Buying or selling a farm can seem like an insurmountable task, full of legal challenges, paperwork problems and stressful decisions.
Agents say months can be wasted while questions and answers go to and from buyers and sellers.
But there are plenty of ways to make this procedure simpler and preparation is key.
Brown & Co land agent and partner James Walton explains the main reasons for a farm sale to be held up and gives advice on how to ensure a smooth process.
1. Lack of preparatory legal work by the seller/seller’s lawyers
Such as contracts, transfers, standard replies to enquiries and searches. These can be prepared at the point the farm is marketed and in any event before an offer is accepted.
These can then be issued simultaneously with accepting an offer, rather than waiting two or three weeks for the seller’s lawyers to draft and issue the paperwork.
This also sets the right tone for the sale, as it’s evident that the seller and their advisors are well prepared.
2. Land registry title and boundary issues
Sellers should ideally already have registered title to the property, as opposed to a selection of old deeds. This should make a sale easier to transact.
However, issues with titles can be evident, such as field corners or access ways not being included in the title plan or register, and third-party issues such as rights of way or boundary disputes.
Sellers should always make sure the property being sold matches the Land Registry title.
If an overage condition is proposed or is pre-existing, this should be made clear in the sale particulars and the wording of such clauses should be stated verbatim in the sales particulars where possible.
It is also important to agree the “trigger” event (usually the grant of planning consent, sale of the site or implementation of the planning consent) that will dictate when the overage/uplift becomes payable.
4. Agent preparatory work
The selling agent should prepare all the relevant details, such as previous cropping and yield data, BPS importation, stewardship details, abstraction licences, soil analysis, contracts and quotas, and have the sale particulars prepared prior to the marketing of the farm.
It is becoming increasingly common for selling agents to set up a web-based data room to hold the information, as it would be impossible to incorporate all this in sale particulars.
A web-based data room is an online platform that holds detailed information and property documents which interested parties can access on a secure and confidential basis.
5. Finance delays
A buyer should ensure that they have made enquiries with their bank and understand what is required in order to obtain the borrowing and the timescale involved.
Often the banking process, including valuation of the security being offered by the borrower, can take some time.
Recently I had a case where the borrower changed bank at the 11th hour and they needed further valuations of security – by the time the valuations had been undertaken and the bank’s legal work was completed, the sale was delayed by eight weeks.
6. Anti-money laundering
The UK Anti-Money Laundering and Counter Terrorist Financing legislation came into place in 2017. This now means that selling agents must verify the buyer in addition to the seller.
All buyers and buyers’ agents should seek to prepare the necessary documents or have certified copies lodged with their solicitor if inspecting the original documents is not practical. These documents typically include passports, driving licences, shotgun certificates and utility bills.
However, the process becomes more complicated if the buyer is an offshore trust or an investment fund.