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Partial Interests in Real Property: Does the Sum of the Parts Equal the Whole?

28/02/2017


​Courts have consistently recognized that the sum of all fractional interests in a propertyis less than the whole and have upheld the use of fractional interest discounts in valuingundivided interests.

An undivided co-ownership interest is an interest or right in the property of co-owners. Each co-owner​ has an equal right to make use of and enjoy the entire property. The owner of an undivided interest (which comprises a bundle of rights) holds his or her percentage of the entire property and not an identifiable, separable or legally described section, acre, floor, room, entrance, easement, or anything else that can be readily separated and sold. The interest derives from “unity of possession” and is distinguished from interests that have been partitioned, i.e., divided and distributed to the different owners for their use in severalty.

It may be of only a fractional share, in which case the holder is entitled to his or her percentage participation in all profits and sale proceeds. Co-owners each hold separate, undivided co-ownership interests that can be sold, transferred or conveyed without the consent of the other co-owners, subject however to the provisions of an executed written agreement providing otherwise.

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