Divorce & Partner Dissolution

Who orders this appraisal

• Family law attorneys
• Business litigators
• Partners exiting an entity

What the engagement covers

• Neutral third-party valuations
• Partnership buyout support
• Rebuttal analysis services
• Deposition testimony available

The rules that govern it

Two different assignments, and they are not interchangeable, Valuing a partnership or LLC interest that holds real estate is not the same assignment as valuing the real estate. The first is a business valuation; the second is a real property appraisal. The entity interest may be worth considerably less than its proportionate share of the property, and conflating the two is the most common error in these matters.

USPAP Standards 1–2 versus Standards 9–10, the competency question, Real property appraisal is developed and reported under Standards 1 and 2. Business and intangible asset appraisal falls under Standards 9 and 10. A real property appraiser is competent for the underlying real estate; applying entity-level discounts is business valuation work. USPAP requires the appraiser to be competent for the specific assignment or to disclose the deficiency and address it, which in practice often means two experts, each doing the part they are qualified for.

Discounts for lack of control and lack of marketability, A minority interest that cannot force a sale or a distribution is worth less per dollar of underlying asset than a controlling one. A discount for lack of control. An interest with no ready market is worth less again, a discount for lack of marketability. These are entity-level adjustments applied by a business appraiser to the interest, not by a real property appraiser to the building.

The real property number still has to be right, Whatever happens at the entity level rests on a supported value for the underlying real estate. In a contested dissolution that number is examined closely, and a weakness in it undermines everything built on top.

Partition, where owners hold directly, Where co-owners hold real property directly rather than through an entity, California provides a statutory partition procedure through which a court can divide the property or order it sold and the proceeds divided. An independent appraisal is the evidence of value in that process. The specific statutes are not cited here because they could not be verified to the standard applied to the rest of this site, your attorney will identify the operative provisions.

How it works

1. Establish what is actually being valued: the real property, or an interest in the entity that owns it. This determines who is competent to do the work.
2. Confirm the valuation date, which in a dissolution is usually set by the court or by agreement rather than chosen.
3. Appraise the underlying real property to that date under Standards 1 and 2.
4. Where entity-level discounts are in issue, coordinate with a business appraiser working under Standards 9 and 10 rather than applying them in a real property report.
5. Prepare for the report to be examined by an opposing expert, and be available to testify.

What you receive

Neutral appraisal, rebuttal analysis, and testimony as needed. Standard turnaround is 1–3 weeks. Rush appraisals available for urgent deadlines.

Common questions