With most things in life, preparation is key. This applies equally to property sales. Whether you are selling an entire farm, your business premises, or a residential property.
Of course, a farm sale may well involve all of these – as well as the main holding, there may be a farm shop, holiday lets, or workers’ cottages. Any property sale is stressful and there will be times when there are hiccups along the way which can’t be avoided, but there are ways to prepare for a sale that can help to reduce delays once a buyer is found.
The key is to think ahead and prepare for the sale before an offer is made and accepted. It is tempting to wait until you have a buyer as you may not want to incur legal costs before that stage. However, nothing that is done before a buyer is found is wasted – it is all work that would need to be done once you have accepted the offer – but it could save you time and money in the long run.
So, what can you do to prepare for a sale? What are the issues to look out for?
The first thing to check is your title to the property. Are you the legal owner? I know this may seem a strange statement, but we do come across instances where the title simply hasn’t been updated.
For example, the title may have been vested in more than one person and one of those may have died. If the co-owners were beneficial joint tenants, then all that would need to be done is to submit the relevant Death Certificate to the Land Registry to remove that person’s name from the register. If the land is not registered, it is simply a case of getting the Death Certificate ready to include in the bundle of title documents that will need to be presented to the buyer’s solicitor. Sellers aren’t always easily able to lay their hands on the Death Certificate and preparation means there is time before the documents are issued to the buyer’s solicitor to obtain another copy of it.
If the co-owners held the property as tenants-in-common then it may not be as simple as just producing the Death Certificate. That will still need to be done, but depending on the number of co-owners it may be necessary to appoint a second ‘trustee’ of the property to effectively transfer the title to the buyer. This is usually addressed at the time that the Transfer document is drafted, but by understanding that this is a requirement in advance, the seller can give some consideration as to who to appoint as the second ‘trustee’ and that person can be briefed as to what it means.
Where were the relevant documents completed to ensure that the legal title was passed to you if you inherited the property? we do come across situations where this hasn’t been done and it can be difficult for them to trace executors of the deceased person or they may have passed away themselves, which further complicates matters.
The same applies if a court order required the property to be transferred to you (either due to matrimonial proceedings or other litigation). Was the title transferred to you once the court order was issued? If not, this can be tackled before the title documents are issued to the buyer’s solicitor.
There may be mortgages affecting the title. Have the loans been repaid? If so, it may be possible to get the necessary documentation from the bank in advance of the sale so that the title can be tidied up and to eliminate the need to involve the bank during the transaction. Obtaining discharge documents from banks can take some time, so if this can be addressed sooner rather than later it can help to streamline the process.
Do you have title documents for the whole of the property that you are selling? Again, this might sound obvious, but it isn’t uncommon to find that small slivers of land or outbuildings are missing from the title, even though the seller has used that part of the property exclusively for many years. Similarly, do you have all the legal rights you require, such as access over neighbouring roads and provisions for water, electricity, and other supplies to the property? By doing these checks early, we can look at the options which will help to rectify these issues rather than waiting for the buyer’s solicitor to ask for them to be rectified.
If any title defects need to be addressed through an indemnity insurance policy, then you can look to get quotations for policies in advance of the sale. Getting insurance quotes can be quite involved if the property or the defect is complex, with insurers asking for lots of detail in some cases. By being prepared and getting the quotations in advance you have the peace of mind that the sale won’t be delayed whilst you deal with the insurer’s requests.
Enquiries
The type of property you sell will dictate the standard form enquiries you will be asked to address. If you are just selling a cottage on the farm, then it may just be a Property Information Form and a Fittings and Contents Form, both of which are relatively short and in a lot of cases require tick boxes to be completed.
If you are selling a farm, then you will likely be asked to complete Agriculture and Rural Land Standard Enquiries, which is a much longer form that requires more detailed information about a much wider range of issues. Of course, if there is a house (or houses) on the farm, then you will also need to complete the Fittings and Contents Form as a minimum too.
The Agriculture and Rural Land Standard Enquiries ask for information about stewardship schemes, the Basic Payment Scheme, drainage and watercourses, growing crops, animals, holdover, and much more. To answer many of the queries, you will likely need to provide maps, records, and documents. Where did you put the RLR maps? Do you have a business rates bill for the farm shop? Or the Energy Performance Certificate for the cottage? Considering the Enquiries in advance of the sale, it will allow you time to pull together all of the records that need to be produced for the buyer at an early stage.
Practicalities
Inevitably, there will be many items on the farm that will have accumulated over the years. It may be your intention to include some or all of them in the farm sale. But if not, think ahead about what you intend to take with you and what will need to be sold. Planning allows you time to discuss a possible dispersal sale or to make arrangements to put items into an auction.
Are there growing crops that need to be dealt with in the contract? I did recently encounter a situation where neither party had informed their solicitor that there were growing crops on the land and so when the time came to sign the documents we suddenly had to negotiate additional provisions to allow the seller onto the land to harvest the crops, which pushed back completion for a few weeks whilst instructions were taken and wording agreed.
If there are holiday cottages on the farm these will likely be sold on a furnished basis, but are there any items that you want to keep because they have sentimental value? Taking the time to consider this before a sale is agreed, upon means you are less likely to forget to include this on the Fittings and Contents Form when the time comes to complete it.
What bookings do you have for the holiday cottages? Is there a break in the bookings which might be a convenient time to complete and hand things over to the buyer? If so, letting the buyer know about this at an early stage is advisable so that the parties can try to work towards the completion within that window.
Conclusion
Of course, no amount of planning can eliminate issues that might cause delays. Some things may be simply beyond your control. However, a little planning in advance of the sale process can save a lot of time in the long run and can help the transaction to proceed much more smoothly. Selling the farm, which has been both home and business for many years, can be a stressful time – a little planning can help to ease the burden at a difficult time and make the whole transition much easier for everyone involved.
If you would like to speak to someone in the Agriculture and Rural Affairs team about issues relating to this article, please telephone 01642 356500/0191 2322574.
Nicola Neilson, Partner and Head of Agriculture and Rural Affairs
