Selling property can be complicated. In order to sell a piece of real estate properly, you need to consult with a variety of professionals. Typically, you meet with an appraiser, a licensed agent, a construction professional, among myriad others.
To reap the greatest benefit, the seller must also conduct market research to be cognizant of trends. Selling a home is tricky enough when the ownership status of the home is straightforward; when ownership status is not, the process can be downright maddening.
The case of Baker v Weedon (1972) is one example of this. Due to the presence of multiple ownership interests (specifically contingent remainder interests), selling real estate became complicated.
Baker v Weedon: The Case
In Baker v Weedon, a dispute developed over the sale of a portion of land in Alcorn County, Mississippi.
Anna Plaxco Weedon was the third wife of the original owner of Oakland Farm, John Harrison Weedon. Weedon had had two previous marriages; both of which yielded children and both of which he was estranged from — and not entirely without reason as one daughter only reached out for money or to threaten lawsuit against him. As a result, Weedon made it clear in his will that his estate and possessions would go toward his new 17yo wife Anna Plaxco. Should Anna pass without bearing children, then all of Weedon’s property would go towards his grandchildren. When John Weedon passed, Anna inherited the land and continued to run the farm.
After 30 years, Anna could not maintain the upkeep of the farm herself and rented out the property. This was her only source of income and it was rapidly becoming not enough. As the city of Oakland continued to prosper and expand over that time, some highway surveyors offered Anna a lump sum for a portion of the land so they could build a highway through it. Of course, Anna agreed.
However, because Anna sold a portion of the land in 1964 to the city, this resulted in issues for who the rightful owner of the land would be. At the time of the sale, the land was appreciating in value in tandem with commercial development in the surrounding area. Projections indicated the land would increase in value by $150,000 (increasing its worth by over $330,000) in a few short years.
Anna appeared to be coming under financial hardship and felt she needed to sell the portion of land so that she could construct a new home for herself and this is where the issue of ownership presents itself. While the will clearly stated the property was Anna’s, it also said it would default to Weedon’s grandchildren should Anna bear no children. Anna had no children, and the grandchildren were unaware they were potential inheritors to this estate.
By selling a portion of the land without consulting the grandchildren, Anna removed the remainder interests of the grandchildren, and potentially cost them thousands of dollars in unrealized income. The issue became whether the court could order a sale of land affected by future interests. Anna argued it was due to her inability to survive on her income.
What’s the law say?
A court may order a judicial sale of land in certain situations. In this case, the court argued Anna’s limited income and the farm’s old standing made it possible to rule in Anna’s favor due to the economic waste rule. The economic waste rule is the idea that “repairs” would far exceed the value of the home. However, the Baker children believed selling the farm (which was in working order and in a manageable state) would be a disservice to their inheritance and undercut the value of the farm.
Court rules in favor of Weedon… until the Supreme Court intervenes and rules in favor of Baker
While the trial court ruled in favor of Anna (arguing the theory of economic waste), the children (Baker) filed an appeal and the Supreme Court of Mississippi overturned the ruling. The Supreme Court sided with Baker (the grandchildren). They did this based on a few factors including Anna’s age, the state of the farmhouse, and the rate of growth in the real estate market.
They recognized neither party would be served by the sale of the land. The court ruled the sale of this home would have resulted in too great of a financial loss. This was especially true for the remaindermen due to the fact that the value of the land was appreciating rapidly; however, this was true for Anna as well since (in 4 years) she’d be able to sell the property for over 2 times what the property was worth.
The court (the Supreme Court) sent the case to the chancery court with instructions to find a more equitable solution to the problem.
Shared Interest Between All Parties
Baker v Weedon presents an exceptional case that illustrates some of the complexities of selling property when the market is hot. Equally important in this case is the complexity when the sale of land impacts the future inheritors of the property.