Getting Your Rural Land Ready for a Sale – Part 3: avoiding issues

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By Victoria Sandberg, Partner specialising in Commercial Property and Head of Rural

This is the third in a series of blogs about preparing your rural land ready for a possible future sale.

In my previous blog on this subject, I explained the importance of checking for any potential stumbling blocks on a sale – before you put the property on the market. As I said in that blog, issues that are revealed after terms have been agreed can often result in the buyer seeking to reduce the purchase price. The sale is therefore likely to proceed more smoothly and at the agreed price if any issues are made clear at the outset.

Examples of the types of issue that might arise are:

  • Lack of legal rights to and from the public highway

If this is the case, it is likely to have a significant effect on the value of your land. However, if we have time to try and get a right of way in place (if possible in the particular circumstances) then we may be able to resolve this before a buyer is found, which should then lead to a quicker sale at a higher price.

If you need to negotiate a new right of way, you are more likely to achieve this with a neighbouring land owner at a reasonable price if they don’t know that you are about to sell!

However, be careful not to discuss this with your neighbour until you have taken legal advice, because it might be that this is an issue that would actually be better dealt with by way of an insurance indemnity policy. Such policies are not usually available if you have already spoken to the owner of the right of way.

  • Undocumented or badly drafted leases

You might need to have new leases put in place for occupiers of various parts of your land. With rural land it can be common to find that there is no proper legal documentation in place – the tenancy may only have been verbal, on a “farmer’s handshake”. Sometimes it has been put in writing, but possibly not in a form that solicitors acting for a buyer or a bank would be happy with, as the effect of the document may mean that it could be difficult to get the tenant out at the end of the lease.

This can have a significant effect on the value of the land, although if a purchaser is aware of this when they put their offer in, they should already have taken this into account. However, if they are not aware until their solicitor starts reviewing the documents, they might use that as an excuse to reduce the price. They might also ask you to put a formal lease in place before they are willing to buy the land, and that will delay matters. You might also find yourself having to pay the tenant a premium to agree to this, if they know you are trying to sell.

Where you own vast amounts of land, it can also be easy to forget to renew leases. So even if your tenant shouldn’t have a right to renew its lease when it comes to an end (“security of tenure”), if you forget to renew their lease and the tenant stays on, you might find that they have inadvertently acquired such right. Again, therefore, if you have time for your solicitor to review the documents before you sell, hopefully we will then have time to try and correct this.

I should also say that if you have tenants with security of tenure, this could have a significant impact if a developer wants to buy your land, because they may well want to be able to get the tenants out at the end of their leases, without a fuss.

In my next blog I will discuss dealing with replies to the standard enquiries which need to be answered when you sell land. These can take a very long time to answer, so now could be a good time to prepare them in advance!

This blog was originally intended to form part of my talk at Longmores’ annual rural seminar at Knebworth House in March. For obvious reasons it has been postponed. We hope to run the seminar again this year if at all possible. If you would like to be added to the invitation list, please e mail our marketing manager:

Please note the contents of this blog are given for information only and must not be relied upon. Legal advice should always be sought in relation to specific circumstances.