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ATTRAā€”National Sustainable Agriculture Information Service is managed by the National Center for Appropriate Technology
(NCAT) and is funded under a grant from the U.S. Department of Agricultureā€™s Rural Business-Cooperative Service. Visit the
NCAT website, www.ncat.org for more information .
Contents
Various Agreements for Leasing and Owning Land..........page 2
ā€¢ Cash Lease
ā€¢ Crop Share
ā€¢ Long-Term Lease
ā€¢ Lease with Option to Buy or Right of First Refusal
ā€¢ Fee Title Purchase with Seller Financing
ā€¢ Fee Title Purchase with Agricultural Conservation Easement
Finding Land to Farm.................................page 3
Resources for Farmers Seeking Land Tenure..11
Land Linking Programs ...................................... 13
Elements of a Good Lease.................................. 15
Kinds of Consultants You May Need................ 15
FEE TITLE
PURCHASE WITH
SIMULTANEOUS
CONSERVATION
EASEMENT
Page 2 ATTRA Finding Land to Farm
A Publication of ATTRA - National Sustainable Agriculture Information Service ā€¢ 1-800-346-9140 ā€¢ www.attra.ncat.org
This publication highlights some common ways to lease or
own land. It outlines important considerations about each
of these leasing options and paths to ownership.
Renting farmland is a common practice in U.S. agriculture,
where more than 45 percent of the 917 million farmland
acres are rented. According to the 1999 Agricultural Eco-
nomics and Land Ownership Survey, 60 percent of farmland
rent is paid in cash, 24 percent in shares of production, and
11 percent in a cash/share combination. Following are short
descriptions of the various leasing and ownership options
covered in this publication.
Cash Lease
Most cash leases are short-term, requiring little commit-
ment from either landowner or tenant farmer. Long-term
leases can be an aļ¬€ordable way for farmers to use more
sustainable practices and to invest more in their busi-
nesses. Many leases are based on a handshake. Verbal
agreements are considered legal leases for one year, but
this is NOT recommendable for either party, as conļ¬‚icts
can arise even among friends when terms are not clearly
stated on outset. A written lease provides beneļ¬ts and
security for both parties.
Crop Share
In this model, rent payment consists of part of the crop,
most often paid as part of the income from total crop
sold. Also known as ā€œshare-cropā€ and ā€œshare lease,ā€ this
was historically disadvantageous to tenant farmers, but
can work well for beginning farmers without start-up
capital. Crop share arrangements are common in peren-
nial crops and some commodities, for example fruit and
nut operations, hay, ļ¬eld crops, processing tomatoes.
Agreements may have maximum and minimum limits
to protect the farmer and landowner, respectively.
Long-Term Lease
This model is as close to ownership as a lease can get.
The term is usually 40 to 99 years depending on state
law. This is longer than the average mortgage. These
types of leases may even be inheritable. They are used
for publicly owned land and commercial real estate, but
are less common in agriculture. They are sometimes used
by cities and land trusts who own the land but wish to
guarantee farmers lifetime tenure. Because of their lon-
gevity, the intent and clauses of leases must be very care-
fully drafted so they will last as long as the lease term.
Lease with Option to Buy
or Right of First Refusal
There are two ways a lease can improve ownership oppor-
tunities for a tenant farmer:
ā€¢ With a ā€œPurchase Option,ā€ the owner and ten-
ant pre-determine the purchase price, with a date
for execution of the purchase. The tenant pays for
this option up front, and the rent money can count
toward an initial down payment.
ā€¢ With a ā€œRight of First Refusalā€ clause, the
owner can only sell the land to a third party after
the tenant has had a chance to ā€œrefuse,ā€ by match-
ing that third-party oļ¬€er and making the purchase
ļ¬rst. This helps ensure that an owner doesnā€™t sell
the land ā€œout from underā€ the tenant, but the ten-
ant must be ready to act quickly.
Fee Title Purchase with Seller Financing
In this model the new buyer takes possession of the land
and makes payments directly to the seller, as written
in a ā€œnote.ā€ This works very well when a good relation-
ship has been established. The landowner can see the
property transferred to a promising new farmer, and the
new farmer can secure that noteā€”sometimes by virtue
of his or her ā€œcharacterā€ more than conventional lend-
ing requirements. Even better, brokerage fees are avoided
by both parties. Payments can be structured like a typi-
cal mortgage, or in the case of an installment or land
contract sale, made periodically. This strategy is often a
good way to transfer land to the next generation within
a family.
Fee Title Purchase with Agricultural
Conservation Easement
An agricultural conservation easement forever extin-
guishes development rights on that land, making it less
valuable to nonfarmers. These types of easements are
used if a landowner wishes to see the land remain avail-
able for agriculture: He or she donates or sells the landā€™s
development rights in the form of an agricultural conser-
vation easement to a nonproļ¬t land trust or government
agency, which ensures that the easement goals are upheld
forever. This can drop the after-easement value, or ā€œease-
ment encumbered value,ā€ of the land into an aļ¬€ordable
price range for a new farmer.
Various Agreements for Leasing and Owning Land
Page 3ATTRAwww.attra.ncat.org
SORRY PEDRO ā€” IF YOU ONLY HAD
A VERBAL AGREEMENT, ITā€›S YOUR WORD
AGAINST THE LANDOWNERā€›S,
AND IT COULD BE TIED UP IN THE COURTS
FOR A LONG TIME. IF YOU LEASE LAND
AGAIN, GET A SIGNED CONTRACT!
Page 4 ATTRA Finding Land to Farm
Page 5ATTRAwww.attra.ncat.org
CASH LEASE AGREEMENTS
ā—Š VARIABLE DURATION
ā€¢ SHORT TERM LEASES ALLOW ā€œTRIAL PERIODā€ FOR
BOTH LANDOWNER AND FARMER
ā€¢ LONG TERM LEASES ARE PREDICTABLE FOR THE
OWNER AND SECURE FOR THE FARMER
ā—Š PAYMENT SCHEDULE NEGOTIABLE
ā—Š FARMER & LANDOWNER KNOW HOW MUCH THE RENT
WILL BE
DISADVANTAGES (IF LEASE IS SHORT)
ā—Š DIFFICULT TO MAKE LONG-TERM DECISIONS
AND INVESTMENTS
ā—Š LENDERS MAY BALK AT FINANCING IMPROVEMENTS
ā—Š LESS INCENTIVE TO USE SUSTAINABLE PRACTICES
TO IMPROVE THE SOIL
ā—Š NO EQUITY IS BUILT UP (SHORT OR LONG LEASE)
ā—Š LANDOWNER DOESNā€›T SHARE RISK IF FARMER HAS
A POOR CROP OR CROP HASNā€›T COME IN YET
Page 6 ATTRA Finding Land to Farm
CROP SHARE LEASE
ā—Š RENT PAYMENT CONSISTS OF PART OF THE CROP, MOST
OFTEN PAID AS PART OF THE INCOME FROM TOTAL CROP
SOLD BUT CAN ALSO BE CALCULATED AS A PORTION OF NET
INCOME AFTER EXPENSES. PAYMENT IS USUALLY NOT
REQUIRED UNTIL CROP COMES IN.
ā—Š RISK IS SHARED BETWEEN PARTIES.
ā—Š THIS KIND OF LEASE IS HISTORICALLY DISADVANTAGEOUS
TO TENANT FARMERS, BUT MAY BE A GOOD
OPTION FOR BEGINNING FARMERS
WITHOUT START-UP CAPITAL.
ā—Š IT CAN BE HARD TO BUDGET FOR AN EXACT
RENT AMOUNT. NEITHER PARTY KNOWS
WHAT A FARM WILL YIELD, SO PAYMENT
AMOUNTS ARE UNCERTAIN.
OWNERS DONā€›T WANT THE RENT TO
BE TOO LOW. TENANTS DONā€›T
WANT IT TO BE TOO HIGH.
ā—Š IF THE TENANT FARMER DOES VERY WELL, THE CROP
SHARE RENT MAY EXCEED LOCAL CASH-LEASE RATES.
YOU MAY WISH TO INCLUDE A ā€œMAXIMUM PAY-
MENT CLAUSE,ā€ WHICH WOULD PROTECT THE
TENANT AGAINST PAYING TOO MUCH FOR RENT.
ā—Š CONVERSELY, A ā€œMINIMUM PAYMENT CLAUSEā€
WOULD PROTECT THE LANDOWNER FROM
RECEIVING TOO LITTLE PAYMENT (FOR EXAMPLE,
IN CASE OF CROP FAILURE BY TENANT), BUT
SHOULD REFLECT THE ā€œSHARED RISKā€ BETWEEN
THE LANDLORD AND TENANT.
Page 7ATTRAwww.attra.ncat.org
LONG TERM LEASE
ā—Š OFFERS MOST ADVANTAGES OF OWNERSHIP WITHOUT NEED
FOR DOWN PAYMENT OR HEAVY BORROWING. LESS COMMON
IN AN AGRICULTURAL CONTEXT.
ā—Š SOME LONG-TERM LEASES ARE INHERITABLE AND ALLOW FOR
TRANSFER TO THE NEXT GENERATION. LOOK AT YOUR
STATEā€›S REAL ESTATE CODE.
ā—Š BECAUSE OF THEIR LONGEVITY, THESE LEASES CAN BE HIGHLY
COMPLEX. THE INTENT AND CLAUSES MUST BE VERY CARE-
FULLY DRAFTED TO LAST AS LONG AS THE LEASE TERM.
ā—Š LANDOWNERS ARE NOT OFTEN WILLING TO MAKE SUCH A
LONG-TERM COMMITMENT, OR TO RISK TITLE
FOR TENANT FINANCING
ā—Š TENANT IS SUBJECT TO LEASE TERMS WHICH
MUST REMAIN REASONABLE AND PRUDENT
FOR DURATION OF LEASE. MULTIPLE DECADES
ARE A LONG TIME TO PLAN FOR!
ā—Š FARMERā€›S ABILITY TO RECOVER EQUITY
IN LAND MAY BE LIMITED, DEPENDING
ON AGREEMENT.
IT DEPENDS ON WHAT THE LANDOWNER WANTS,
BUT LETā€›S VISIT A FRIEND WHO HAS PURCHASED
SOME LAND USING AN EASEMENT TO REDUCE THE
COST OF THE LAND
Page 8 ATTRA Finding Land to Farm
Page 9ATTRAwww.attra.ncat.org
FEE TITLE PURCHASE WITH
AGRICULTURAL CONSERVATION EASEMENT
ā—Š THE USE OF THE PROPERTY (THE DEVELOPMENT RIGHTS) IS
RESTRICTED BY THE TERMS OF THE CONSERVATION EASEMENT
AND THOSE RESTRICTIONS APPLY TO ALL FUTURE OWNERS OF
THE PROPERTY
ā—Š THE DEVELOPMENT RIGHTS (IN THE FORM OF A CONSERVATION
EASEMENT) ARE DONATED OR SOLD TO A NONPROFIT LAND
TRUST OR GOVERNMENT AGENCY WHICH HOLDS THE
EASEMENT AND ENSURES IT IS UPHELD.
THE AFTER-EASEMENT VALUE (OR EASEMENT-ENCUMBERED
VALUE) OF THE LAND MAY DROP THE PRICE INTO AN AFFORDABLE
RANGE FOR A NEW FARMER. THIS CAN OCCUR IN SEVERAL WAYS:
ā—Š THE LANDOWNER COULD SELL THE EASEMENT FIRST,
THEN SELL THE ENCUMBERED LAND TO A NEW FARMER.
ā—Š THE NEW FARMER COULD PARTNER WITH A LAND TRUST
TO MAKE A JOINT PURCHASE OFFER TO THE LANDOWNER.
(OCCASIONALLY A LAND TRUST BUYS FIRST, THEN SELLS TO
A FARMER THROUGH A BIDDING PROCESS)
ā—Š THE NEW FARMER COULD CREATIVELY FINANCE LAND
PURCHASE, WITH A COMMITMENT BY THE LAND TRUST TO
PURCHASE THE EASEMENT IN FUTURE.
FEE TITLE PURCHASE WITH
AGRICULTURAL CONSERVATION EASEMENT
ā—Š FARMERS SEEKING TO BUY LAND HAVE A BETTER CHANCE WHEN
THEYā€›RE NOT BIDDING ON RESIDENTIAL OR RANCHETTE REAL
ESTATE VALUE. EASEMENTS CAN MAKE THE DIFFERENCE
BETWEEN AFFORDABLE OWNERSHIP AND LIFELONG LEASING.
ā—Š SELLERS CAN SEE THEIR AGRICULTURAL LEGACY CONTINUED.
WITH TAX BENEFITS, THEY CAN SOMETIMES RECEIVE CLOSE
TO FAIR MARKET VALUE FOR THE LAND.
ā—Š BECAUSE EASEMENTS RESTRICT PROPERTY RIGHTS, THEY MAY
LIMIT VALUES OR OWNERSā€› ABILITY TO GET FINANCING.
ā—Š AGRICULTURAL CONSERVATION EASEMENTS DONā€›T ALWAYS
WORK AS INTENDED. THESE EASEMENT-ENCUMBERED
PROPERTIES OFTEN STILL HAVE HIGH RURAL-ESTATE
HOME VALUE TO NON-FARMERS.
ā—Š PROCESS CAN BE SLOW, SINCE LAND TRUSTS USUALLY HAVE
TO APPLY FOR FUNDING TO PURCHASE EASEMENTS.
ā—Š EASEMENTS ARE, IN THEORY, FOREVER. THIS PRESENTS
CHALLENGES TO CURRENT AND FUTURE LANDOWNERS AS TO
COMPLIANCE AND FUTURE ENFORCEABILITY OF EASEMENTS.
Page 10 ATTRA Finding Land to Farm
FEE TITLE PURCHASE WITH SELLER FINANCING
ā—Š IN THIS MODEL, THE NEW BUYER TAKES POSSESSION
OF THE LAND, MAKES PAYMENTS DIRECTLY TO SELLER.
ā—Š THIS WORKS VERY WELL WHEN A GOOD RELATIONSHIP
HAS BEEN ESTABLISHED. THE LANDOWNER CAN SEE
THE PROPERTY TRANSFERRED TO A PROMISING NEW
FARMER, AND THE NEW FARMER CAN BUILD EQUITY,
SOMETIMES WITHOUT HIGH DOWN PAYMENT
ADVANTAGES
ā—Š CHARACTER LOAN MAY BE EASIER IN THIS
SCENARIO. BUYER DOESNā€›T NECESSARILY
HAVE TO QUALIFY FOR TRADITIONAL
BANK OR GOVERNMENT LOAN.
ā—Š LANDOWNER CAN SPREAD OUT CAPITAL
GAINS FOR TAX PURPOSES.
FEE TITLE PURCHASE WITH SELLER FINANCING
ADVANTAGES (CONTINUED)
ā—Š BROKERAGE FEES AVOIDED BY BOTH PARTIES
ā—Š GOOD WAY TO TRANSFER LAND TO NEXT GENERATION
ā—Š INSTALLMENT PLAN MAY BE STRUCTURED FOR
SMALLER INITIAL PAYMENTS WITH LARGER
ā€œBALLOONā€ PAYMENTS WHEN FARMER EXPECTS
TO BE MORE FINANCIALLY PREPARED
DISADVANTAGES
ā—Š IF BUYER DEFAULTS, THE LAND GOES
BACK TO THE SELLER AND THE BUYERā€›S
EQUITY MAY BE LOST.
ā—Š MOST INITIAL PAYMENTS COVER
INTEREST ONLY, OR MAY BE VERY
LARGE. REQUIRED DOWN PAYMENTS
MAY ALSO BE LARGE.
LEASE WITH OPTION TO BUY
THERE ARE TWO WAYS A LEASE CAN IMPROVE
OWNERSHIP OPPORTUNITIES FOR A TENANT FARMER.
1) WITH A ā€œFIRST RIGHT OF REFUSALā€ CLAUSE, THE
TENANT GETS TO MAKE THE FIRST OFFER PRIOR
TO THE OWNER LISTING THE LAND FOR SALE, AT
THE SELLERā€›S ASKING PRICE.
2) WITH AN ā€œOPTION AGREEMENT,ā€ OWNER
AND TENANT PRE-DETERMINE PURCHASE
PRICE, WITH A REQUIRED DATE OF
EXECUTION OF PURCHASE. TENANT
PAYS FOR THIS OPTION UP FRONT,
AND RENT MONEY SOMETIMES COUNTS
TOWARD INITIAL DOWN PAYMENT.
ADVANTAGES
ā—Š THE FARMER IS GUARANTEED THAT LAND WILL
NOT BE ā€œSOLD OUT FROM UNDERā€ HIM OR HER.
ā—Š WITH AN OPTION IN WHICH THE RENT PAYMENT
GOES TOWARD EVENTUAL PURCHASE, THE FARMER
BUILDS EQUITY TOWARD OWNERSHIP.
ā—Š WHEN THE PURCHASE AGREEMENT IS ATTACHED,
FARMER CAN PLAN FOR A KNOWN PURCHASE PRICE.
DISADVANTAGES
ā—Š WITH FIRST RIGHT OF REFUSAL, TENANTS HAVE
LITTLE NEGOTIATING POWERā€”THEY CAN ONLY EX
ERCISE THE RIGHT BY AGREEING TO SELLERā€›S TERMS.
ā—Š IF THE FARMER IS NOT FINANCIALLY
READY WHEN THE PROPERTY IS
PUT UP FOR SALE, OR AT
THE AGREED-UPON
PURCHASE DATE (OPTION),
THE ADVANTAGE AND THE
RENT EQUITY ARE LOST.
THANKS FOR YOUR HELP, JOE!
Iā€›M GOING TO THINK ABOUT THIS, STUDY
THE RESOURCES* AND TALK WITH MY
FAMILY. Iā€›VE LEARNED A LOT.
Page 11ATTRAwww.attra.ncat.org
Publications and Web Resources
Farmers for the Future is an internet resource for
beginning farmers which can be found on the Farm
Credit System-sponsored ā€œAgriculture Onlineā€ web-
site. It includes featured proļ¬les of farmers, articles
about farm transitions and beginning farmers who have
ā€œmade it,ā€ and a list of links for beginning farmers.
www.agriculture.com/ag/category.jhtml?categoryid=/
templatedata/ag/category/data/agfuturechannel.xml
A Farmersā€™ Guide to Securing Land, by California
FarmLink, 2008, provides tools and examples to help
landowners, farmers and service providers keep farmland
in viable agriculture. The book includes an overview
of farmland tenure in the U.S.ā€”who owns and oper-
ates American farmlandā€”and some of the challenges
to keeping land in the hands of farmers. Each chapter
describes a land tenure ā€œmodelā€ such as lease, partner-
ship or ownership. These are explained by real case stud-
ies collected by California FarmLink staļ¬€ and associ-
ates. The book includes a CD-ROM that contains many
of the actual lease, partnership or purchase documents
used in these examples. www.californiafarmlink.org
Holding Ground: A Guide to Northeast Farmland
Tenure and Stewardship. Kathy Ruhf, Annette Higby,
Andrea Woloschuk and others. 2004. Belchertown, Mass.
The New England Small Farm Institute and Intervale
Foundation (see ā€œOrganizationsā€ section for more infor-
mation on each of these). This publication addresses
farmland access, transfer, aļ¬€ordability and stewardship.
It focuses on ā€œnon-ownershipā€ tenure options and con-
tains sample lease provisions with explanations, sample
stewardship standards, worksheets, and case studies.
$30.00; 162 pages, paperback.
Minority Landowner is a monthly periodical featuring
articles and information speciļ¬cally targeting minor-
ity landowners in the southeastern United States and
addressing the issues they face. Contact Victor L. Harris
at 919-215-1632 or ccpublishing@earthlink.net
National Farm Transition Network supports programs
that foster the next generation of farmers and ranchers.
Below is a list of linking programs, which work with the
NFTN. Value-Added and Alternative Agriculture Tool
Kit, from the NCSU College of Agriculture and Life
Sciences, provides an overview and on-line references.
www.ncvalueadded.org/business-management.html
Resources for Farmers Seeking Land Tenure
Organizations
New England Small Farm Instituteā€™s mission is to pro-
mote small farm development by providing information
and training for aspiring, beginning and transitioning
farmers. NESFI maintains an extensive resource collec-
tion, produces publications, develops and oļ¬€ers innova-
tive farmer-guided programs, and advocates for policies
that encourage sustainable small-scale agriculture.
275 Jackson St., Belchertown, MA 01007
413-323-4531; 413-323-9594 (fax)
info@smallfarm.org; www.smallfarm.org
The Intervale Center of Burlington, VT supports
ļ¬nancially viable and environmentally sustainable agri-
culture. Its mission is to develop farm- and land-based
enterprises that generate economic and social opportu-
nity while protecting natural resources. The Intervale
Farms Program creates opportunities for new farmers
by leasing land and facilities to small organic enterprises.
The program provides technical support and network-
ing among other more experienced farmers. The Suc-
cess on Farms Program works one on one with farmers
throughout Vermont to help strengthen their businesses
through increased revenues, more eļ¬€ective marketing,
consideration of processing value-added products at the
farm, and other strategies.
180 Intervale Road, Burlington, VT 05401
802-660-0440; www.intervale.org
Land For Goodā€™s mission is to keep New Englandā€™s
productive land cared for and in active use for the ben-
eļ¬t of the owners, the land and the community. This
New England nonproļ¬t helps families and organiza-
tions plan for, manage and pass on working lands. The
group fosters professional and community networks,
public awareness and policies to keep New Englandā€™s
working lands working. Land For Good oļ¬€ers assis-
tance with farm transfer planning, leases and other
land use agreements, farm design and land planning,
and conservation development.
29 Center Street, Keene, NH 03431
603-357-1600
info@landforgood.org; www.landforgood.org
American Society of Farm Managers and Rural
Appraisers is a nationwide organization for profession-
als who provide management, valuation, and consulting
services on agricultural and rural assets. The California
Chapter publishes Trends in Agricultural Land and Lease
Page 12 ATTRA Finding Land to Farm
Values, an excellent guide to farm-land values. The Soci-
ety was formed in 1929.
950 South Cherry Street, Suite 508
Denver, CO 80246-2664
303-758-0190
info@asfmra.org; www.asfmra.com
USDA Farm Service Agency (FSA) oļ¬€ers two ļ¬nanc-
ing programs for land purchase which especially ben-
eļ¬t beginning and socially disadvantaged farmers. The
new Farm Bill provides for the Land Contract Guar-
antee Program and the Direct Farm Ownership Loan
Program. Because traditional methods of farm entry
and farm succession are no longer adequate to meet
current challenges, the agency also oļ¬€ers the Begin-
ning Farmer and Rancher Land Contract Guarantee
Pilot Program. This pilot program will explore whether
land contract sales are a viable alternative for facili-
tating land transfers to beginning farmers and ranch-
ers. The pilot program will be available in Indiana,
North Dakota, Oregon, Pennsylvania, Wisconsin, and
Iowa. Contact the local Farm Service Agency oļ¬ƒce.
www.fsa.usda.gov
American Farmland Trust, founded in 1980 by a group
of farmers and conservationists concerned about the
rapid loss of the nationā€™s farmland to development, is a
nonproļ¬t membership organization dedicated to protect-
ing our nationā€™s strategic agricultural resources. The trust
provides legislative updates, conferences and e-news.
1200 18th Street, NW, Suite 800
Washington, D.C. 20036
202-659-8339
info@farmland.org; www.farmland.org
Equity Trust is a small, national nonproļ¬t organiza-
tion committed to changing the spirit and character of
our material relationships. The Trust helps communi-
ties gain ownership interests in their food, land, and
housing. The group works with people to make eco-
nomic changes that balance the needs of individuals
with the needs of the community, the earth, and future
generations. Equity Trust oļ¬€ers land tenure counseling,
ļ¬nancing, and land stewardship services.
PO Box 746 , Turners Falls, MA 01376
Phone: 413-863-9038
Fax: 413-863-9082
info@equitytrust.org; www.equitytrust.org
Black Farmers and Agriculturalists Association was
created to respond to the issues and concerns of Black
farmers in the U.S. and abroad. The group is concerned
with advocacy at the national level, as well as support for
the local Black farming community.
P.O Box 61, Tillery, NC 27887
252-826-2800
info@bfaa-us.org; www.bfaa-us.org
Agriculture and Land-Based Training Association
(ALBA) provides educational and business opportunities
for farmworkers and aspiring farmers to grow and sell
crops grown on two organic farms in Monterey County,
California. ALBA provides educational and economic
opportunities for limited-resource, aspiring and immi-
grant farmers.
P.O. Box 6264, Salinas, California 93912
831-758-1469, 831-758-3665 fax
www.albafarmers.org
Land Loss Prevention Project is dedicated to land
retention and environmental justice by providing train-
ing and legal support. The organization is dedicated to
the preservation of the family farm. The project was
founded in 1982 by the North Carolina Association of
Black Lawyers to curtail epidemic losses of Black-owned
land in North Carolina. The organization broadened its
mission in 1993 to provide legal support and assistance
to all ļ¬nancially distressed and limited-resource farmers
and landowners in North Carolina.
P.O. Box 179, Durham, NC 27702
919-682-5969
www.landloss.org
Appalachian Sustainable Agriculture Project sup-
ports farmers and rural communities in the mountains
of Western North Carolina and the Southern Appala-
chians by providing education, mentoring, promotion,
web resources, and community and policy development.
729 Haywood Rd. #3
Asheville, NC 28806
828-236-1282
FarmLASTS Project seeks to improve how farm and
ranch land is acquired, stewarded, and passed on. Team
members are drawn from organizations across the U.S.
The projectā€™s working groups conduct research and edu-
cation on farmland access, farm succession, and the
impact of these arrangements on land use and the envi-
ronment. In June 2009 the project convened a national
conference in Colorado to address these issues. The
USDA/CSREES-funded project is directed by staļ¬€ at
the University of Vermont and Land for Good.
Contact Kathy Ruhf, kzruhf@verizon.net;
www.farmlasts.org
Page 13ATTRAwww.attra.ncat.org
Land Linking Programs
National Farm
Transition Network
The goal of the network is to sup-
port programs that foster the next
generation of farmers and ranchers.
Farm linking organizations develop
new transition and tenure strategies
for the entry of the next generation
and the exit of the existing farmer.
Below is a list of linking programs
that work with the Network.
Beginning Farmer Center
10861 Douglas Ave., Suite B
Urbandale, Iowa 50322
jrbaker@iastate.edu;
www.farmtransition.org
California
California FarmLink
P.O. Box 2224
Sebastopol, CA 95473
Oļ¬ƒce: 707.829.1691
Fax: 707.829.1693
Contact: Steve Schwartz
E-mail: info@californiafarmlink.org
www.californiafarmlink.org
Connecticut
New England Land Link
P.O. Box 608
Belchertown, MA 01007
Oļ¬ƒce: 413.323.4531
Fax: 413.323.9594
Contact: Eric Toensmeier
E-mail: landlink@smallfarm.org
www.smallfarm.org
Iowa
Farm On ā€“ Beginning Farmer
Center
Iowa State University Extension
10861 Douglas Avenue, Suite B
Urbandale, IA 50322
Oļ¬ƒce: 877.BFC.1999
Fax: 515.252.7829
Contact: John Baker
E-mail: jrbaker@iastate.edu
www.extension.iastate.edu/bfc
Ag Link
Iowa State University
www.extension.iastate.edu/bfc/Aglink
Iowa State also has links to some
very good on-line presentations by
previous Ag Link presenters: www.
extension.iastate.edu/bfc/pubs.html
Maine
Maine Farmlink
97 Main Street
Belfast, ME 04915
Oļ¬ƒce: 207.338.6575
Fax: 207.338.6024
Contact: Esther LaCognata,
esther@mainefarmlink.org
www.mainefarmlink.org
New England Land Link
P.O. Box 608
Belchertown, MA 01007
Oļ¬ƒce: 413.323.4531
Fax: 413.323.9594
Contact: Eric Toensmeier
E-mail: landlink@smallfarm.org
www.smallfarm.org
Maryland
Eastern Shore Land Conservancy
P.O. Box 169
Queenstown, MD 21658
Oļ¬ƒce: 410.827.9756
www.eslc.org
Massachusetts
New England Land Link
P.O. Box 608
Belchertown, MA 01007
Oļ¬ƒce: 413.323.4531
Fax: 413.323.9594
Contact: Eric Toensmeier
E-mail: landlink@smallfarm.org
www.smallfarm.org
Michigan
FarmLink
Michigan Farm Bureau
7373 W Saginaw Hwy.
Lansing, MI 48917
Oļ¬ƒce: 517.323.7000
Toll-free: 888.805.4864
Fax: 517.323.6604
Contact: Matthew Smego,
msmego@mail.michfb.com
www.michiganfarmbureau.com/
beneļ¬ts/farmlink.php
Minnesota
Land Stewardship Project
Farm Beginnings
P.O. Box 130
Lewiston, MN 55952
Oļ¬ƒce: 507.523.3366
Contact: Karen Stettler,
stettler@landstewardshipproject.org
www.landstewardshipproject.org
Montana
Land Link Montana
Community Food &
Agriculture Coalition
127 N. Higgins Ave., Suite 305
Missoula, MT 59802
Phone: 406.543.0542
Contact: Paul Hubbard,
pfhubbard@gmail.com
www.landlinkmontana.org
Nebraska
Land Link
Center for Rural Aļ¬€airs
145 Main St.
PO Box 136
Lyons, NE 68038
Oļ¬ƒce: 402.687.2100
Fax: 402.687.2200
Contact: Michael Holton
E-mail: info@cfra.org
www.cfra.org/issues/become.htm
Beginning Farmer Program
Nebraska Depā€™t of Agriculture
P.O. Box 94947
Lincoln, NE 68509-4947
Oļ¬ƒce: 402.471.6890
Toll-free: 800.446.4071
Fax: 402.471.2525
Contact: Marian Beethe,
mbeethe@agr.ne.gov
www.agr.ne.gov ā€” click on
ā€œBeginning Farmerā€
Page 14 ATTRA Finding Land to Farm
New Hampshire
New England Land Link
P.O. Box 608
Belchertown, MA 01007
Oļ¬ƒce: 413.323.4531
Fax: 413.323.9594
Contact: Eric Toensmeier
E-mail: landlink@smallfarm.org
www.smallfarm.org
New Jersey
Ag Development Committee
State of New Jersey
PO Box 330
Trenton, NJ 08625-0330
Oļ¬ƒce: 609.984.2504
Fax: 609.633.2004
Contact: David Kimmel,
david.kimmel@ag.state.nj.us
www.state.nj.us/agriculture/sadc/
farmlink.htm
New York
NY FarmLink
c/o NY FarmNet
415 Warren Hall
Ithaca, NY 14853
800-547-FARM
E-mail: info@farmlink.org
www.nyfarmlink.org
Ohio
The Farmland Center, a program
of the Countryside Conservancy
2179 Everett Road
Peninsula, Ohio 44264
330.657.2538
beth@thefarmlandcenter.org
www.thefarmlandcenter.org
www.cvcountryside.org
Oregon
Friends of Family Farmers man-
ages ifarmoregon.org, an online
database that allows the user to
search for agricultural services,
land for sale, land wanted, unique
leasing arrangements, partnership
options, mentoring and internship
programs, educational opportuni-
ties and ļ¬nancial resources.
P.O. Box 1286
Molalla, OR, 97038
info@friendsoļ¬€amilyfarmers.org
www.ifarmoregon.org
Pennsylvania
Pennsylvania Farm Link, Inc.
PA Dept. of Agriculture
2301 N. Cameron Street, Rm 311
Harrisburg, PA 17110-9408
Oļ¬ƒce: 717.705.2121
Fax: 717.787.5643
E-mail: mail@pafarmlink.org
www.pafarmlink.org
Center for Farm Transitions
Pennsylvania Dept. of Agriculture
2301 North Cameron Street
Harrisburg, PA 17110-9408
Toll-free: 877-475-2686
Contact: D. Robert Davidson
Email: ddavidso@state.pa.us
www.iplantofarm.com
Rhode Island
New England Land Link
P.O. Box 608
Belchertown, MA 01007
Oļ¬ƒce: 413.323.4531
Fax: 413.323.9594
Contact: Eric Toensmeier
E-mail: landlink@smallfarm.org
www.smallfarm.org
Vermont
Land Link Vermont
Center for Sustainable Agriculture
Oļ¬ƒce: 802.656.0233
Fax: 802.656.8874
Contact: Deb Heleba
www.uvm.edu/landlinkvt
New England Land Link
P.O. Box 608
Belchertown, MA 01007
413.323.4531; Fax: 413.323.9594
Contact: Eric Toensmeier
E-mail: landlink@smallfarm.org
www.smallfarm.org
Virginia
Virginia FarmLink
Virginia Department of Agriculture
and Consumer Services
P.O. Box 1163
Richmond, VA 23218
Oļ¬ƒce: 804.786.3501
Fax: 804.371.2945
Contact: William P. Dickinson, Jr.,
wdickinson@vdacs.state.va.us
www.savefarms.com/farmlink_
about.htm
Virginia Farm Bureau Federation
P.O. Box 27552
Richmond, Virginia 23261-7552
Oļ¬ƒce: 804.290.1017
Fax: 804.290.1099
Contact: Brock Herzberg,
brock.herzberg@vafb.com
www.vafb.com
and www.savefarms.com
Washington
Washington FarmLink
Cascade Harvest Coalition
4649 Sunnyside Avenue North,
Room 123
Seattle, WA 98103
Oļ¬ƒce: 206.632.0606
Fax: 206.632.1080
Contact: Mary Embleton
E-mail: mary@oz.net
www.cascadeharvest.org/programs/
washington-farmlink
and www.cascadeharvest.org
Wisconsin
Wisconsin Farm Center
Oļ¬ƒce: 800.942.2474 or
608.224.5049
Fax: 608.224.5107
Contact: Roger James,
Roger.James@datcp.state.wi.us
www.datcp.state.wi.us/mktg/
agriculture/farm-center/
transfers/index.jspvvvv
Page 15ATTRAwww.attra.ncat.org
This list is from California FarmLink
www.californiafarmlink.org
1. Contact information
Be sure to include information for
both landowner and tenant
2. Description of leased property
Include a map if possible.
3. Length of term
How long is lease valid?
Can it be renewed?
4. Rental amount and how it is to be paid
What is the amount per term?
Is it as cash or share rent?
When is it payable?
Are there periodic increases?
5. Maintenance and repairs
Who is responsible?
What are the monetary limits?
6. Liability insurance and indemniļ¬cation
Is the tenant required to have liability
insurance?
Most landowners want to specify that
theyā€™re not liable for tenantā€™s operation.
7. Use restrictions or requirements
How is the land to be used?
Are there prohibitions or limitations on its
use, such as types of crops or production
methods, for example?
8. Compliance with law
Most leases reiterate that the tenant must
comply with all appropriate laws.
9. Initial condition of premises
Is the property okay as-is?
Are improvements or upgrades required
before or during the lease?
10. Alterations
Are there restrictions or allowances
concerning changes to the property?
What changes or improvements are allowed,
with and without speciļ¬c permission?
11. Subletting
Are there any restrictions or allowances?
Is tenant allowed to lease to a third party?
12. Dispute resolution
California FarmLink suggests specifying
that disputes should be resolved ļ¬rst by
mediation, then through binding arbitration.
Kinds of Consultants You May Need
1. Real estate agents
2. Real estate attorneys
3. Cooperative extension and other agricultural business consultants
4. Accountants and CPAs
5. Lenders such as Farm Service Agency (FSA), Farm Credit System,
banks, Community Development Financial Institutions (CDFIs),
Small Business Development Corporations (SBDCs)
Elements of a Good Lease
Finding Land to Farm: Six Ways to Secure Farmland
By Kendra Johnson, California FarmLink
Rex Dufour and Marisa Alcorta, NCAT
Ā© 2009 National Center for Appropriate Technologyā€”
NCAT
Robert Armstrong, Illustrations
Karen Van Epen, Production
This publication is available on the Web at:
www.attra.ncat.org/attra-pub/PDF/ļ¬nding.pdf
IP349, Slot 347
Version 070209
Page 16 ATTRA

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Finding Land to Farm: Six Ways to Secure Farmland

  • 1. ATTRAā€”National Sustainable Agriculture Information Service is managed by the National Center for Appropriate Technology (NCAT) and is funded under a grant from the U.S. Department of Agricultureā€™s Rural Business-Cooperative Service. Visit the NCAT website, www.ncat.org for more information . Contents Various Agreements for Leasing and Owning Land..........page 2 ā€¢ Cash Lease ā€¢ Crop Share ā€¢ Long-Term Lease ā€¢ Lease with Option to Buy or Right of First Refusal ā€¢ Fee Title Purchase with Seller Financing ā€¢ Fee Title Purchase with Agricultural Conservation Easement Finding Land to Farm.................................page 3 Resources for Farmers Seeking Land Tenure..11 Land Linking Programs ...................................... 13 Elements of a Good Lease.................................. 15 Kinds of Consultants You May Need................ 15 FEE TITLE PURCHASE WITH SIMULTANEOUS CONSERVATION EASEMENT
  • 2. Page 2 ATTRA Finding Land to Farm A Publication of ATTRA - National Sustainable Agriculture Information Service ā€¢ 1-800-346-9140 ā€¢ www.attra.ncat.org This publication highlights some common ways to lease or own land. It outlines important considerations about each of these leasing options and paths to ownership. Renting farmland is a common practice in U.S. agriculture, where more than 45 percent of the 917 million farmland acres are rented. According to the 1999 Agricultural Eco- nomics and Land Ownership Survey, 60 percent of farmland rent is paid in cash, 24 percent in shares of production, and 11 percent in a cash/share combination. Following are short descriptions of the various leasing and ownership options covered in this publication. Cash Lease Most cash leases are short-term, requiring little commit- ment from either landowner or tenant farmer. Long-term leases can be an aļ¬€ordable way for farmers to use more sustainable practices and to invest more in their busi- nesses. Many leases are based on a handshake. Verbal agreements are considered legal leases for one year, but this is NOT recommendable for either party, as conļ¬‚icts can arise even among friends when terms are not clearly stated on outset. A written lease provides beneļ¬ts and security for both parties. Crop Share In this model, rent payment consists of part of the crop, most often paid as part of the income from total crop sold. Also known as ā€œshare-cropā€ and ā€œshare lease,ā€ this was historically disadvantageous to tenant farmers, but can work well for beginning farmers without start-up capital. Crop share arrangements are common in peren- nial crops and some commodities, for example fruit and nut operations, hay, ļ¬eld crops, processing tomatoes. Agreements may have maximum and minimum limits to protect the farmer and landowner, respectively. Long-Term Lease This model is as close to ownership as a lease can get. The term is usually 40 to 99 years depending on state law. This is longer than the average mortgage. These types of leases may even be inheritable. They are used for publicly owned land and commercial real estate, but are less common in agriculture. They are sometimes used by cities and land trusts who own the land but wish to guarantee farmers lifetime tenure. Because of their lon- gevity, the intent and clauses of leases must be very care- fully drafted so they will last as long as the lease term. Lease with Option to Buy or Right of First Refusal There are two ways a lease can improve ownership oppor- tunities for a tenant farmer: ā€¢ With a ā€œPurchase Option,ā€ the owner and ten- ant pre-determine the purchase price, with a date for execution of the purchase. The tenant pays for this option up front, and the rent money can count toward an initial down payment. ā€¢ With a ā€œRight of First Refusalā€ clause, the owner can only sell the land to a third party after the tenant has had a chance to ā€œrefuse,ā€ by match- ing that third-party oļ¬€er and making the purchase ļ¬rst. This helps ensure that an owner doesnā€™t sell the land ā€œout from underā€ the tenant, but the ten- ant must be ready to act quickly. Fee Title Purchase with Seller Financing In this model the new buyer takes possession of the land and makes payments directly to the seller, as written in a ā€œnote.ā€ This works very well when a good relation- ship has been established. The landowner can see the property transferred to a promising new farmer, and the new farmer can secure that noteā€”sometimes by virtue of his or her ā€œcharacterā€ more than conventional lend- ing requirements. Even better, brokerage fees are avoided by both parties. Payments can be structured like a typi- cal mortgage, or in the case of an installment or land contract sale, made periodically. This strategy is often a good way to transfer land to the next generation within a family. Fee Title Purchase with Agricultural Conservation Easement An agricultural conservation easement forever extin- guishes development rights on that land, making it less valuable to nonfarmers. These types of easements are used if a landowner wishes to see the land remain avail- able for agriculture: He or she donates or sells the landā€™s development rights in the form of an agricultural conser- vation easement to a nonproļ¬t land trust or government agency, which ensures that the easement goals are upheld forever. This can drop the after-easement value, or ā€œease- ment encumbered value,ā€ of the land into an aļ¬€ordable price range for a new farmer. Various Agreements for Leasing and Owning Land
  • 3. Page 3ATTRAwww.attra.ncat.org SORRY PEDRO ā€” IF YOU ONLY HAD A VERBAL AGREEMENT, ITā€›S YOUR WORD AGAINST THE LANDOWNERā€›S, AND IT COULD BE TIED UP IN THE COURTS FOR A LONG TIME. IF YOU LEASE LAND AGAIN, GET A SIGNED CONTRACT!
  • 4. Page 4 ATTRA Finding Land to Farm
  • 5. Page 5ATTRAwww.attra.ncat.org CASH LEASE AGREEMENTS ā—Š VARIABLE DURATION ā€¢ SHORT TERM LEASES ALLOW ā€œTRIAL PERIODā€ FOR BOTH LANDOWNER AND FARMER ā€¢ LONG TERM LEASES ARE PREDICTABLE FOR THE OWNER AND SECURE FOR THE FARMER ā—Š PAYMENT SCHEDULE NEGOTIABLE ā—Š FARMER & LANDOWNER KNOW HOW MUCH THE RENT WILL BE DISADVANTAGES (IF LEASE IS SHORT) ā—Š DIFFICULT TO MAKE LONG-TERM DECISIONS AND INVESTMENTS ā—Š LENDERS MAY BALK AT FINANCING IMPROVEMENTS ā—Š LESS INCENTIVE TO USE SUSTAINABLE PRACTICES TO IMPROVE THE SOIL ā—Š NO EQUITY IS BUILT UP (SHORT OR LONG LEASE) ā—Š LANDOWNER DOESNā€›T SHARE RISK IF FARMER HAS A POOR CROP OR CROP HASNā€›T COME IN YET
  • 6. Page 6 ATTRA Finding Land to Farm CROP SHARE LEASE ā—Š RENT PAYMENT CONSISTS OF PART OF THE CROP, MOST OFTEN PAID AS PART OF THE INCOME FROM TOTAL CROP SOLD BUT CAN ALSO BE CALCULATED AS A PORTION OF NET INCOME AFTER EXPENSES. PAYMENT IS USUALLY NOT REQUIRED UNTIL CROP COMES IN. ā—Š RISK IS SHARED BETWEEN PARTIES. ā—Š THIS KIND OF LEASE IS HISTORICALLY DISADVANTAGEOUS TO TENANT FARMERS, BUT MAY BE A GOOD OPTION FOR BEGINNING FARMERS WITHOUT START-UP CAPITAL. ā—Š IT CAN BE HARD TO BUDGET FOR AN EXACT RENT AMOUNT. NEITHER PARTY KNOWS WHAT A FARM WILL YIELD, SO PAYMENT AMOUNTS ARE UNCERTAIN. OWNERS DONā€›T WANT THE RENT TO BE TOO LOW. TENANTS DONā€›T WANT IT TO BE TOO HIGH. ā—Š IF THE TENANT FARMER DOES VERY WELL, THE CROP SHARE RENT MAY EXCEED LOCAL CASH-LEASE RATES. YOU MAY WISH TO INCLUDE A ā€œMAXIMUM PAY- MENT CLAUSE,ā€ WHICH WOULD PROTECT THE TENANT AGAINST PAYING TOO MUCH FOR RENT. ā—Š CONVERSELY, A ā€œMINIMUM PAYMENT CLAUSEā€ WOULD PROTECT THE LANDOWNER FROM RECEIVING TOO LITTLE PAYMENT (FOR EXAMPLE, IN CASE OF CROP FAILURE BY TENANT), BUT SHOULD REFLECT THE ā€œSHARED RISKā€ BETWEEN THE LANDLORD AND TENANT.
  • 7. Page 7ATTRAwww.attra.ncat.org LONG TERM LEASE ā—Š OFFERS MOST ADVANTAGES OF OWNERSHIP WITHOUT NEED FOR DOWN PAYMENT OR HEAVY BORROWING. LESS COMMON IN AN AGRICULTURAL CONTEXT. ā—Š SOME LONG-TERM LEASES ARE INHERITABLE AND ALLOW FOR TRANSFER TO THE NEXT GENERATION. LOOK AT YOUR STATEā€›S REAL ESTATE CODE. ā—Š BECAUSE OF THEIR LONGEVITY, THESE LEASES CAN BE HIGHLY COMPLEX. THE INTENT AND CLAUSES MUST BE VERY CARE- FULLY DRAFTED TO LAST AS LONG AS THE LEASE TERM. ā—Š LANDOWNERS ARE NOT OFTEN WILLING TO MAKE SUCH A LONG-TERM COMMITMENT, OR TO RISK TITLE FOR TENANT FINANCING ā—Š TENANT IS SUBJECT TO LEASE TERMS WHICH MUST REMAIN REASONABLE AND PRUDENT FOR DURATION OF LEASE. MULTIPLE DECADES ARE A LONG TIME TO PLAN FOR! ā—Š FARMERā€›S ABILITY TO RECOVER EQUITY IN LAND MAY BE LIMITED, DEPENDING ON AGREEMENT. IT DEPENDS ON WHAT THE LANDOWNER WANTS, BUT LETā€›S VISIT A FRIEND WHO HAS PURCHASED SOME LAND USING AN EASEMENT TO REDUCE THE COST OF THE LAND
  • 8. Page 8 ATTRA Finding Land to Farm
  • 9. Page 9ATTRAwww.attra.ncat.org FEE TITLE PURCHASE WITH AGRICULTURAL CONSERVATION EASEMENT ā—Š THE USE OF THE PROPERTY (THE DEVELOPMENT RIGHTS) IS RESTRICTED BY THE TERMS OF THE CONSERVATION EASEMENT AND THOSE RESTRICTIONS APPLY TO ALL FUTURE OWNERS OF THE PROPERTY ā—Š THE DEVELOPMENT RIGHTS (IN THE FORM OF A CONSERVATION EASEMENT) ARE DONATED OR SOLD TO A NONPROFIT LAND TRUST OR GOVERNMENT AGENCY WHICH HOLDS THE EASEMENT AND ENSURES IT IS UPHELD. THE AFTER-EASEMENT VALUE (OR EASEMENT-ENCUMBERED VALUE) OF THE LAND MAY DROP THE PRICE INTO AN AFFORDABLE RANGE FOR A NEW FARMER. THIS CAN OCCUR IN SEVERAL WAYS: ā—Š THE LANDOWNER COULD SELL THE EASEMENT FIRST, THEN SELL THE ENCUMBERED LAND TO A NEW FARMER. ā—Š THE NEW FARMER COULD PARTNER WITH A LAND TRUST TO MAKE A JOINT PURCHASE OFFER TO THE LANDOWNER. (OCCASIONALLY A LAND TRUST BUYS FIRST, THEN SELLS TO A FARMER THROUGH A BIDDING PROCESS) ā—Š THE NEW FARMER COULD CREATIVELY FINANCE LAND PURCHASE, WITH A COMMITMENT BY THE LAND TRUST TO PURCHASE THE EASEMENT IN FUTURE. FEE TITLE PURCHASE WITH AGRICULTURAL CONSERVATION EASEMENT ā—Š FARMERS SEEKING TO BUY LAND HAVE A BETTER CHANCE WHEN THEYā€›RE NOT BIDDING ON RESIDENTIAL OR RANCHETTE REAL ESTATE VALUE. EASEMENTS CAN MAKE THE DIFFERENCE BETWEEN AFFORDABLE OWNERSHIP AND LIFELONG LEASING. ā—Š SELLERS CAN SEE THEIR AGRICULTURAL LEGACY CONTINUED. WITH TAX BENEFITS, THEY CAN SOMETIMES RECEIVE CLOSE TO FAIR MARKET VALUE FOR THE LAND. ā—Š BECAUSE EASEMENTS RESTRICT PROPERTY RIGHTS, THEY MAY LIMIT VALUES OR OWNERSā€› ABILITY TO GET FINANCING. ā—Š AGRICULTURAL CONSERVATION EASEMENTS DONā€›T ALWAYS WORK AS INTENDED. THESE EASEMENT-ENCUMBERED PROPERTIES OFTEN STILL HAVE HIGH RURAL-ESTATE HOME VALUE TO NON-FARMERS. ā—Š PROCESS CAN BE SLOW, SINCE LAND TRUSTS USUALLY HAVE TO APPLY FOR FUNDING TO PURCHASE EASEMENTS. ā—Š EASEMENTS ARE, IN THEORY, FOREVER. THIS PRESENTS CHALLENGES TO CURRENT AND FUTURE LANDOWNERS AS TO COMPLIANCE AND FUTURE ENFORCEABILITY OF EASEMENTS.
  • 10. Page 10 ATTRA Finding Land to Farm FEE TITLE PURCHASE WITH SELLER FINANCING ā—Š IN THIS MODEL, THE NEW BUYER TAKES POSSESSION OF THE LAND, MAKES PAYMENTS DIRECTLY TO SELLER. ā—Š THIS WORKS VERY WELL WHEN A GOOD RELATIONSHIP HAS BEEN ESTABLISHED. THE LANDOWNER CAN SEE THE PROPERTY TRANSFERRED TO A PROMISING NEW FARMER, AND THE NEW FARMER CAN BUILD EQUITY, SOMETIMES WITHOUT HIGH DOWN PAYMENT ADVANTAGES ā—Š CHARACTER LOAN MAY BE EASIER IN THIS SCENARIO. BUYER DOESNā€›T NECESSARILY HAVE TO QUALIFY FOR TRADITIONAL BANK OR GOVERNMENT LOAN. ā—Š LANDOWNER CAN SPREAD OUT CAPITAL GAINS FOR TAX PURPOSES. FEE TITLE PURCHASE WITH SELLER FINANCING ADVANTAGES (CONTINUED) ā—Š BROKERAGE FEES AVOIDED BY BOTH PARTIES ā—Š GOOD WAY TO TRANSFER LAND TO NEXT GENERATION ā—Š INSTALLMENT PLAN MAY BE STRUCTURED FOR SMALLER INITIAL PAYMENTS WITH LARGER ā€œBALLOONā€ PAYMENTS WHEN FARMER EXPECTS TO BE MORE FINANCIALLY PREPARED DISADVANTAGES ā—Š IF BUYER DEFAULTS, THE LAND GOES BACK TO THE SELLER AND THE BUYERā€›S EQUITY MAY BE LOST. ā—Š MOST INITIAL PAYMENTS COVER INTEREST ONLY, OR MAY BE VERY LARGE. REQUIRED DOWN PAYMENTS MAY ALSO BE LARGE. LEASE WITH OPTION TO BUY THERE ARE TWO WAYS A LEASE CAN IMPROVE OWNERSHIP OPPORTUNITIES FOR A TENANT FARMER. 1) WITH A ā€œFIRST RIGHT OF REFUSALā€ CLAUSE, THE TENANT GETS TO MAKE THE FIRST OFFER PRIOR TO THE OWNER LISTING THE LAND FOR SALE, AT THE SELLERā€›S ASKING PRICE. 2) WITH AN ā€œOPTION AGREEMENT,ā€ OWNER AND TENANT PRE-DETERMINE PURCHASE PRICE, WITH A REQUIRED DATE OF EXECUTION OF PURCHASE. TENANT PAYS FOR THIS OPTION UP FRONT, AND RENT MONEY SOMETIMES COUNTS TOWARD INITIAL DOWN PAYMENT. ADVANTAGES ā—Š THE FARMER IS GUARANTEED THAT LAND WILL NOT BE ā€œSOLD OUT FROM UNDERā€ HIM OR HER. ā—Š WITH AN OPTION IN WHICH THE RENT PAYMENT GOES TOWARD EVENTUAL PURCHASE, THE FARMER BUILDS EQUITY TOWARD OWNERSHIP. ā—Š WHEN THE PURCHASE AGREEMENT IS ATTACHED, FARMER CAN PLAN FOR A KNOWN PURCHASE PRICE. DISADVANTAGES ā—Š WITH FIRST RIGHT OF REFUSAL, TENANTS HAVE LITTLE NEGOTIATING POWERā€”THEY CAN ONLY EX ERCISE THE RIGHT BY AGREEING TO SELLERā€›S TERMS. ā—Š IF THE FARMER IS NOT FINANCIALLY READY WHEN THE PROPERTY IS PUT UP FOR SALE, OR AT THE AGREED-UPON PURCHASE DATE (OPTION), THE ADVANTAGE AND THE RENT EQUITY ARE LOST. THANKS FOR YOUR HELP, JOE! Iā€›M GOING TO THINK ABOUT THIS, STUDY THE RESOURCES* AND TALK WITH MY FAMILY. Iā€›VE LEARNED A LOT.
  • 11. Page 11ATTRAwww.attra.ncat.org Publications and Web Resources Farmers for the Future is an internet resource for beginning farmers which can be found on the Farm Credit System-sponsored ā€œAgriculture Onlineā€ web- site. It includes featured proļ¬les of farmers, articles about farm transitions and beginning farmers who have ā€œmade it,ā€ and a list of links for beginning farmers. www.agriculture.com/ag/category.jhtml?categoryid=/ templatedata/ag/category/data/agfuturechannel.xml A Farmersā€™ Guide to Securing Land, by California FarmLink, 2008, provides tools and examples to help landowners, farmers and service providers keep farmland in viable agriculture. The book includes an overview of farmland tenure in the U.S.ā€”who owns and oper- ates American farmlandā€”and some of the challenges to keeping land in the hands of farmers. Each chapter describes a land tenure ā€œmodelā€ such as lease, partner- ship or ownership. These are explained by real case stud- ies collected by California FarmLink staļ¬€ and associ- ates. The book includes a CD-ROM that contains many of the actual lease, partnership or purchase documents used in these examples. www.californiafarmlink.org Holding Ground: A Guide to Northeast Farmland Tenure and Stewardship. Kathy Ruhf, Annette Higby, Andrea Woloschuk and others. 2004. Belchertown, Mass. The New England Small Farm Institute and Intervale Foundation (see ā€œOrganizationsā€ section for more infor- mation on each of these). This publication addresses farmland access, transfer, aļ¬€ordability and stewardship. It focuses on ā€œnon-ownershipā€ tenure options and con- tains sample lease provisions with explanations, sample stewardship standards, worksheets, and case studies. $30.00; 162 pages, paperback. Minority Landowner is a monthly periodical featuring articles and information speciļ¬cally targeting minor- ity landowners in the southeastern United States and addressing the issues they face. Contact Victor L. Harris at 919-215-1632 or ccpublishing@earthlink.net National Farm Transition Network supports programs that foster the next generation of farmers and ranchers. Below is a list of linking programs, which work with the NFTN. Value-Added and Alternative Agriculture Tool Kit, from the NCSU College of Agriculture and Life Sciences, provides an overview and on-line references. www.ncvalueadded.org/business-management.html Resources for Farmers Seeking Land Tenure Organizations New England Small Farm Instituteā€™s mission is to pro- mote small farm development by providing information and training for aspiring, beginning and transitioning farmers. NESFI maintains an extensive resource collec- tion, produces publications, develops and oļ¬€ers innova- tive farmer-guided programs, and advocates for policies that encourage sustainable small-scale agriculture. 275 Jackson St., Belchertown, MA 01007 413-323-4531; 413-323-9594 (fax) info@smallfarm.org; www.smallfarm.org The Intervale Center of Burlington, VT supports ļ¬nancially viable and environmentally sustainable agri- culture. Its mission is to develop farm- and land-based enterprises that generate economic and social opportu- nity while protecting natural resources. The Intervale Farms Program creates opportunities for new farmers by leasing land and facilities to small organic enterprises. The program provides technical support and network- ing among other more experienced farmers. The Suc- cess on Farms Program works one on one with farmers throughout Vermont to help strengthen their businesses through increased revenues, more eļ¬€ective marketing, consideration of processing value-added products at the farm, and other strategies. 180 Intervale Road, Burlington, VT 05401 802-660-0440; www.intervale.org Land For Goodā€™s mission is to keep New Englandā€™s productive land cared for and in active use for the ben- eļ¬t of the owners, the land and the community. This New England nonproļ¬t helps families and organiza- tions plan for, manage and pass on working lands. The group fosters professional and community networks, public awareness and policies to keep New Englandā€™s working lands working. Land For Good oļ¬€ers assis- tance with farm transfer planning, leases and other land use agreements, farm design and land planning, and conservation development. 29 Center Street, Keene, NH 03431 603-357-1600 info@landforgood.org; www.landforgood.org American Society of Farm Managers and Rural Appraisers is a nationwide organization for profession- als who provide management, valuation, and consulting services on agricultural and rural assets. The California Chapter publishes Trends in Agricultural Land and Lease
  • 12. Page 12 ATTRA Finding Land to Farm Values, an excellent guide to farm-land values. The Soci- ety was formed in 1929. 950 South Cherry Street, Suite 508 Denver, CO 80246-2664 303-758-0190 info@asfmra.org; www.asfmra.com USDA Farm Service Agency (FSA) oļ¬€ers two ļ¬nanc- ing programs for land purchase which especially ben- eļ¬t beginning and socially disadvantaged farmers. The new Farm Bill provides for the Land Contract Guar- antee Program and the Direct Farm Ownership Loan Program. Because traditional methods of farm entry and farm succession are no longer adequate to meet current challenges, the agency also oļ¬€ers the Begin- ning Farmer and Rancher Land Contract Guarantee Pilot Program. This pilot program will explore whether land contract sales are a viable alternative for facili- tating land transfers to beginning farmers and ranch- ers. The pilot program will be available in Indiana, North Dakota, Oregon, Pennsylvania, Wisconsin, and Iowa. Contact the local Farm Service Agency oļ¬ƒce. www.fsa.usda.gov American Farmland Trust, founded in 1980 by a group of farmers and conservationists concerned about the rapid loss of the nationā€™s farmland to development, is a nonproļ¬t membership organization dedicated to protect- ing our nationā€™s strategic agricultural resources. The trust provides legislative updates, conferences and e-news. 1200 18th Street, NW, Suite 800 Washington, D.C. 20036 202-659-8339 info@farmland.org; www.farmland.org Equity Trust is a small, national nonproļ¬t organiza- tion committed to changing the spirit and character of our material relationships. The Trust helps communi- ties gain ownership interests in their food, land, and housing. The group works with people to make eco- nomic changes that balance the needs of individuals with the needs of the community, the earth, and future generations. Equity Trust oļ¬€ers land tenure counseling, ļ¬nancing, and land stewardship services. PO Box 746 , Turners Falls, MA 01376 Phone: 413-863-9038 Fax: 413-863-9082 info@equitytrust.org; www.equitytrust.org Black Farmers and Agriculturalists Association was created to respond to the issues and concerns of Black farmers in the U.S. and abroad. The group is concerned with advocacy at the national level, as well as support for the local Black farming community. P.O Box 61, Tillery, NC 27887 252-826-2800 info@bfaa-us.org; www.bfaa-us.org Agriculture and Land-Based Training Association (ALBA) provides educational and business opportunities for farmworkers and aspiring farmers to grow and sell crops grown on two organic farms in Monterey County, California. ALBA provides educational and economic opportunities for limited-resource, aspiring and immi- grant farmers. P.O. Box 6264, Salinas, California 93912 831-758-1469, 831-758-3665 fax www.albafarmers.org Land Loss Prevention Project is dedicated to land retention and environmental justice by providing train- ing and legal support. The organization is dedicated to the preservation of the family farm. The project was founded in 1982 by the North Carolina Association of Black Lawyers to curtail epidemic losses of Black-owned land in North Carolina. The organization broadened its mission in 1993 to provide legal support and assistance to all ļ¬nancially distressed and limited-resource farmers and landowners in North Carolina. P.O. Box 179, Durham, NC 27702 919-682-5969 www.landloss.org Appalachian Sustainable Agriculture Project sup- ports farmers and rural communities in the mountains of Western North Carolina and the Southern Appala- chians by providing education, mentoring, promotion, web resources, and community and policy development. 729 Haywood Rd. #3 Asheville, NC 28806 828-236-1282 FarmLASTS Project seeks to improve how farm and ranch land is acquired, stewarded, and passed on. Team members are drawn from organizations across the U.S. The projectā€™s working groups conduct research and edu- cation on farmland access, farm succession, and the impact of these arrangements on land use and the envi- ronment. In June 2009 the project convened a national conference in Colorado to address these issues. The USDA/CSREES-funded project is directed by staļ¬€ at the University of Vermont and Land for Good. Contact Kathy Ruhf, kzruhf@verizon.net; www.farmlasts.org
  • 13. Page 13ATTRAwww.attra.ncat.org Land Linking Programs National Farm Transition Network The goal of the network is to sup- port programs that foster the next generation of farmers and ranchers. Farm linking organizations develop new transition and tenure strategies for the entry of the next generation and the exit of the existing farmer. Below is a list of linking programs that work with the Network. Beginning Farmer Center 10861 Douglas Ave., Suite B Urbandale, Iowa 50322 jrbaker@iastate.edu; www.farmtransition.org California California FarmLink P.O. Box 2224 Sebastopol, CA 95473 Oļ¬ƒce: 707.829.1691 Fax: 707.829.1693 Contact: Steve Schwartz E-mail: info@californiafarmlink.org www.californiafarmlink.org Connecticut New England Land Link P.O. Box 608 Belchertown, MA 01007 Oļ¬ƒce: 413.323.4531 Fax: 413.323.9594 Contact: Eric Toensmeier E-mail: landlink@smallfarm.org www.smallfarm.org Iowa Farm On ā€“ Beginning Farmer Center Iowa State University Extension 10861 Douglas Avenue, Suite B Urbandale, IA 50322 Oļ¬ƒce: 877.BFC.1999 Fax: 515.252.7829 Contact: John Baker E-mail: jrbaker@iastate.edu www.extension.iastate.edu/bfc Ag Link Iowa State University www.extension.iastate.edu/bfc/Aglink Iowa State also has links to some very good on-line presentations by previous Ag Link presenters: www. extension.iastate.edu/bfc/pubs.html Maine Maine Farmlink 97 Main Street Belfast, ME 04915 Oļ¬ƒce: 207.338.6575 Fax: 207.338.6024 Contact: Esther LaCognata, esther@mainefarmlink.org www.mainefarmlink.org New England Land Link P.O. Box 608 Belchertown, MA 01007 Oļ¬ƒce: 413.323.4531 Fax: 413.323.9594 Contact: Eric Toensmeier E-mail: landlink@smallfarm.org www.smallfarm.org Maryland Eastern Shore Land Conservancy P.O. Box 169 Queenstown, MD 21658 Oļ¬ƒce: 410.827.9756 www.eslc.org Massachusetts New England Land Link P.O. Box 608 Belchertown, MA 01007 Oļ¬ƒce: 413.323.4531 Fax: 413.323.9594 Contact: Eric Toensmeier E-mail: landlink@smallfarm.org www.smallfarm.org Michigan FarmLink Michigan Farm Bureau 7373 W Saginaw Hwy. Lansing, MI 48917 Oļ¬ƒce: 517.323.7000 Toll-free: 888.805.4864 Fax: 517.323.6604 Contact: Matthew Smego, msmego@mail.michfb.com www.michiganfarmbureau.com/ beneļ¬ts/farmlink.php Minnesota Land Stewardship Project Farm Beginnings P.O. Box 130 Lewiston, MN 55952 Oļ¬ƒce: 507.523.3366 Contact: Karen Stettler, stettler@landstewardshipproject.org www.landstewardshipproject.org Montana Land Link Montana Community Food & Agriculture Coalition 127 N. Higgins Ave., Suite 305 Missoula, MT 59802 Phone: 406.543.0542 Contact: Paul Hubbard, pfhubbard@gmail.com www.landlinkmontana.org Nebraska Land Link Center for Rural Aļ¬€airs 145 Main St. PO Box 136 Lyons, NE 68038 Oļ¬ƒce: 402.687.2100 Fax: 402.687.2200 Contact: Michael Holton E-mail: info@cfra.org www.cfra.org/issues/become.htm Beginning Farmer Program Nebraska Depā€™t of Agriculture P.O. Box 94947 Lincoln, NE 68509-4947 Oļ¬ƒce: 402.471.6890 Toll-free: 800.446.4071 Fax: 402.471.2525 Contact: Marian Beethe, mbeethe@agr.ne.gov www.agr.ne.gov ā€” click on ā€œBeginning Farmerā€
  • 14. Page 14 ATTRA Finding Land to Farm New Hampshire New England Land Link P.O. Box 608 Belchertown, MA 01007 Oļ¬ƒce: 413.323.4531 Fax: 413.323.9594 Contact: Eric Toensmeier E-mail: landlink@smallfarm.org www.smallfarm.org New Jersey Ag Development Committee State of New Jersey PO Box 330 Trenton, NJ 08625-0330 Oļ¬ƒce: 609.984.2504 Fax: 609.633.2004 Contact: David Kimmel, david.kimmel@ag.state.nj.us www.state.nj.us/agriculture/sadc/ farmlink.htm New York NY FarmLink c/o NY FarmNet 415 Warren Hall Ithaca, NY 14853 800-547-FARM E-mail: info@farmlink.org www.nyfarmlink.org Ohio The Farmland Center, a program of the Countryside Conservancy 2179 Everett Road Peninsula, Ohio 44264 330.657.2538 beth@thefarmlandcenter.org www.thefarmlandcenter.org www.cvcountryside.org Oregon Friends of Family Farmers man- ages ifarmoregon.org, an online database that allows the user to search for agricultural services, land for sale, land wanted, unique leasing arrangements, partnership options, mentoring and internship programs, educational opportuni- ties and ļ¬nancial resources. P.O. Box 1286 Molalla, OR, 97038 info@friendsoļ¬€amilyfarmers.org www.ifarmoregon.org Pennsylvania Pennsylvania Farm Link, Inc. PA Dept. of Agriculture 2301 N. Cameron Street, Rm 311 Harrisburg, PA 17110-9408 Oļ¬ƒce: 717.705.2121 Fax: 717.787.5643 E-mail: mail@pafarmlink.org www.pafarmlink.org Center for Farm Transitions Pennsylvania Dept. of Agriculture 2301 North Cameron Street Harrisburg, PA 17110-9408 Toll-free: 877-475-2686 Contact: D. Robert Davidson Email: ddavidso@state.pa.us www.iplantofarm.com Rhode Island New England Land Link P.O. Box 608 Belchertown, MA 01007 Oļ¬ƒce: 413.323.4531 Fax: 413.323.9594 Contact: Eric Toensmeier E-mail: landlink@smallfarm.org www.smallfarm.org Vermont Land Link Vermont Center for Sustainable Agriculture Oļ¬ƒce: 802.656.0233 Fax: 802.656.8874 Contact: Deb Heleba www.uvm.edu/landlinkvt New England Land Link P.O. Box 608 Belchertown, MA 01007 413.323.4531; Fax: 413.323.9594 Contact: Eric Toensmeier E-mail: landlink@smallfarm.org www.smallfarm.org Virginia Virginia FarmLink Virginia Department of Agriculture and Consumer Services P.O. Box 1163 Richmond, VA 23218 Oļ¬ƒce: 804.786.3501 Fax: 804.371.2945 Contact: William P. Dickinson, Jr., wdickinson@vdacs.state.va.us www.savefarms.com/farmlink_ about.htm Virginia Farm Bureau Federation P.O. Box 27552 Richmond, Virginia 23261-7552 Oļ¬ƒce: 804.290.1017 Fax: 804.290.1099 Contact: Brock Herzberg, brock.herzberg@vafb.com www.vafb.com and www.savefarms.com Washington Washington FarmLink Cascade Harvest Coalition 4649 Sunnyside Avenue North, Room 123 Seattle, WA 98103 Oļ¬ƒce: 206.632.0606 Fax: 206.632.1080 Contact: Mary Embleton E-mail: mary@oz.net www.cascadeharvest.org/programs/ washington-farmlink and www.cascadeharvest.org Wisconsin Wisconsin Farm Center Oļ¬ƒce: 800.942.2474 or 608.224.5049 Fax: 608.224.5107 Contact: Roger James, Roger.James@datcp.state.wi.us www.datcp.state.wi.us/mktg/ agriculture/farm-center/ transfers/index.jspvvvv
  • 15. Page 15ATTRAwww.attra.ncat.org This list is from California FarmLink www.californiafarmlink.org 1. Contact information Be sure to include information for both landowner and tenant 2. Description of leased property Include a map if possible. 3. Length of term How long is lease valid? Can it be renewed? 4. Rental amount and how it is to be paid What is the amount per term? Is it as cash or share rent? When is it payable? Are there periodic increases? 5. Maintenance and repairs Who is responsible? What are the monetary limits? 6. Liability insurance and indemniļ¬cation Is the tenant required to have liability insurance? Most landowners want to specify that theyā€™re not liable for tenantā€™s operation. 7. Use restrictions or requirements How is the land to be used? Are there prohibitions or limitations on its use, such as types of crops or production methods, for example? 8. Compliance with law Most leases reiterate that the tenant must comply with all appropriate laws. 9. Initial condition of premises Is the property okay as-is? Are improvements or upgrades required before or during the lease? 10. Alterations Are there restrictions or allowances concerning changes to the property? What changes or improvements are allowed, with and without speciļ¬c permission? 11. Subletting Are there any restrictions or allowances? Is tenant allowed to lease to a third party? 12. Dispute resolution California FarmLink suggests specifying that disputes should be resolved ļ¬rst by mediation, then through binding arbitration. Kinds of Consultants You May Need 1. Real estate agents 2. Real estate attorneys 3. Cooperative extension and other agricultural business consultants 4. Accountants and CPAs 5. Lenders such as Farm Service Agency (FSA), Farm Credit System, banks, Community Development Financial Institutions (CDFIs), Small Business Development Corporations (SBDCs) Elements of a Good Lease
  • 16. Finding Land to Farm: Six Ways to Secure Farmland By Kendra Johnson, California FarmLink Rex Dufour and Marisa Alcorta, NCAT Ā© 2009 National Center for Appropriate Technologyā€” NCAT Robert Armstrong, Illustrations Karen Van Epen, Production This publication is available on the Web at: www.attra.ncat.org/attra-pub/PDF/ļ¬nding.pdf IP349, Slot 347 Version 070209 Page 16 ATTRA