial rental property along with my three siblings. I would like it to be sold, even at a much lower price, and they do not. Is there any way for me to get out of this partnership and receive money, according to what my share is worth now?
Monty’s Answer: It is unclear whether you asked them to buy your interest at a lower price. If they do not want to buy your stake, even at a lower price, it may be difficult to locate an outside individual to purchase your interest. For an outside buyer, a one-fourth interest with all family members in commercial property may not be an attractive investment. Odds may improve if one or more partner has a successful real estate track record. The chances improve with steady cash flow, good location, and other qualities. You stated you would sell for a reduced price, and also wrote: “for what my share is worth now.” Which is it?
Other disadvantages in selling a partial interest may include an extended market time, difficulty finding representation, creating family conflicts, and more cost for you. If your siblings do not want to buy your interest as a group, perhaps one, or two of them would buy your share as individuals. When you name your price, consider approaching them with this suggestion.
Generally, in these situations, a current fair market value appraisal is sought, which can be very different from an estate appraisal. Understand the fact that every property has a “range of value” that becomes wider as good comparable sales and competing properties become scarce.
Care should be taken to avoid appraisers with whom one of you may have a personal relationship. An arms-length appraisal reduces suspicion that a partner influenced the chosen appraiser.
While you maintain you are willing to sell for less, the best way to sell the property is to sell together. Otherwise, at some future sale, the remaining siblings who “stay in” now will either come out on the short end or come out better financially than the early exit sibling. No one can predict the future.
Lastly, there is a legal doctrine in the law called partition. Depending on state law and your circumstances you may find relief there. Consider seeking a competent attorney, if your other efforts fail.