It is a big day when you decide to sell your farm. A lot of labour will have gone into improving and working it. It will have cost hours of heartache and sweat, and be the dearest thing you own. Parting with it will be hard, but once the decision is made – all you have to do is get a buyer and agree the price – and whether in joy or sorrow, you can walk away.
David Quayle of H&H Land and Property
It’s not quite that easy. Making your mind up could be the simple part. Waiting for you are a host of problems and difficulties that will have been building up over the years – these might concern deeds, regulations, ownerships, partnerships, boundaries and so on – in fact a score of pitfalls that could put you in a weak position, and the purchaser at an advantage.
For example, recently a family which had farmed land for many years decided to sell. When we looked into the paperwork - they couldn’t actually find the deeds for some of the land. There were also a number of parcels of land which were still in their grandfather's name, who had died many years previously.
The implications of this were considerable – not only was there a huge delay to the sale, there were considerable expenses to be paid for in professional time and legal costs.
And then there was the purchaser whose lenders wanted to know that the septic tank complied with the latest legislation and environmental consents. Now where was the septic tank, again? How long ago was it installed?
If you have not addressed the issue of who owns what, whether your ancestors are still holding on to the farm, or are unable to answer whether your septic tank meets the necessary rules and regulations, it is time you checked it out.
If not and, you have not done all of your homework, the buyer comes with many advantages which might be at your expense. You will have delayed the sale, and of course, given them the opportunity to negotiate down.
In the current market not only does your farm need to look presentable, your paperwork should be too, to ensure a sale can proceed quickly and swiftly. Any hiccup after the acceptance of an offer can lead to the prospective purchaser gazundering [to use a technical term!] - or reducing the price.
It can be relatively straight forward, but you would be surprised how many times difficulties arise due to lack of preparation.
The questions to be asked and resolved are:-
- Who are the owners? Do they own all of the property?
- Have the Deeds been inspected or alternatively is the land registered with Land Registry? If it is not registered it would be sensible to register before the property goes on the market.
- Are there any tenancies or leases or third party rights?
- Are there mains services or private services to consider?
- Any rights of way enjoyed or used?
- Are there any restrictive covenants, clawback arrangements or any other legal issues? If so are there any existing breeches?
- Have there been any planning applications or are there any planning conditions which need to be complied with? If so, the purchaser is almost certain to want to see the documentation.
- If there are any building or environmental regulations or approvals - again a purchaser will want to see these.
- In the case of your farm, are there employees to consider?
- Do you share any services or rights of access with any third parties?
- Who owns the boundaries?
- Is the farm or land subject to any subsidy or any grant schemes? In special areas or zones?
This list is not exhaustive. Depending on the farm, these are the main questions and queries which should be raised. It is much better to have answers ready for these questions, than to have to find them later, only to discover your purchaser has gone elsewhere.
Once the documents are ready, you are ready to sell. In our experience, in order to be successful you need to set a realistic price - don’t imagine that you can put a value on the work you have put into it. It should be presented to the market, well advertised both in the local press and appropriate journals. Keep your folder of answers ready, have the yard tidy and the farmhouse welcoming, and wait for the enquiries to roll in.....
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