Ducks in a row: preparing for a successful farm sale
7 June 2022
Successful preparation is preparation for success. This certainly rings true when it comes to preparing a farm for sale. This article considers the merits of getting one’s ducks firmly in a row in advance of marketing land in order to save time, money and stress throughout the legal process.
First things first: what are you selling? If the land is registered, you should review the title plans to the property and ensure that they accurately reflect the area which you believe you own. If the boundaries of the registered title are not as you expect, consult a solicitor as soon as possible. Rectifying the issue could involve anything from a simple exchange with the Land Registry regarding amending the title plan, to the much more time-consuming process of making an application for first registration.
If any part of the land is unregistered, you will need to be able to prove that you have good title to it. Ideally you will be able to lay your hands on the title deeds to the property, but if for any reason they have been lost or destroyed then you will need to explain how you have established your ownership of the area for at least the past ten years.
If you intend to sell part of your registered title or if the land is unregistered and the deeds do not adequately identify the extent of it, you will need to arrange for an agent to draw up a Land Registry compliant plan for you.
Rights and restrictions
Part of the title review process should also involve considering whether or not the title accurately reflects what rights and restrictions you believe benefit and burden the land. You will need to be able to answer detailed questions on the source of such rights and how they are documented, if at all.
Gather together copies of any and all agreements you have with third parties in relation to rights exercisable over your land and theirs. Leases, contract and/or share farming agreements, licences (shooting, grazing, fishing et cetera) and other documents of a similar nature will all be relevant here. If such arrangements were agreed “on a handshake”, note down their key terms and the contact details of the relevant parties so that this information can be passed onto the buyer. Beware: seek legal advice before approaching anyone in relation to evidencing the arrangement as you might inadvertently scupper any chances of your buyer obtaining indemnity insurance to cover the risk of a lack of a formal right.
You should be able to show where each of the accesses into and across the land are located, so mark these on a plan. You will be asked whether or not these abut an adopted highway and, if there are any gaps between the property and the highway, the buyer may require you to swear a statutory declaration confirming how you have accessed the land over them during your ownership.
What are the routes of any water pipes which cross the land and are they publicly or privately owned? You should mark these on the plan, along with the locations of any water meters and stopcocks. You should also be able to show any abstraction points and be able to provide a copy of the abstraction licence, along with details of the volume of water taken from them.
You should also be able to show the routes of any other service media in, on and over the land. You will be asked for copies of any wayleave agreements or deeds of easement which may exist in relation to utilities which cross the land, so dig these out in advance. Be certain as to whether or not any payments under these agreements have been capitalised or are still paid at regular intervals – if the latter, locate evidence of receipt of payment from any service providers.
Collate all documentation you have relating to the planning history of the Property. This should include copies of current planning applications and past planning decision notices (along with related drawings), building regulations certificates, any agricultural occupancy restrictions, tree preservation orders, details of any planning designations and information relating to any notices received or enforcement action taken. If work has been carried out at the property but you either know or suspect that planning permission and/or building regulations consent was not obtained when it should have been, do not make enquiries of the local authority as you may prevent potential issues being insured in the absence of statutory compliance.
Unearth copies of any environmental reports which have been produced in relation to the property, along with any permits, licences or other certificates which have been obtained. In addition, the buyer will want full disclosure in relation to all matters concerning possible pollution or contamination, such as dead or burn pits, asbestos, fly tipping and other contaminants which may be present on the land. Be prepared to provide information on fuel tanks, waste disposal, silage and slurry storage.
Until 2024, when the Basic Payment Scheme is due to be replaced, you should be able to confirm to a buyer the number of entitlements which you hold and which will be transferred to them on completion. You should also be able to provide copies of the current and past two years’ worth of claims, along with details of the payments which you have received.
Collate details of any schemes into which the land has been entered, whether these are land management, or capital grant – think stewardship, woodland grant, energy crop grant, amongst others. A buyer will want to see copies of any existing agreements, plans, records kept, details of payments received and those which are due. They will also want information concerning any problems which have arisen or works which are yet to be carried out.
Take professional advice early
Consult an agent, a solicitor and an accountant as early as possible. They will assist with preparing the
necessary information, dealing with any issues which might cause delays in the sale process, structuring the sale tax efficiently and producing a set of carefully-considered heads of terms which will serve as a strong basis for negotiation. This piece is by no means exhaustive; there will undoubtedly be a wealth of enquiries raised throughout the legal process which will be tailored to the unique identity of the land and you will need to deal with those as they arise. However, the hope is that this article assists in focussing the mind on some of the most important information you will need to provide if you sell your property and, even if that is not currently on the agenda, in encouraging the keeping of meticulous records in the meantime.
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at June 2022.