Thinking of buying farmland? Rural solicitor Karen Walsh gives her top tips
The most common ways of buying and selling land in Ireland continue to be 'sale by private treaty'.
Dear Reader,
Land does not come up for sale very often where we live or run the farm business. The first and most common reason land is put up for sale is the ‘executor sale’. This is where the landowner has died and the land must be sold to distribute the proceeds of the estate to all to the beneficiaries.
Such sales are often anticipated by neighbours. The second most common reason for selling land nowadays is marriage breakdown. Another increasingly common reason for selling land is to pay for nursing home costs or to repay the HSE for a nursing home loan as people are living longer.
The most common ways of buying and selling land in Ireland continue to be 'sale by private treaty', which means that the seller, typically via an auctioneer, puts their property on the market and invites offers. Another common method is by public auction.
You need to conduct due diligence. As the saying goes ‘Buyer beware’. A lot of questions need to asked before you put pen to paper.
You need to walk the land and become familiar with it. You should instruct an engineer/surveyor to ensure that the contract map matches the land on the ground.
Does the property have a right of way over it? Are there listed buildings on the land? Is there a fairy fort on the land that restricts the use you can put to the land? Is the land being sold with or without the Basic Payment Entitlements?
If there are buildings on the land, are they in good condition? Is there planning permission for the buildings on the land? Are there any disputes with adjoining owners? Is the property land designated under the hen harrier scheme? Does the property have access to water? Is there a septic tank on the part of the property being sold? Are there any crops on the property being sold? If so, are the crops included in the sale or is the seller retaining the benefit?
It is essential that all contracts clearly state whether or not the property is sold with vacant possession, which means that the buyer must be able to occupy the property. This is particularly relevant when buying a tenanted farm – the seller must ensure that the tenant (and all his assets) has vacated the property prior to closing.
You will need to ensure that you have finance in place with your bank, unless you can fund the purchase through your own resources. This can take time and it is important to engage with your bank at the earliest time.
Your solicitor will calculate how much stamp duty is due and request this from you before the closing of the sale. The stamp duty is paid to the Revenue Commissioners. Without this stamp, the deed cannot be registered. Stamp Duty is paid on the value of the land at the rate of 7.5%.
Farmers under the age of 35 who have satisfactorily attended an approved agricultural course, that meets Revenue's requirements, do not have to pay Stamp Duty. The farmer must also have a business plan in place certified by Teagasc in advance of the closing of the purchase.
However, the young farmer must not sell the land for five years after the transfer, unless the farmer is replacing the lands sold within a timeframe of one year. Also, she or he must spend 50% of their time farming the land for the five years after the purchase. Id there is a residential property part of the sale, stamp duty of 1% is payable on the market value of that part of the property.
These are some examples of the important matters you need consider. There may be more depending on your particular circumstances. As always it is essential that you obtain the necessary advices from suitable professional advisers and in particular from a solicitor who is experienced with land sale and purchases.
Buying a farm will more than likely be the most expensive purchase you make in your lifetime and it is critical that you conduct a full investigation of the property and title to avoid buying a ‘pig in a poke’.
