Shouldn't sellers get their check at closing? (appraised, negotiating, property tax)

[newfie56]

Originally Posted by Brandon Hoffman

This whole things seems like a nightmare. I have no idea why someone would want to retain minority ownership with a stranger, nor why the buyer would accept that arrangement. Has this been discussed and agreed to by all parties? Does the brother even have the right to force that? If there is a designated PR decision maker they have control of decisions.

I probably should have given more context: This 55+ acre parcel is adjacent to another large parcel that this same brother and I own. The portion of the "being sold" parcel he is keeping was selected by him because it is where an ancestor had a mill, long ago. It is separated from the rest of the parcel by a creek. He's a surveyor, and selected the part he wanted to keep.

So, he's not retaining minority partnership with a stranger. The stranger is buying the adjacent 40+ acres. It's not close to where any of us siblings live, and there are no buildings on the property.

This could be a reason why it's tricky to name four siblings as heirs to the same piece of property. There are two other "family" parcels in this remote section of NC...

[oceangaia]

Originally Posted by newfie56

After the brother's quarter is taken out, the portion of the parcel being purchased is still more than 40 acres.

The number of acres is irrelevant. The point is that it is an unusual transaction that requires non-standard agreements. Is the parcel being legally subdivided into two separate parcels?

[dontaskwhy]

Well they couldn't sell it illegally subdivided, could they ??

[Chas863]

The way I understand the situation now is that the owners of a large tract of land are selling approximately 3/4 of the land to a buyer. This will require a survey, and the survey should be reviewed carefully by both parties before the closing to insure that the legal description conveys exactly what both parties understand to be conveyed, and retains what both parties understand to be retained.

It's not a big deal to sell 100% ownership in a parcel that is roughly 3/4 the size of the parcel it is being taken out of provided all the "i's" are dotted and the "t's" are crossed properly.

All of the current owners of the entire parcel must agree to the sale and must sign the deed conveying the parcel that is to be cut out of the original tract. This will then leave all the owners of the original tract as the owners of what's left (about 1/4) of the original tract. It will also leave the buyer as the sole (100%) owner of the parcel that was taken out of the original tract.

If this is in fact the OP's intent, then that's not an excessively difficult situation provided everyone does their job and understands and agree on what is being sold and what is being retained. The problem comes in later after the sale is finalized and someone says "That's not what I understood was being sold." Well, tough cookies to that. You need to speak up BEFORE the sale is finalized or forever hold your piece... kinda like having an objection to a wedding. Of course, weddings are so "yesterday".

[GotHereQuickAsICould]

Originally Posted by adjusterjack

You should be talking to the title/escrow company person about that.

Definitely.

We've sold a number of houses. We always get the check at closing.

We've bought a number of houses. We always bring a check to closing.

[newfie56]

Originally Posted by Chas863

The way I understand the situation now is that the owners of a large tract of land are selling approximately 3/4 of the land to a buyer. This will require a survey, and the survey should be reviewed carefully by both parties before the closing to insure that the legal description conveys exactly what both parties understand to be conveyed, and retains what both parties understand to be retained.

It's not a big deal to sell 100% ownership in a parcel that is roughly 3/4 the size of the parcel it is being taken out of provided all the "i's" are dotted and the "t's" are crossed properly.

All of the current owners of the entire parcel must agree to the sale and must sign the deed conveying the parcel that is to be cut out of the original tract. This will then leave all the owners of the original tract as the owners of what's left (about 1/4) of the original tract. It will also leave the buyer as the sole (100%) owner of the parcel that was taken out of the original tract.

If this is in fact the OP's intent, then that's not an excessively difficult situation provided everyone does their job and understands and agree on what is being sold and what is being retained. The problem comes in later after the sale is finalized and someone says "That's not what I understood was being sold." Well, tough cookies to that. You need to speak up BEFORE the sale is finalized or forever hold your piece... kinda like having an objection to a wedding. Of course, weddings are so "yesterday".

We all agree to the sale, the deed, the new survey, and the metes and bounds description. So, I think we're good (knock on wood). :-)

[JONOV]

Originally Posted by MidValleyDad

I believe that would be true only if the Parcel has been divided into separate properties for each of the heirs. If they hold the entirety as co-owners than they are selling 3/4 ownership in the entirety.

Not all portions of a property have the same value. 3 Acres along a busy road would be more valuable than 3 acres of low lying wetlands that might not even be buildable.

I see this as being a big mess. Unless the brother has some kind of relationship with whoever is buying the other siblings shares ....

Originally Posted by oceangaia

Exactly. The brother will always be minority in this new ownership and essentially have no control. Would he be able to build on this land without permission of the others? What if he wants to sell? The brother seems pretty passive about this.

Originally Posted by oceangaia

The number of acres is irrelevant. The point is that it is an unusual transaction that requires non-standard agreements. Is the parcel being legally subdivided into two separate parcels?

You're making a mountain out of a molehill. This happens all the time (subdividing two parcels.) Is it as standard as selling an empty buildable lot? No. But it's done rather frequently and it isn't reinventing the wheel. Safe to assume that the surveyor brother has done his homework, and probably safe to assume that the lawyers aren't going to bring it to closing with nothing more than handshakes and smiles.

[newfie56]

Okay, I'll try to keep my blood pressure from spiking as I write this, but here's an update:

--The night before the scheduled closing at 11 a.m. on Sept. 9, each of us was sent an email from the realtor with the financial closing document, and the update that the cost for taxes would need to be changed after she got updated figures from the county tax office.

--The update was related to the fact that the undeveloped property was taxed at an agricultural rate (timber).

--She expected to get the update in the morning, and we would be reviewing the changes at the closing.

--I left at 7:30 a.m. and arrived at the closing location three hours later. My two brothers were there, and one brother had the POA rights for my sister. My brothers had also driven about 1 1/2-2 hours from their respective cities.

--Right before 11 a.m., after we'd gone inside the building to close, we learned that tax information from the tax office still had not been provided. They said it may arrive soon. But just in case, the realtor and the closing attorney asked if we'd like to postpone a week or a month out. But, we'd driven all this way and said we'd like to do it later that day, and if the info is still not available and we have no other choice, we'd reschedule. The attorney has an opening at 2 p.m. and schedules us for 30 minutes.

--The three of us siblings ate lunch and wandered around. We all agreed that it made no sense that our "very experienced" (30+ years) listing agent didn't know and prepare for this in advance.

--We dropped by the county tax office ourselves to ask about this-- why, when we're not the ones using the "non-agriculture" rate for the property, we would have to be the ones to pay it. The tax person said that we've benefited from paying lower taxes over the year and now we're selling the property for a profit (not really), we have to pay the difference in the two tax rates for the three previous years, and for the period of time this year we've owned it. The difference was almost $3,500 (total) for that time frame. She also said the realtor should have known (and prepared for this) in advance.

--We didn't like that much, but were willing to accept it to get the closing done with. At the time we were talking with this tax person, another tax person said that the information was being provided to the realtor, so we felt better about the 2 p.m. closing happening on schedule.

--Everything seemed to go fine at the closing, and the financial document had been updated with the new tax info. We signed everything we needed, I handed over my POA documents to the closing attorney, and so did my brothers.

--The brother who wasn't selling his portion arranged with the lawyer to take care of his new deed for his 13 or so acres.

--The attorney told us that both deeds would be recorded that day, and the checks would be ready for the selling-brother to pick up the next day for himself and our sister.

--The attorney said he would be getting a wire from the buyer's attorney to the escrow account later that day or the next day, and I would get my wire transfer Monday to my account, and that I could check for updates.

The next day, I send a note to the realtor and the attorney to see if there were any updates to the wire process. The attorney responded that the selling brother "inadvertently kept the signed page of his power of attorney and took it back with him."

My thought is--didn't he check through all the damn documents to make sure he had everything before the end of the closing???!!!

Further complicating this, my brother mailed to my sister (after returning home) the folder she'd given him of various documents. He doesn't know if that "signed page" is in that folder -- and won't know until she gets it. What if it's not in there?

Thank you for letting me vent. This has been the land sale/closing from hell. And we're still burning.

*Another interesting tidbit: Yesterday the other (non-selling) brother, who has been handling paying taxes on the property and had already paid taxes for this year, got a partial refund check for what he had paid. It was mailed from the tax office before "our" closing... Makes me wonder if the buyer's closing was earlier than we were told -- and if keeping money in escrow longer just makes realtors richer. (Apologies for being snarky. I'm just ticked off.)

[Chas863]

Sounds like a real mess, and I would be P. O'ed too. But the part that really seemed unjust to me is the retroactive changing of the taxes on the land being sold. You (or your family) received a tax statement on your property every year based on the classification of the land.

Each year, you paid the taxes based on the Assessor's statement. I don't see how they can go back 3 years and change the classification that THEY had made. It matters not what the new owners plan to do with the property. The only thing that SHOULD matter is what YOU did with the property and how the Assessor classified the property.


The only justification for doing what the Assessor did, IMO, is if they could prove that you fraudulently stated how the property was being used in order to evade taxes. If they could prove that, then you should be charged with a lot more than just paying the difference in the tax rates. However, I'm assuming that you did nothing fraudulently.

[newfie56]

Originally Posted by Chas863

Sounds like a real mess, and I would be P. O'ed too. But the part that really seemed unjust to me is the retroactive changing of the taxes on the land being sold. You (or your family) received a tax statement on your property every year based on the classification of the land.

Each year, you paid the taxes based on the Assessor's statement. I don't see how they can go back 3 years and change the classification that THEY had made. It matters not what the new owners plan to do with the property. The only thing that SHOULD matter is what YOU did with the property and how the Assessor classified the property.


The only justification for doing what the Assessor did, IMO, is if they could prove that you fraudulently stated how the property was being used in order to evade taxes. If they could prove that, then you should be charged with a lot more than just paying the difference in the tax rates. However, I'm assuming that you did nothing fraudulently.

We did nothing fraudulently--and also thought the retroactive change of taxes on land we would no longer own was unfair. But I did some digging through old documents this afternoon and found a letter from 2006 from the tax assessor's office that was sent to me and my siblings after we inherited the land from my aunt. It said the parcel had been previously approved for taxation at a "present use value."

It said:"The difference between the land use value and market value is your deferred value for having for either agriculture, horticulture, or forestry use value. Please remember this is a tax deferment, not an exemption. Tax liability for 4 years on the deferred amount becomes due when the property is sold or deeded to anyone other than an immediate family member..."

We submitted a forestry management plan, which is why it had lower/deferred taxes for 15 years. I should have pulled that 15-year-old letter out and read it before the closing. I had no memory of it.