Property is a key asset for many family farms but legal issues need to be addressed.
For many farmers, property is the key asset of their business and whether selling or re-financing, a bank will probably be involved. To protect its own security, a bank will almost certainly insist on any problems with the asset being resolved, says solicitor Steven McGuigan, a partner with Veale Wasbrough Vizards.
But, while concentrating on day-to-day tasks, farmers can easily neglect legal issues, which will reduce the farm’s value, or lead to avoidable expense.
Most title problems have a solution, he says. But if they are uncovered at the last moment, your options will be limited and you will often be required to take out an insurance policy.
“If you do need to do this it will be cheaper if you can provide detailed information about the background and history, but this takes time to assemble. Tackling these issues early will make life easier in the future,” explains Steven.
“Farms are often family businesses and their land can pass from generation to generation without undergoing the legal scrutiny of a sale. This makes it more likely that problems remain hidden, only to be exposed during a sale or refinance, where they can cause delay and expense.”
“Over time, the use of land changes and legal documents may no longer reflect the position on the ground,” he continues. “Boundaries may have moved, footpaths may have been re-routed or additional land may be used for storage or parking.”
“We recently acted on a sale where the access to part of the farm crossed three other sites, but there were no written rights for the farm to use it. There was no problem in practice, but the sale could not proceed until the seller had purchased an expensive, and probably unnecessary, insurance policy. If the issue had been identified earlier, there would have been more time to gather information and a cheaper solution could almost certainly have been found.”
Even if you are not considering a sale or re-finance, you should think about investing some time in reviewing your title, to your land. This allows you to identify any problems while you have time to find solutions. In the end, this should help you to maximise the value of your most important asset.
What you need to think about…
Check what you own
Speak to your solicitor and ask for a plan showing the extent of your land ownership. Do the boundaries on the plan reflect the position on the ground? Who looks after the boundary structures?
Do you occupy any land outside your ownership?
Is there anyone in occupation of your land?
Find out if your land is registered at the Land Registry. If not, discuss this with your solicitor. Registering your land can be surprisingly inexpensive and the Land Registry are often very helpful when dealing with first registration applications. This process will speed up future transactions and help to flush out any problems.
How is your water supplied?
Do you own the supply?
Do you have any necessary abstraction licences?
If you are connected to anyone else’s supply, do you have the necessary rights?
Is anyone connected to your supply? Is this properly documented?
How is the land accessed?
Is all of your land accessible from the public highway?
f not, how do you access it?
Is this documented?
Is anyone using your land to access their land, and is this documented?
How do you use the land?
Are planning consents in place for the current use, and for the buildings on the land?
Do you have copies of building regulations approvals?
Do third parties use the land, for example for business, shooting or dog walking? If they do, they could be acquiring rights to continue to do so, which could prove difficult to bring to an end, affecting your future plans for the property.
Talk to your family and employees
This exercise can usefully form part of the succession planning process. Very often the older generation of a family will have direct knowledge that is very helpful. Gather and record this information while you can.
Farming families clearly need to keep abreast of things relating to their land, one of their key assets and not defer doing the necessary work to keep things in order.