Real Estate Minority Interest Discounts in Divorce Cases

Everyone seems to have a different view of this notion. For example, in one case, both real estate experts did not realize that the husband in the case owned only half the building in question. Therefore, the experts valued the entire interest in fee simple. Obviously, an appraiser must first value the whole asset, and then value the partial interest. However, in that particular case, the judge struck both opinions because the experts valued the wrong interest. Ultimately, the parties had to come up with another appraiser and ended up stipulating to the value.

In In re Marriage of Brenner, 235 Ill.App.3d 840, 601 N.E.2d 1270 (Ill.App.Ct. 1992) the husband owned a 50% interest in a business and the real estate where the business was located. In this particular case, the building was not a corporate asset but was owned personally. The appraiser merely testified as to the value of the entire parcel and found it to be worth $590,000. The trial court accepted that valuation and found the husband's interest to be exactly one-half ($295,000). On appeal, the husband challenged the valuation as being outdated, but he did not make the argument that his half was worth less than 50% of the value of the whole. Therefore, the trial court's ruling as to valuation was affirmed.