Partial interest valuation









Property ownership falls into many categories.


Let’s assume Mr. Jones owns a property outright, unencumbered by liens or mortgages, leases or easements. If there’s a Mrs. Jones, Mr. Jones is likely a joint tenant. Perhaps the Jones’ lease some of their property or have signed an agreement to give up any subsurface or mineral rights in exchange for cash. There may be a restriction in the Jones' deed stipulating that the property must never contain a structure more than two stories in height.


Anything less than full ownership, called “fee simple” in deeds and conveyances, by a single person or entity is a "partial interest." RU Appraisals, LLC have extensive experience appraising partial interests which require unique expertise and training in order to deliver a well qualified opinion of value.


When is a partial interest valuation needed?

When a partnership dissolves, either through divorce or other circumstances, there’s a need to fairly value each party's interest in real property. Sometimes, particularly in partnership situations, it's not simply a matter of appraising the entire property and dividing by the number of owners. A fractional share of property may sell at a discount to reflect lack of control, costs and barriers to sale.


You may need the value of rents or leases on a property, but not the underlying value of the real estate. This is more complicated than it sounds, and isn't just a matter of how much a tenant is currently paying. A professional, well trained appraiser will examine rents in the market to determine fair market value of rents or leases. If a tenant is paying below market value, they may be able to sublet at a profit. If they're paying over market value, their likelihood of moving on when the lease expires increases. There are many components requiring the professional judgment of an appraiser that factor into the calculation.


You may need to know the value of a proposed or existing easement. An easement is a right-to-use property, without owning it. How much is it worth to your neighbor to build a driveway across part of your property for entry to and exit from his property, rather than an alternate route that may be more costly to build?



With various ways the "bundle" of rights to property can be divided, you may not even be aware a partial interest valuation is needed. You should be sure the company you hire is qualified to perform partial interest valuations. At RU Appraisals, LLC, we are both qualified and experienced.