Farming and the Law: Nicola Furmston on farm valuations in the event of divorce
THE valuation of land in farming divorces is an area that often causes significant conflict between husband and wife.
Very often one spouse is the farmer and land-owner with the other spouse the “incomer”.
The incomer becomes the out-goer and seeks as a high a valuation as possible to be placed on the land in hope of increasing the capital settlement paid on divorce.
The incomer will very often have heard snippets of information about the farm and its prospects and be certain that these prospects will have a significant effect on value.
A professional valuation of farmland is an inevitability. If the divorce case is before the court for a decision as to who is to have what, a judge will invariably appoint a single joint expert to prepare a valuation. The parties will have to agree on a valuer and pay half the bill.
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However, the parties are not obliged to agree with the result of the valuation and either may choose to question the valuer on his/her findings or to get a second opinion. This invariably results in a range of valuations being available to the court, with no one being the wiser which to rely on.
The major complication in agricultural land is the diversity in value, particularly in bare land. Bare land has no agricultural buildings or residences on it and tends to be purchased by somebody who lives in close proximity or farms locally. Demand is difficult to predict unless the valuer is aware of someone who is already on the look-out for a piece of land of that location and description
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Agricultural land is classified in five categories according to versatility and suitability for growing crops and its value per acre will differ depending upon its classification. Value will also depend on how many acres of land there are. Buildings and land should be valued as components as it is often possible to hive parts off for sale in order to raise capital.
Getting a valuation spot-on and unchallengeable is a tall order for a single valuer and a better approach might be to ask two valuers, one chosen by each party, to work together to produce a valuation on which they both agree. This will involve compromise, but local land agents are familiar with each other and will work together to find a suitable figure, basing their findings on local knowledge, statistics and comparables.
A valuation figure reached by two experts, working in this way should be unassailable and could be a cost saving in the long run. The cost of two experts, in this situation may be cheaper as they share the risk and work associated with the job.
: : Nicola Furmston is a lawyer specialising in farm divorces at Barker Gotelee Solicitors