In court-ordered dissolution proceedings, a minimum sale price is often established to protect the partners from selling the property for less than its fair value. Understanding how this price is determined and how to influence it is important for both sellers and buyers in these proceedings.
Why a Minimum Price Matters
In a forced sale, without a minimum price floor, the property might sell at a significant discount to its market value – particularly in situations where few buyers are aware of the sale, market conditions are poor, or the property has complications that deter mainstream buyers.
A properly set minimum price ensures that partners receive fair value.
The Role of Court-Appointed Appraisers
Courts typically appoint an independent appraiser to assess the property’s market value, which then serves as the basis for the minimum price. The court may set the minimum at market value, or somewhat below it to ensure the property can actually be sold.
Each partner also typically has the right to present their own appraisal evidence.
Challenging the Minimum Price
If a partner believes the court-appointed appraiser has undervalued the property, they can present evidence to challenge the assessment. This requires their own expert appraisal and legal arguments about methodology or comparable sales.
What Happens When No Buyer Meets the Minimum
If a property is put on the market at the established minimum price and no buyer offers that amount, the court must decide how to proceed. Options include reducing the minimum price, changing the method of sale, or addressing specific issues that are deterring buyers.
Partners’ Right to Purchase
In many dissolution proceedings, the existing partners have a right to purchase the property at the minimum price before it is sold to external buyers. This allows a partner who values the property above the minimum to retain ownership rather than see it sold to a stranger at that price.
