Top tips when buying farmland for the first time
Auctions can be a very efficient way of purchasing property for farmland
Buying agricultural land at auction can be a very useful way to buy farmland but it can have adverse consequences unless the bidder prepares well in advance.
When buying at auction organisation is key. Follow these guidelines to create a smoother and less stressful process.
Tip 1
It is imperative that finances are in place prior to bidding as contracts for sale must be signed immediately after succeeding at auction and a deposit must be paid there and then. The deposit is usually 10% of the purchase price.
Once the contracts are signed at auction, you are legally bound to complete the sale. Normally the sale must be completed within four weeks and if you do not complete within the four weeks you could potentially lose your deposit, and even be sued for your failure to complete. Failure to timely organise such things as direct debit mandates, identification, buildings insurance and the like, as required, can often cause delays in completing a lending transaction.
It is not advisable to go ahead with bidding until your mortgage is fully approved for that property or your finance is in place. Be sure to factor into your budget any stamp duty, legal fees and land registry fees to complete the sale.
Tip 2
It is important to find out as much about the property as possible before bidding to avoid the common pitfalls of buying at auction. It is advisable to see the actual property and not just photographs of the property.
If there are buildings or dwellings on the land a structural survey should be obtained.
An engineer’s services should be sought to confirm that the boundaries on the ground are comprised within the maps.
It is also important to check for things that might not seem obvious, for example whether there is a tenant on the property, which could cause complications after the purchase.
Tip 3
Each property at auction has a legal pack containing all of the relevant information in relation to the property. The importance of reading this cannot be emphasised enough. It is advisable to get a copy of the contract for sale and title documents and give them to your solicitor.
Ensure that this is done in a timely manner to allow your solicitor the time to raise pre-contract enquiries with the solicitor for the vendor. By doing so you will have the benefit of legal advice and you will also have the opportunity to agree to the timely insertion of any conditions for your benefit into the contract for sale with the vendor’s solicitor.
Your solicitor will also carry out an investigation on title to make sure that the vendor has full power to sell and that you will have no trouble becoming the registered owner and selling on the land.
Tip 4
Check to be sure whether you have access. This is incredibly important and land should not be bought without it.
Be certain that permanent, legal, transferable access is specified in the deed. A minor disagreement with a seemingly friendly neighbour might leave you without access to your land.
Tip 5
It is also important to check whether the entitlements are passing with the land.
Entitlements attach to the farmer and not to the land — so it is very important not to assume that the entitlements are passing.
Auctions really can be a very efficient way of purchasing property for farmland.
The benefit of buying at auction is that the transaction is immediate and it is possible to come out with what you want at a bargain price if nobody else in the room on that particular day is interested.
It is always highly advisable to obtain professional advice before buying farmland at auction. The cost of engaging a surveyor, an engineer and a solicitor can save you thousands in the long run.
