Undivided Interest: Farm & Ranch

Hey, problems that arise from undivided interests in property ownership. Again, we’re going to talk about farm and ranch property, but there are things that you’re not thinking about.

Let’s say you and your four siblings inherited property. Maybe the problem is your spouse or your siblings.

Let’s just say I am one of four, and I am married and have kids. Something happens to me. What does my ownership go to? So you are no longer an undivided interest owner with me. You’re an undivided interest owner with my siblings and my spouse and kids.

So that could be a problem when it’s time to sell or do things.

It’s also a problem if one of the undivided interest owners has any sort of liens, judgments, or anything else that could come along and place a lien on the property. And since you’re an undivided interest owner, that means that encumbers the entire property, not just that undivided interest owner’s portion.

So if somebody has a tax lien, something new with the IRS that has nothing to do with this particular piece of property, there are instances—and I’m not getting into the legalities of all of it—where I’ve seen judgments filed on pieces of property that had several undivided interest owners because there was a random sibling that had an issue. There was one black sheep or one something that had something happen, and that’s what happened.

So it’s not just necessarily about arguing and bickering over who gets what or when to sell or not. There are some real instances where something can actually happen.

Let’s just go on the flip side of that. Let’s just say that you all own an undivided interest in your personal names, and then you go out there for recreation. One of the siblings lets their kids use the property, and their kids bring their friends to the property. Then somebody gets hurt on the property.

Who’s getting in trouble? Every single undivided interest property owner? Yep.

This isn’t legal advice. This is for your everyday average person who needs to know this little bit of information. If you’re an undivided interest property owner and you have questions, you need to go seek guidance from an attorney because I’m not here to give you legal advice whatsoever.

I am just telling you situations that I’ve seen, things that happen on the real estate side and when I was in banking. Take with it what you want.