S.F. 2210 Section 1. NEW SECTION . 557D.1 Definitions. 1 For purposes of this chapter, unless the context otherwise 2 requires: 3 1. “ Agricultural land” means land suitable for use in 4 farming. 5 2. “Cotenant” means a person who possesses an interest of 6 record in a family farm. 7 3. “Family farm” means real property owned by more than one 8 cotenant that satisfies all of the following requirements: 9 a. The real property is agricultural land. 10 b. All of the cotenants acquired title to the real estate 11 from a relative, whether living or deceased. 12 c. There is no written agreement binding all of the 13 cotenants that governs the partition of the real property or 14 the rights in the real property of all of the cotenants in 15 relation to each other. 16 4. “Nonselling cotenant” means a cotenant of a family farm 17 where another cotenant is a selling cotenant. 18 5. “Relative” means a person who is related to another 19 person as a spouse, parent, grandparent, lineal ascendants of 20 grandparents or their spouses and lineal descendants of the 21 grandparents or their spouses, or persons acting in a fiduciary 22 capacity for persons so related. 23 6. “ Selling cotenant” means a cotenant who proposes to sell 24 such cotenant’s interest in a family farm. 25 Sec. 2. NEW SECTION . 557D.2 Right of first refusal. 26 1. A selling cotenant shall not sell the selling cotenant’s 27 interest in a family farm before offering each nonselling 28 cotenant the right to purchase the selling cotenant’s interest 29 for fair market value, as determined under section 557D.3. 30 2. After the fair market value of the selling cotenant’s 31 interest in the family farm has been determined under section 32 557D.3, the nonselling cotenants shall have ten business 33 days after receiving notice of the price to submit a binding 34 offer to the selling cotenant for the purchase of the selling 35 -1- LSB 5046XS (3) 86 jh/sc 1/ 8

S.F. 2210 cotenant’s interest, with closing to occur within thirty days 1 after the offer unless otherwise agreed to by the selling 2 cotenant. 3 3. If more than one nonselling cotenant submits a binding 4 offer to purchase the selling cotenant’s interest in the family 5 farm, a nonselling cotenant who submits a binding offer shall 6 be entitled to purchase a portion of the selling cotenant’s 7 interest that is in proportion to each nonselling cotenant’s 8 existing interest in the family farm. 9 4. After the expiration of either the period for offer or 10 the period for closing, without submission of an offer or a 11 closing occurring, the selling cotenant may sell the interest 12 to any other person. 13 5. a. Notwithstanding subsection 4, if more than one 14 nonselling cotenant submitted a binding offer to the selling 15 cotenant and one or more nonselling cotenants failed to close 16 within the time period specified in this section, a nonselling 17 cotenant who complied with this section and purchased a portion 18 of the selling cotenant’s interest in the family farm may 19 submit a binding offer to the selling cotenant to purchase the 20 selling cotenant’s remaining interest. 21 b. The selling cotenant shall notify each nonselling 22 cotenant who complied with this section and purchased a portion 23 of the selling cotenant’s interest in the family farm that 24 a nonselling cotenant failed to close within the specified 25 time period and that the compliant nonselling cotenant has the 26 right to purchase the selling cotenant’s remaining interest 27 by submitting a binding offer to the selling cotenant for the 28 fair market value of the interest. The fair market value shall 29 be the price determined under section 557D.3, multiplied by 30 the fraction that is the selling cotenant’s remaining interest 31 divided by the selling cotenant’s original interest. 32 c. Such binding offer must be submitted within ten business 33 days after the receipt of notice under paragraph “b” , and 34 closing must occur within thirty days after the offer unless 35 -2- LSB 5046XS (3) 86 jh/sc 2/ 8

S.F. 2210 otherwise agreed to by the selling cotenant. If more than one 1 nonselling cotenant wishes to purchase an additional amount of 2 the selling cotenant’s interest and is eligible to do so under 3 this subsection, a nonselling cotenant may purchase a portion 4 of the selling cotenant’s unsold interest in the family farm 5 that is in proportion to each nonselling cotenant’s existing 6 interest in the family farm. 7 6. If, more than one year after the selling cotenant 8 offered the nonselling cotenant the right to purchase the 9 selling cotenant’s interest for fair market value the selling 10 cotenant has not sold the selling cotenant’s interest, the 11 selling cotenant shall not sell the interest without again 12 offering each nonselling cotenant the right to purchase the 13 selling cotenant’s interest for the fair market value price as 14 determined at such time in accordance with the procedure under 15 section 557D.3. 16 7. The right of first refusal provided in this section 17 is not assignable, but may be exercised by the nonselling 18 cotenant’s personal representative, executor, or heir in case 19 of the death of the nonselling cotenant. 20 Sec. 3. NEW SECTION . 557D.3 Determination of fair market 21 value. 22 The fair market value of the selling cotenant’s interest in 23 the family farm shall be determined as follows: 24 1. The selling cotenant and nonselling cotenant may agree to 25 the fair market value of the selling cotenant’s interest in the 26 family farm at any time during the process described in this 27 section. If there is more than one nonselling cotenant, such 28 an agreement must be unanimous. 29 2. If the selling cotenant and nonselling cotenant cannot 30 agree on the fair market value of the selling cotenant’s 31 interest in the family farm, the selling cotenant shall select 32 an independent, certified appraiser who shall appraise the 33 value of the selling cotenant’s interest. The cost of the 34 appraisal shall be paid by the selling cotenant. 35 -3- LSB 5046XS (3) 86 jh/sc 3/ 8

S.F. 2210 3. The nonselling cotenant may accept the appraised value of 1 the appraiser selected by the selling cotenant or may select a 2 second independent, certified appraiser to appraise the value 3 of the selling cotenant’s interest. If there is more than 4 one nonselling cotenant, an agreement to accept the appraised 5 value of the appraiser selected by the selling cotenant must 6 be unanimous. If the nonselling cotenant obtains a second 7 appraisal, such cost shall be paid by the nonselling cotenant. 8 4. If the two appraisals are of the same value, such value 9 shall be the fair market value of the selling cotenant’s 10 interest in the family farm. 11 5. If the two appraisals are of different values, the 12 two appraisers shall select a third independent, certified 13 appraiser to appraise the value of the selling cotenant’s 14 interest. The fair market value of the selling cotenant’s 15 interest shall be the average of the three appraisals. The 16 cost of the third appraisal shall be divided equally between 17 the cotenants. 18 Sec. 4. NEW SECTION . 557D.4 Waiver of rights. 19 A cotenant, in a signed writing, may waive the cotenant’s 20 rights under this chapter. 21 Sec. 5. NEW SECTION . 651.7 Partition of family farm. 22 1. If real property to be partitioned is a family farm and 23 the court has ordered a partition by sale, the court shall 24 provide the defendant the right to purchase the plaintiff’s 25 interest for fair market value, as determined by the court. 26 2. The defendant shall have thirty days to exercise the 27 right to purchase the plaintiff’s interest. 28 3. If more than one defendant desires to exercise the right 29 to purchase the plaintiff’s interest, the court shall allow 30 a defendant electing to purchase the plaintiff’s interest to 31 purchase a portion of the plaintiff’s interest that is in 32 proportion to each defendant’s existing interest in the family 33 farm. 34 4. If a defendant who indicated a desire to purchase the 35 -4- LSB 5046XS (3) 86 jh/sc 4/ 8

S.F. 2210 plaintiff’s interest does not exercise the right to purchase 1 a portion of the plaintiff’s interest within thirty days, and 2 another defendant did exercise the right to purchase a portion 3 of the plaintiff’s interest within thirty days, the court shall 4 provide a defendant who purchased such a portion an opportunity 5 to purchase the remaining portion of the plaintiff’s interest 6 for fair market value. If more than one defendant wishes to 7 purchase an additional amount of the plaintiff’s interest and 8 is eligible to do so under this subsection, a defendant may 9 purchase a portion of the plaintiff’s unsold interest that is 10 in proportion to each defendant’s existing interest in the 11 family farm. 12 5. For purposes of this section, “family farm” means the 13 same as defined in section 557D.1. 14 Sec. 6. APPLICABILITY. 15 1. The sections of this Act enacting sections 557D.1, 16 557D.2, 557D.3, and 557D.4 apply to transfers of real estate 17 occurring on or after the effective date of this Act. 18 2. The section of this Act enacting section 651.7 applies to 19 partition actions filed on or after the effective date of this 20 Act. 21 EXPLANATION 22 The inclusion of this explanation does not constitute agreement with 23 the explanation’s substance by the members of the general assembly. 24 This bill enacts new Code chapter 557D, which creates a right 25 of first refusal for cotenants of family farms who acquired 26 an interest in the family farm from a relative and enacts new 27 Code section 651.7, which creates a right of first refusal in 28 partition actions involving a family farm. 29 DEFINITIONS. The bill defines “family farm” as real 30 property that is agricultural land that is owned by more than 31 one cotenant all of whom acquired title to the real estate 32 from a relative, whether living or deceased, and for which 33 there is no written agreement binding all of the cotenants 34 which governs the partition of the real property or the rights 35 -5- LSB 5046XS (3) 86 jh/sc 5/ 8

S.F. 2210 in the real property of all of the cotenants in relation to 1 each other. The bill defines “relative” as a person who is 2 related to another person as a spouse, parent, grandparent, 3 lineal ascendants of grandparents or their spouses and lineal 4 descendants of the grandparents or their spouses, or persons 5 acting in a fiduciary capacity for persons so related. 6 RIGHT OF FIRST REFUSAL. The bill provides that a selling 7 cotenant shall not sell the selling cotenant’s interest in 8 a family farm before offering each nonselling cotenant the 9 right to purchase the selling cotenant’s interest for fair 10 market value. After the determination of fair market value, a 11 nonselling cotenant has 10 business days to submit a binding 12 offer to the selling cotenant for the purchase of the selling 13 cotenant’s interest. The closing must occur within 30 days 14 after the offer is submitted to the selling cotenant. 15 If more than one nonselling cotenant submits an offer, the 16 bill provides that each may purchase a portion of the selling 17 cotenant’s interest in the family farm that is in proportion 18 to each nonselling cotenant’s existing interest in the family 19 farm. The bill provides that if multiple nonselling cotenants 20 submit a binding offer to a selling cotenant, but one of the 21 nonselling cotenants fails to close within 30 days after the 22 offer is submitted, a nonselling cotenant who purchased part 23 of the selling cotenant’s interest is eligible to purchase an 24 amount of the unsold interest. 25 The bill provides that if more than one year after the 26 selling cotenant offered the nonselling cotenant the right to 27 purchase the selling cotenant’s interest the selling cotenant 28 has not sold the selling cotenant’s interest, the selling 29 cotenant shall not sell the interest without again offering 30 each nonselling cotenant the right to purchase the interest for 31 fair market value. 32 The bill provides that the right of first refusal under new 33 Code chapter 557D is not assignable but may be exercised by the 34 nonselling cotenant’s personal representative, executor, or 35 -6- LSB 5046XS (3) 86 jh/sc 6/ 8

S.F. 2210 heir in case of the death of the nonselling cotenant. 1 DETERMINATION OF FAIR MARKET VALUE. The bill provides 2 that the cotenants may agree on the fair market value for 3 the selling cotenant’s interest in the family farm. If the 4 cotenants are unable to agree, the bill directs the selling 5 cotenant to obtain and pay for an independent appraisal of 6 the value of the selling cotenant’s interest. The nonselling 7 cotenant may agree with the value of the appraisal or may 8 obtain and pay for a second independent appraisal of the value 9 of the selling cotenant’s interest. If the value of each 10 appraisal is the same, that is the fair market value of the 11 selling cotenant’s interest in the family farm. If the two 12 appraisals are of different values, the two appraisers shall 13 select a third independent appraiser to appraise the value of 14 the selling cotenant’s interest. The fair market value of the 15 selling cotenant’s interest shall be the average of the three 16 appraisals. The cost of the third appraisal shall be divided 17 equally between the cotenants. 18 WAIVER. A cotenant, in a signed writing, may waive the 19 cotenant’s rights under new Code chapter 557D. 20 PARTITION ACTIONS. Under current Code chapter 651, a 21 cotenant may file a partition action to divide the property 22 among the cotenants. The bill enacts new Code section 651.7, 23 which provides that if real property to be partitioned is a 24 family farm and the court has ordered a partition by sale, 25 the court shall provide a defendant the right to purchase the 26 plaintiff’s interest for fair market value, as determined 27 by the court. In such a case, the defendant has 30 days to 28 exercise the right to purchase the plaintiff’s interest. 29 If more than one defendant submits an offer, the bill 30 provides that each may purchase a portion of the plaintiff’s 31 interest in the family farm that is in proportion to each 32 defendant’s existing interest in the family farm. The bill 33 provides that if multiple nonselling cotenants express a desire 34 to purchase a portion of the plaintiff’s interest, but one 35 -7- LSB 5046XS (3) 86 jh/sc 7/ 8

S.F. 2210 of the defendants fails to close within 30 days, a defendant 1 who purchased part of the plaintiff’s interest is eligible to 2 purchase an additional amount of the interest. 3 APPLICABILITY. The bill provides that new Code chapter 557D 4 applies to transfers of real estate occurring on or after the 5 effective date of the bill, and that new Code section 651.7 6 applies to partition actions filed on or after the effective 7 date of the bill. 8 -8- LSB 5046XS (3) 86 jh/sc 8/ 8