"I own a property in ocean city with 7 siblings (condo left to us after our parents passed away.) I am asking to be bought out. It is my understanding that there is a 'penalty' applied to the value of share, Anywhere from 0 to 35%. Is that true? And, help me understand the reasoning behind it?
2 Answers from Attorneys
It sounds like you are referring to the "minority interest discount" which is applied when less than a controlling ownership interests in business is valued. In such cases, one can argue that a minority interest in a business should be discounted because the owner lacks the ability to control the business and the interest is not readily marketable. Minority discounts are not "mandatory." The applicability of the discount is most typically negotiable. Please feel free to contact me if you want more information (973-921-0600). Kindly understand, this does not constitute legal advice or opinion. And, this this exchange does not create an attorney-client relationship.
The business minority situation doesn't really apply to buy-outs among siblings for a property they own in common. They may be trying to push you into giving up your interest for less than its value. If you consult with Mr. Gartenberg, mention this to him.
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