“You picked a fine time to leave me LucilleWith four hungry children and a crop in the field” – Rogers, Kenny. “Lucille.” Kenny Rogers, United Artists, 1977 My grandfather was a farmer in Saskatchewan, Canada. His brother and he owned an enormous winter wheat farm. One year, the crop was worth more than the ground under it. The next year, a hail storm destroyed their crops. Luckily, a bad storm was the worst thing that happened to my grandfather and grandmother. They stayed together for 50+ years until they both passed. Some farmers aren’t so lucky and must learn what happens to their farm in a divorce. A Farm Appraisal Must Begin With Defining What Is Being Valued “How much is the farm worth?” seems like a straightforward question. Yet, it is not. A farm may consist of several parcels of land, a residence, barns, grain-storage facilities, livestock facilities, drainage systems, permanent plantings and other additions. It may also have machinery, stored grain, crops, livestock, accounts receivable or interests in a partnership, corporation or limited liability company. A real-estate appraisal does not necessarily value all of these assets. Before determining the value of “the farm,” the appraiser must identify the exact property and property rights included in the assignment. Illinois courts must “employ a fair market value standard” when valuing property. 750 ILCS 5/503(k). The valuation date is the date of trial unless the parties agree to another date or the court selects another date within its discretion. Id. The court must also make specific factual findings concerning the classification and value of the parties’ property and the facts supporting its ultimate property award. 750 ILCS 5/503(a). A valuation cannot reliably help the court unless the appraisal first answers a more basic question: What, exactly, is being valued? Defining The Farm Appraisal Problem Valuing Rural America: Foundations of Data Analysis explains that “[t]he valuation process begins with a concise, understandable statement of the appraisal problem.” American Society of Farm Managers and Rural Appraisers, Valuing Rural America: Foundations of Data Analysis, 60 (2019-2022). The appraisal problem should identify the subject property, the property rights being valued, the intended use and users of the appraisal, the applicable definition of value, the effective valuation date, the scope of work and any assumptions or limiting conditions. Id. at 60-65. These all can affect the resulting opinion of value. Identifying The Subject Property The subject […]
