Preparing your farm for sale

Selling your farm is much more than just contacting your agent and solicitor to let them know you are selling.  It can involve selling your home, a business asset and other land and buildings that may have passed through multiple generations.  In turn, there will inevitably be additional considerations and complexities to account for which may cause delays and additional costs if they are not identified before a sale is agreed.

However, by reviewing the following matters as soon as possible after making your decision to sell, you may be able to alleviate the issues and allow a smoother overall transaction.   

Partner Andrew Holden, Head of Rural Business at Nathen’s Solicitors, explains some of the key areas to consider:

Selecting the right team
Selling your farm (or any part of it) is a big decision. You therefore want to ensure you have a team of specialists on board who you trust and who know about matters such as entitlements, stewardship, rural tenancies, etc. It is imperative therefore to instruct and liaise with the following professionals as soon as possible:

• Solicitor – ensure they are rural specialists
• Land Agent – not just an estate agent but a specialist land agency that deals with land and farms
• Accountant – the accountant plays an important role in saving you tax by planning ahead (see below)

What is being sold?
It is important to understand the exact extent of what you are selling and check that it is all registered with the Land Registry. With new MapSearch facilities from the Land Registry this can easily be checked by your advisors.

Whether you are selling the whole farm or only part, will of course affect the nature of the transaction. For instance, if you are selling part of the property, additional provisions may need to be made for access and services as well as other issues you may want to include specific to rural properties including:

• Continuing obligations on the buyer to cross comply and also comply with any remaining term and obligations of a stewardship agreement
• Covenants restricting planting in gardens of plants toxic to livestock when you are retaining adjoining land
• Any specific terms such as overage should be agreed upfront so they can be fully disclosed to a buyer

It is important to check title deeds for any possible issues. We often come across missing documents, undocumented rights of way, unregistered pieces of land and the need for consent from previous owners. These are all issues that can delay a sale. Your solicitor will be able to review the title before marketing and identify any possible issues – and the solutions available.

A key component of a sale will be that the property needs to be clearly illustrated on a detailed, Land Registry compliant plan. This will assist your solicitor and the buyer in understanding exactly what is being sold and will also allow the buyer to submit their searches sooner, which could potentially speed up the sale. This should not be a problem when instructing a land agent as they will prepare the plan for you – but delays can arise if a compliant plan is not used.

Deeds and documents
If your farm is registered your solicitor will be able to obtain the title documents from the Land Registry and provide them to your buyer’s solicitor as part of the ‘contract pack’.  However, if the farm is unregistered it will be necessary to locate the whereabouts of all deeds and documents relating to the property.  It may be advisable to register the farm in advance of the sale, but this is not always necessary and can just add to your costs, so don’t jump into this without discussions with your advisors.

It will also be useful to compile all documentation relating to utility bills, planning permissions, building regulations, guarantees, certificates, EPC certificates, tenancy agreements, wayleave agreements etc.  Providing these to your solicitor will ultimately reduce enquiries from the buyers and speed up the process.  Again, if these are not immediately available you can start the process of obtaining these before the sale to ensure minimal delays.

Tax implications
It is important to consider the tax implications of selling the farm as getting the right tax advice could save you a large sum of money.  You should consider whether the sale price will be subject to VAT and the amount of Capital Gains Tax which may be payable.  Alongside this you should also determine what reliefs may be available to you as this may reduce your tax burden.  Consult your accountant as soon as possible.

Mortgage
Advise your solicitor as soon as possible whether there is an existing mortgage or borrowing over the farm.  On sale you will need to either repay the loan to the bank or at least seek their consent to a release of some of the land without a repayment.  You should therefore provide your solicitor with the loan account details and details of your bank manager (if you have one) so that your solicitor can contact the bank to request instructions on their requirements.

Conclusion
If you plan ahead your farm sale can be relatively stress free and progress with minimal delays.  But if you fail to prepare for the sale in advance you could leave yourself with significant delays during the transaction with increased costs as a result.

Napthen’s are delighted to work regularly with Armitstead Barnett acting for both vendors and purchasers in residential, land and farm transactions.  This consistent working relationship ensures that all potential complications are minimised and dealt with promptly ensuring a timely purchase or sale. 

Andrew Holden
Head of Rural, Partner
Napthens Solicitors
(T) 01254 686216
(M) 07854 378739
E:andrew.holden@napthens.co.uk