Legal Question in Real Estate Law in California
Appraisal and Partition
I am in a dispute with my siblings regarding my request to sell my 25% interest of my mother�s house to them. I requested, in July 2008 via email, to have them buy my 25% interest. They agreed yet dragged out contacting a lender to refinance the property until this month (Nov.). In the interim the house lost approx $30,000 (which 25% would be allocated to me) in value. They are also requesting that I pay all their closing costs. I have stated to them that they could have paid me in cash rather than refinance the house and that I should not have to pay closing costs. Their only argument for delaying was who was going to pay for the appraisal fee. It turns out when they went to the lender the lender required a current appraisal on the property. When I read the appraiser�s report, it was very misleading and did not offer a fair appraisal of the home. The appraisal consisted of homes that were distressed (my mother�s home is free and clear of debt), pending sales, and sales that occurred in June and Sept. I had another appraiser do an appraiser as of July 2008, which is how I calculated the 30K difference. Missing from the lender�s appraisal were actual comparable sales of homes similar to my mother�s (non-distressed, and actual not
3 Answers from Attorneys
Re: Appraisal and Partition
I believe I have already addressed this question from you before. If you and your siblings cannot agree how to divide the property, you may need to seek a partition action, provided there has not been a waiver. You should speak with an attorney regarding this matter.
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Re: Appraisal and Partition
If they don't want to buy you out, you can't make them unless you file a lawsuit to appraise and apportion the property. The terms of any buy out are not 'imposed'; you don't get to dictate, only negotiate. You don't like what they offer, sorry. You'll spend substantial legal fees doing it the hard way in court.
Re: Appraisal and Partition
First, the e-mail request to be bought out might be sufficient to constitute an offer to sell, and the responses might be sufficient to be an acceptance. This is semi-unlikely, but a lawyer representing you would need to consider this possibility as a first analytical step.
Next, I wonder why you say "refinance" when later on you say the house is free and clear of debt. No refinancing should be necessary at all. Were you demanding cash? Were the buying siblings planning to borrow against the property? That would be a financing, not a refinancing, and the loan would have been a "first" for about a third of the property's value, generally pretty easy to do, even with three co-borrowers.
It sounds as though the appraisal problem as more to do with pricing the sale than with closing any financing needed.
Wether your mother's home is free and clear or mortgaged to the hilt should not affect the appraisal. The purpose of an appraisal is to determine the market value of the property, not to assess the urgency of the seller in unloading it. If the neighborhood is full of distressed properties, that affects everyone. Think of it this way: a street full of physically identical houses....half of them owned by owners who are about to go into foreclosure, and half of them owned free and clear. What determines the value of ALL of them? The willingness of SOME of the owners to sell real, real cheap. Anyone who tries to get more will have their listing on the market, with no offers, until the next ice age.
If you want to sell, and come out well, avoid lawyers and lawsuits, but go back to the siblings with a realistic view of what your 25% is really worth and be prepared to deal, including perhaps a willingness to take promissory notes secured by trust deeds if need be, in lieu of cash (but I'd insist on a little cash down).
Actually, I take back the part about avoiding lawyers. Avoid the lawsuit, but use a lawyer to help you strategize, negotiate and document the deal.
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