Home, Home on the Range

by Bryce Linden, Attorney at Cook & James

This blog is a forum to curate expert commentary, opinion and thought leadership resources. Today, Bryce Linden, who clerked for the EPA, continues his mini-series examining topics in environmental real estate law. Previously, he has written about such topics as flood insurance, the Clean Water Act, lead-based paint, clean drinking water and environmental due diligence. Today he dives into the ins and outs of purchasing farmland in the rich and varied land in Georgia.

When visitors travel to Georgia, the first place they naturally think of visiting is Atlanta, the largest city and the state capitol. Yes, our great city is bustling with plenty of things to do, but if you drive south on Interstate 75 just about an hour outside Atlanta, you may be surprised to find rich agriculture and farmland. Although Georgia is generally known as the Peach State, the state General Assembly actually chose the peanut as the state crop in 1995 and our treasure of farms and agriculture contributes almost $73.3 billion annually to the state economy.

After a bit of time basking in the rural beauty of our great state, many visitors and residents alike have been compelled to buy a slice of Georgia's rich farmland. But it’s not as easy as just finding that perfect spot and plunking down the cash. There are several important considerations when negotiating a purchase and sale agreement for agriculture and farmland.

Is a Tenant Harvesting Crops?

The first legal item that a purchaser should look out for is whether the current owner (seller) has a binding lease agreement with a tenant to use the farmland to harvest their crops. The purchaser should have their agent or attorney request any lease agreements that may be ongoing then review the terms and conditions of that lease with their agent or attorney. If there is an outstanding lease, the purchaser may be bound by the lease agreement once they take the title to the land.

It may be prudent to make the offer contingent upon the lease terminating at closing or the end of the current crop year. If the lease is examined before closing, you may find yourself in a cash rental lease or crop share lease.

Cash Rental vs. Crop Share Lease

A cash rental lease is an agreement where the operator / tenant pays the landlord / owner a specified amount of money for rights to farm the land. This can be set at a fixed rate or variable rate. The landlord / owner usually does not share in any expenses to run the farm.

A Crop Share Lease is an agreement where the landlord / owner and the operator / tenant share revenue received from crops being harvested on the land.

If you decided to continue with a current lease that the seller has in place, it is advantageous to discuss this with an attorney who specializes in these types of transactions.

Due Diligence is Important – Surveys and Easements

Throughout my several blogs, you may have noticed a pattern that, whether I’m discussing buying raw land for farming or that nice single-family home in the city, I always stress the importance of conducting due diligence on a prospective property.

Your agent or attorney will recommend that your due diligence on the farmland should ensure there are no outstanding issues that may rear an ugly head. Examples of due diligence may require a survey to determine where the boundary lines lie or possibly if easements are needed to access the farmland.

A survey on your prospective farmland will determine the boundaries and any potential adverse possession claims that may exist. Adverse possession refers to any individuals or entities using the property without holding proper title. An example of this may be a farmer harvesting crops a certain number of feet beyond their property line and extending onto the farmland you are purchasing.

A buyer and seller of farmland may agree to an easement if they have houses or barns that surround their farmland, and the seller is only selling the farmland that surrounds their houses or a barn that stores equipment. The seller may need access across the farmland to reach their house or barn. The buyer and seller should always negotiate terms and conditions on how the easement will be maintained and any special rules that may govern the easement.

This is just the tip of the iceberg when it comes to deciding whether purchasing farmland is right for you. Stayed tuned for my next blog in which I’ll discuss more agricultural law topics and things to watch out for when purchasing farmland, including learning about and protecting mineral rights that can be quite precious.

Until next time….

Bryce Linden holds a law degree from Georgia’s Mercer University and an LL.M in environmental law from George Washington University in Washington, DC. While in our nation’s capital, he clerked for the EPA, specializing in hazardous waste, chemical clean-up and other environmental hazards as they pertain to real estate transactions. Linden brings his eco-expertise to Cook & James and will work on residential resale transactions as well as with home builders. This is the seventh in his ongoing series covering various real estate law and environmental issues. If you have a question or an idea for an upcoming blog topic, drop him a note at Bryce.Linden@CookandJames.com.

Thanks https://unsplash.com/@ecclesiastudio for the photo!