Appellate Court rejects conclusion that appraising farmland is “merely a speculative endeavor”

Mollie Pawlosky Dickinson Law Des Moines, Iowa Iowa Banking Law Iowa Commercial Litigation Law

Posted on 09/19/2016 at 12:00 AM by Mollie Pawlosky

The recent opinion by the Iowa Court of Appeals in Wihlm v. Campbell, No. 15-0011 (Sept. 14, 2016), may become important in the coming months if the overall value of Iowa farmland continues to decline. Wihlm was a partition case, in which Campbell, one of three siblings, asked the court to partition in-kind for her share, meaning that she would be awarded approximately 79 acres, including a multi-generational family homestead.

The rule in Iowa favors partition by sale, such that a party requesting an in-kind partition must show that the in-kind division is both equitable and practicable. Before the trial court, three experts testified, including a certified appraiser, the owner of an auction business, and the owner of a real estate business. Although the appraiser to which all parties had agreed valued the properties, recommended that the parcels could be sold separately, and testified that in-kind division would be fair and equitable, the district court discounted the appraiser’s testimony, holding that “the volatile nature of farmland as affected by the crop prices has made a partition in kind merely guesswork when factoring in the nature and quality of the land.”

Reversing the district court, the Court of Appeals held, “appraisal was absolutely more certain than mere speculation.” After identifying how the appraiser’s conclusion in this instance was supported, the Court of Appeals saw “no reason to reject the concept of appraisal, generally, and [this appraiser’s] testimony, specifically, out of hand.” Thus, because the land sought by Campbell represented a “near one-third of the total value,” Campbell had established that in-kind distribution was equitable.   The appellate court also recognized a property owner’s sentimental attachment was another equitable consideration favoring division in-kind. The in-kind division was also practicable, because the land desired by Campbell was readily identifiable, largely contiguous, with no topographical issues made division impracticable.

We will monitor whether the Court of Appeals continues with the position that appraising property is not speculative, especially if farm prices throughout Iowa continue to decline. For further information regarding Wihlm or partition suits, contact Mollie Pawlosky.

The material in this blog is not intended, nor should it be construed or relied upon, as legal advice. Please consult with an attorney if specific legal information is needed.

 

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