Buying or selling a farm

There’s the usual practical stuff. For example:

• How big is the property?
• What improvements are on the property?
• What’s the carrying capacity?
• What water is available?
• What’s the soil quality?
• What sort of soil management programme has been in place?

There are also often interesting legal considerations that crop up from time to time. Being aware of these potential issues is an advantage for buyers and sellers. For sellers, it’s good to look into these things before going to market so that you can present the property in the best light. For buyers, you want to know exactly what you’re looking at buying and sometimes things get missed out or left behind.

Things that should be checked include:

• Are there any areas of land which have been missed in past transactions? We sometimes see small areas of land, such as old church sites or other Crown holdings, that need tidying up.
• What is the legal access and does the legal access align with the practical access?
• Are there any enclosure permits or other Crown land arrangements? If there are any enclosure permits, has an application been made to purchase the Crown land?
• If the property is irrigated are there appropriate licences and approvals for the water access and infrastructure?
• If the property has bore water (which may not need a licence) are there appropriate approvals for infrastructure?
• Are there any stock disease, pest or weed orders affecting the property?
• Are there any give and take fencing arrangements in place and if so are they documented or informal?

Sellers should also consider the impact of the sale on their broader circumstances:

• How does the sale impact your succession arrangements (if you have any) or do you have family that may be impacted by the sale? If so, it’s prudent to talk to those family members about the sale. Farms are special places - even where you don’t think a family member will be financially impacted, a farm sale can have a big impact. It’s worth floating the sale early with family. 
• Will the sale affect your estate planning arrangements more generally? It’s worth reviewing your documents, especially your will, to make sure the sale does not cause problems or unintended consequences. 
• How is the sale managed from a taxation perspective? Are there things that you need to do before or after the sale to ensure that you pay the least amount of tax?
• If you are using a business structure in your farming operation, how will the sale affect the business structure/s?
• Will the sale affect any employment arrangements?
• Do you have financing arrangements that will be affected and need to be considered?
• Will the farm sale be incorporated into your superannuation strategy?
• Where will you live? It sounds obvious, but in the tight housing market we are in, it’s harder than ever to find the right place to live. 
  

These issues should also be considered from a buyer’s perspective:

• Succession – it’s never too early to start planning
• Estate planning
• Business structures and taxation planning including any employment plans
• Financing 

Making sure you’ve identified all the potential issues that could come up is a good plan for both vendors and purchasers.  

For further advice about buying or selling a farm, get in touch with us. 

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