Business Clinic: Brothers disagree on sale of inherited land

Whether it’s a legal, tax, insurance, management or land issue, Farmers Weekly’s Business Clinic experts can help.

Russell Reeves, head of Thrings’ agricultural litigation team, explains what two brothers need to establish before sorting out a disagreement about what they should do with some inherited land.

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Q. My brother and I farm in partnership and have been left some offlying farmland by our parents. We now own it jointly but cannot agree on what to do with it. I want to sell it, but he doesn’t. What can I do? 

A: Disputes between any business partners can be painful, and even more so if the disagreement is between family members.

Your first port of call is to determine whether or not the land in question was left personally to you both, or is “partnership property”.

Is there a partnership agreement? 

If you have a partnership agreement then that may set out the answer.

If there is no partnership agreement then the relevant law, the Partnership Act 1890 (the act), defines this as property originally brought into the partnership stock or later acquired, whether by purchase or otherwise, on account of the partnership business or in the course of it.

This is not always clear-cut and I often come across disputes on whether or not land is a partnership asset. 

If the land is partnership property, then the act provides that any partner is free to dissolve the partnership at any time.

If so, the assets of the partnership would likely be sold, the debts of the partnership paid and the net proceeds split between the partners.

This may be helpful in your situation, depending on whether you wish to end the whole partnership or just resolve the issue around this land.

If the land is not a partnership asset, then we are in the hands of the Trusts of Land and Appointment of Trustees Act 1996.

Under this act, if you cannot find a way to agree with your brother, you can make a case to the courts for an order for sale and split of the proceeds.

Resorting to any legal action is likely to be time-consuming and costly. You would also have to decide for yourself whether this is the best course if this could further damage the relationship with your brother.

Possible other options

With that in mind, and if your brother is open to the possibility, it may be productive to explore other options.

This could involve further negotiations with legal advice on both sides, which could help unlock a way through.

Other alternative dispute resolution methods such as mediation through a neutral third party could also help break the deadlock.

If you remain in partnership once this dispute is resolved, and for any family in business partnership, we would recommend thoroughly preparing for disagreements that may arise in the future.

This can be achieved through the drafting of a thorough partnership agreement that clearly sets out what assets are partnership assets or not, the responsibilities of all partners involved, the decisions that can be taken individually and those that require majority or unanimous agreement, and how disputes should be resolved if they occur.

An agricultural law specialist will be able to talk this through with all the parties and draft a tailored agreement which can help to reduce the likelihood of bitter and protracted disputes in future.

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