Lloyd Manning, AACI, FRI, CCRA, PApp is a semi-retired commercial real estate and business appraiser and broker who now spends his time writing for professional journals and trade magazines. He resides in Lloydminster, Alta. Email [email protected]
By Lloyd Manning
What follows is a true story, one taken from my personal experience. The only change is the names of the participants. It occurred about 40 years ago. Could it happen today? I’m not certain. Perhaps! As I recite it to you, please bear in mind that there could be some blanks in the tale. Having reached the age of senility, my memory is not as good as it once was and this was a long time ago.
It concerns a farm, which at the time had a market value of around $200,000. The owner, Nick, was killed in a truck-farm tractor accident and died intestate, which is without a will. All of Nick’s family was aware that it was his intention to leave the farm to Paul, who was about 25-years-old. Nick obtained custody of Paul at an early age and raised him as a son, but so far as I know never legally adopted the lad. Nick had other children who, having long since moved away, had no interest in continuing with the farming operation. No member of the family, including Nick’s widow, had ever expressed any objection to Paul inheriting the farm and if they wanted a share of any inheritance, this was not made known. Although there was never anything in writing since this was Nick’s wish, this disposition seems to have been accepted by all.
Several months after Nick died, with the estate not yet settled, the farm was vacated. No one wished to continue with it, including Paul. Even the widow had moved away and sometime later remarried. There being no objection raised by any family member, or their lawyer, Paul listed the farm with me for sale.
I obtained an offer to purchase the farm for the $200,000. It was to be $50,000 down and the balance by mortgage to be obtained. Essentially it was all cash to the vendor. If a mortgage could not be obtained within a reasonable length of time from Farm Credit Corporation, a bank or elsewhere, the family would carry the mortgage themselves. The terms were spelled out in the purchase offer. The $50,000 was paid; the buyer took possession of the farm, occupied the buildings and commenced a farming operation. My lawyer provided me with a written opinion that my commission had been earned and that upon payment of the balance to the family’s lawyer, I could claim it. It was a done deal. The family’s lawyer received the sale proceeds and raised no objection to the commission having been paid.
During the next three or so years several attempts were made to obtain a mortgage but all efforts failed. The problem was not with the property, but the buyer. Through Paul and their lawyer, the family was informed that the buyer would be making payments to Paul and them for the outstanding balance of $150,000, division still to be determined. However the family claimed they had never been informed of any such arrangement and that Paul had no authority to enter into this deal in the first place. As there was never anything in writing to prove that Paul was supposed to inherit the farm, the family now said that they would block any such inheritance.
The family’s lawyer issued the buyer an eviction notice. The buyer refused to move, saying that it was a legitimate deal to which all participants gave their consent one way or another. The family then sued for possession.
When the matter got to court, the buyer had been in possession for approximately four years. The judge ruled that the sale had not been consummated, that the buyer was to vacate the property and that the full $50,000 he paid was to be refunded. This would of course include my commission, which was part of the $50,000. However, he also ruled that as the buyer had been in possession for this length of time, he was to pay the legitimate owners, the family of the deceased, rent at the usual rate for agricultural properties of this size and type. This consumed all of the $50,000. The buyer was out and the sales commission was refunded.
The farm was later sold to a different purchaser for a much higher price, but not by me. I do not know if Paul got anything but I have my doubts. This was a unique case that could probably not happen more than once in a lifetime. However, it’s why I always say that a sale is not a sale until the buyer has possession, the seller has been paid and you have your commission – and sometimes not even then.
