A farm purchase agreement covers the sale of a farm, including the farmland, the home, and other existing structures.
Putting this agreement in writing instead of simply a handshake deal is crucial.
Most states require the sale of land in writing, so a written farm or ranch purchase agreement is necessary.
What Is a Farm Purchase Agreement?
A farm purchase agreement is a legal contract for selling farmland and its structures. This can include the farmhouse, barns, land, crops, and much more.
Farm purchase agreements create a legally binding contract between the buyer and seller.
These agreements are also commonly called:
- Farm purchase and sale agreement
- Farm and ranch purchase agreement
- Farmland purchase agreement
- Farm and ranch contract
- Farmland purchase agreement form
- Real estate purchase contract (farm and ranch)
When Do You Need a Farm and Ranch Purchase Agreement?
A farm and ranch purchase agreement is helpful whenever you want to sell or purchase farmland. Farms and ranches are valuable assets that you should protect with a comprehensive sales agreement.
When entering such an important transaction, you must protect your buyer’s or seller’s rights.
Situations that often call for a farm purchase agreement include, but are not limited to:
- The sale of farmland
- The sale or purchase of a farmhouse
- Purchase or sale of barns and other attached structures
- The purchase of a farm business, including its assets (crops, equipment, etc.)
Why Use a Farmland Purchase Agreement?
Buying farmland is usually a significant investment.
You want to ensure the terms of your agreement are in writing to avoid any disputes later. Such disputes can lead to costly litigation and the loss of your investment.
Most states follow the statute of frauds which requires certain types of contracts to be in writing to be binding, including the sale of land.
The agreement may be unenforceable or void if it is not in writing.
What to Include in a Farm and Ranch Contract
Writing a farm and ranch contract is easy when you use a template agreement like the one in our easy-to-use document builder.
In that agreement, you will include the essential terms such as:
- The effective date of the agreement
- The names of the parties involved in the transaction
- A detailed description of the property, including the address and the legal description
- Identification of the crops or structures included in the sale
- The purchase price, earnest money deposit, financing, and other financial details
- Disclosures, representations, and warranties
- Rights to inspection and title insurance information
- Closing cost details and other standard legal clauses
Many people refrain from putting a contract in writing because they are unsure how to start.
Legal Templates makes it easy for you to create a customized farm purchase agreement.
How to Write a Farm Purchase Agreement
Follow the steps below to write a farm purchase agreement.
Step 1 – Write the Date of Agreement
Enter the date for your farm purchase agreement.
Step 2 – Fill In Seller and Buyer Information
Identify the seller and buyer, the parties that are signing the agreement. Provide the full name and current address.
Then indicate if the seller and buyer are individuals or entities, including the entity type.
Step 3 – Enter Property Description
Describe the purchased property and include as much detail as possible to accurately identify the property.
Include the property size, address, legal description, and whether specific improvements and crops come (or do not) with the sale.
Step 4 – Fill in Purchase Price
Write the amount of the purchase price the buyer is paying the seller for the property. Include details regarding earnest money deposit and method of payment.
Step 5 – Note Financing Details
Provide whether the buyer will assume the seller’s existing loan and whether the purchase is contingent on the buyer obtaining a mortgage.
Step 6 – State Any Seller Representations and Warranties
Select the representations and warranties the seller will make under this agreement.
Write in any other representations and warranties not already provided.
Step 7 – Include Closing Details
Provide the closing date and location. Indicate the seller and buyer closing deliverables and the seller and buyer closing costs.
Step 8 – Write Delivery Date of Property
Provide the date the seller will deliver possession of the property to the buyer.
Step 9 – Enter Any Miscellaneous Provisions
Provide for miscellaneous provisions such as seller disclosures, property inspection, title insurance, and dispute resolution methods.
Step 10 – Obtain Signatures
Both the seller and buyer will sign farm purchase agreement.
Farm Purchase Agreement Frequently Asked Questions (FAQs)
Can a purchase agreement be handwritten?
A purchase agreement can be handwritten, but it will likely be clearer if it is typed or computer generated. Too many people use informal documents to make a deal, which can create problems later on. At the very least, the parties should use a sample farmland purchase agreement and fill in the blanks.
Does a land contract have to be recorded?
No, a land contract is valid once the parties sign it. Recording the land contract with the county clerk gives notice to the public that the sale occurred and that there is a new owner.
Sample Farm Purchase Agreement
Below is an example of what a typical farm purchase contract looks like:
