RealTown's RealTalk

Here's a new one, I think, but I bet I'm not the 1st or last. 

We own a family farm here as an s-corp.  My 2 cousins have 50% & my brother, sister, & I split the other 50%.  My brother is the eldest, and a highly respected atty. in a major city.  He called me a couple of months ago and said the others wanted to list our frontage with "a more experienced Realtor."

I called our Alabama R E C attys, and was told that I didn't have to give up my ability to sell my own property to anyone else, and that the fair thing to do would be a co-operative listing.  Then I mentioned the s-corp.  He then said the decision would be with the president.

Has anyone else grappled with this family s-corp thing? Any helpful paths to a favorable solution (other than bringing in my own atty)?

Helen Holmes Sockwell, GRI, e-Pro
Broker Associate in Alabama & Tennessee
helen@HelenSockwell.com   "Experience!"
256-337-0210 - cell       256-325-4622 - fax
TNT Realty, Inc.  of Madison/HSV, Alabama

I am not an attorney, or CPA, but you need to look at your by-laws/procedures that you wrote up for the S-corporation when you started it. Most s-corps state what happens when there is a disagreement.  The final word does not have to be the president unless the by-laws/procedures were set up that way. 

It appears that you own 16.67% of the company (if the 50% is really split equally among the 3 siblings).  If the procedures call for a simple vote among stockholders, with a simple majority, and one of your siblings vote against you, then I don't see how you can keep the listing. 

it is a corporation (regardless if it is family or not) and they have rules to follow.  An s-corp has a lot of paperwork and rules (including annual meetings, etc). People choose s-corps to avoid double taxation (income and dividends).  If the rules aren't followed, I believe they could lose their IRS tax designation which would not help anyone. 

If you have a very experienced agent in your office, I would see about doing a co-listing with one of them.  If not, I would step away.

Melina Tomson, MS
ABR, e-PRO
melina@tomsonburnham.com
www.TomsonBurnham.com
ph: 503-371-6515
fax: 503-588-1628

My brother is the eldest, and a highly respected atty. in a major city.  He called me a couple of months ago and said the others wanted to list our frontage with "a more experienced Realtor."

I called our Alabama R E C attys, and was told that I didn't have to give up my ability to sell my own property to anyone else, and that the fair thing to do would be a co-operative listing. 

Helen Holmes Sockwell, GRI, e-Pro
helen@HelenSockwell.com   "Experience!"

*************************************

Helen, why does your brother want someone with more experience?  Didn't he read your "Experience!" in your email signature. LOL

Yvette Chisholm

Helen, I agree with most everything Melina said, and will add a bit more... these are questions and/or comments and/or suggestions:

1) Just because the lawyer/brother said "everyone" wants to sell, I think you should speak with all 3 of the other siblings, and verify that....  AND quantify it....
IOW, on a scale of 1-100 how much do they want to sell (ask yourself that, too), and on a scale of 1-100 how important do they feel it is to use a different Realtor.
2) If using another Realtor is inevitable, will they let you choose a highly regarded Realtor, or is it someone that lawyer/brother has already chosen? If they let you choose, you could at least get a referral fee out of it, but be sure to disclose that to all parties.
3) If you do NOT get to have any input on which Realtor is to be used, you COULD suggest that you want the right to list it FIRST for 60 days.... if it doesn't sell, it can be re-listed with anyone else they like, for no longer than 6months (or 100 days or whatever).... and you RETAIN the right to re-list it AFTER that period. Ideally, you want it first and last, but at least get one of them.
4) Was lawyer/brother also the original executor of estate? and if not, why?
5) Who's idea was the s-corp? presume it was drafted up by lawyer/brother? possible conflict of interest? How old it is?
6) Which sibling FIRST verbalized the desire to sell?
7) Do any of the siblings owe money or have any indebtedness to lawyer/brother or to the s-corp?
8) Are any of the siblings currently residing on the property? Who maintains it?

That's all for now, my brain quit on me....

Lindy in Houston

Hey, THANKS ! Here's the response to some of the Qs/Suggestions:

1. I have ordered the incorp papers and by-laws from my atty, who happens to be the one who wrote up the papers in the 1st place.  If I have a disagreement, presumably I'll have to get another, disinterested atty.

2. My brother did not write them up because he's not an Alabama atty, and his specialty is more in mergers and federal violations of major corporations.  No one owes him money. 

3. He and my 2 cousins who have lived in major cities have plenty of $$ (and they can vote together for a majority), whereas my sister and I who live in smaller places tend not to at this time, which is part of the disagreement as to sell sooner for less $ or later for presumably more. We do have an offer on the table, which came through me, which they are rejecting.

4. Experience: I'm the only one who has lived here all my adult life, therefor I have become "The Village Idiot" to my siblings & cousins. It happens in many families, by my observation, to whoever is in their hometown, even to Jesus. My father has been running the place in decision-making, while I have in fact been doing the leg-work. We tend to split up tasks among the rest of us, such as dealing with zoning and city intereactions, engineering, road construction, maintainence, ect.

5. I can get a referral fee, which is not the same strength as a co-listing.

6. There does seem to be some conflict of interest due to te fact that all these other people own some personal acreage which was given to them, and have altered rights-of-way to develop that property, affecting the eventual ingress-egress to the bulk of the place. perhaps in the running of meetings. But not in the area of corp papers.

That's all I can remember to respond to, but I never would have even thought to get the papers if someone hadn't suggested it.  Suppose it's inevitable that I get another atty involved.  It has been suggested by the AREC atty that I could force the sale of the place, and other friends suggested that I sell out to the bunch of them and go find my own property for me and my horses. That's how we came by this place anyway - our Grandparents chose to leave their obnoxious relatives and do their own thing.  History repeats I suppose. It's pretty here, tho.

Helen Holmes Sockwell, GRI, e-Pro
Broker Associate in Alabama & Tennessee
helen@HelenSockwell.com   "Experience!"
256-337-0210 - cell       256-325-4622 - fax
TNT Realty, Inc.  of Madison/HSV, Alabama