Undivided Interest: How Do You Divide It?

Let’s talk about owning property through undivided interest, especially when you’re inheriting property. What does that mean?

Let me give you an example. If your father owns property and he has four kids, he passes away and gives it to the four kids. This one property is owned four ways. That’s undivided interest.

It means you cannot sell that property or do anything with that property unless all four undivided interest owners agree.

Let’s take this into a 100-acre tract. Let’s just say that your family owns 100 acres. Your parents pass away, and they leave it all to all four kids as undivided interest.

You might think, “Oh, well, I only own one-fourth. So what is 100 acres divided by four? Well, that’s my 25 acres.”

Actually, no, they’re not. You own 25% of 100 acres.

The only way that this gets handled is if you take that 100-acre tract and have a surveyor go out and survey it into four individual 25-acre tracts. And then you get a tract, you get a tract, you get a tract, and you get a tract.

Why is this so important? Because what happens all the time that I see with farm and ranch property specifically, and homes, applies to both. People inherit property, and somebody’s not going to agree with something.

Maybe somebody is utilizing that property. Maybe they’re renting the property. Maybe they’re renting the home and living there while the other siblings don’t have anything to do with it. They just own an interest, and you’re letting them stay there. And everybody else wants to sell, but the person living there doesn’t.

What happens? Well, everyone has to agree to sell it. Because if you have four siblings and three of them want to sell and one of them doesn’t, you’re going to have to go to court and have it handled legally. Otherwise, all four of you are going to have to agree to sell that property. There is no other way.

And if I can tell you one thing, in all the years of doing real estate, even in finance and doing the banking side of it, very rarely is it very amicable.

We used to fund a property, and somebody’s getting something a little bit better. And the best advice that I can give you is that everybody wants to make it fair, but it’s not always going to be 100% equally fair. Okay? It’s just not. You just can’t do it. It’s very hard.

Somebody’s going to get a little bit less, and somebody’s going to get a little bit more. In the grand scheme of things, is that really worth holding something up for years and years and years and causing family problems?

If you ask me, the answer is no.

How do you prevent this? Well, your parents or family members or whoever needs to go see an attorney, do estate planning, and talk to them about this.

People will fight over the most petty things. Whenever I sell homes that have to go through estate sales and things, people will get nuts over Grandma’s piece of furniture. And at the end of the day, it’s just Grandma’s piece of furniture.

Maybe it was sentimental to you, but in the grand scheme of things, in that entire house, there’s probably one or two things that are sentimental to you. The rest of it, you just start becoming a real jerk about it. It isn’t worth it. I promise you.

Maybe it’s because I’m older now, and I’m like, who cares about the things? Just make this easy on me. It’s not worth it.

Take that stance, I’m telling you. Otherwise, everyone suffers. Everyone suffers. You may as well just get along with people.