Sample Farm Land Purchase Agreement

Buyers have lease preferences that can vary considerably depending on the type of owner they are. Those who are less active in the arable land market often like longer-term leases with trusted parties because they do not have time to actively manage their investments. They tend to give up a bit of return because it is difficult to keep up with market rentals with longer-term leases. More active buyers tend to appreciate the flexibility of shorter leases. It allows them to track market trends in structure and rent, while ensuring that all parties are satisfied each year with the terms of the lease. The condition of a property is often taken into account. If there has been a particularly wet harvest, the fields will likely be in poor condition. This can be passed on to the ability to degrade the seed plant in time during the next planting period, which may affect the profitability of the operation in the first year of the new owner/tenant. Other problems can occur with old drainage pipes, wells or irrigation systems. Learn more about the decrease in farm investment and the overall 5-year return for a recent field bear market in Nebraska. Some farmers also hope to have a say in the people who farm the land after it has been sold. They either want to manage it themselves or help a parent or neighbour.

In many cases, these wishes can be taken into account. A creative buyer can find ways to work with a seller if the property is worth buying. In fact, a sale-leaseback agreement (where the seller leases the land to the buyer) is quite common, especially if the buyer is not another farmer. On the other hand, there are times when a seller is willing to finance the purchase of a buyer himself. For example, a neighbour may finance a younger farmer who wants to buy his first property. This allows the young farmer to buy a property that might not lend enough money to a bank to buy it otherwise. Often, this agreement arises from friendship or an interest in selling to someone who is willing to accept terms that others may not accept.

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