Farm Sales & Purchases

Avoiding the Trials of Selling

The following thoughts may be helpful to you in alleviating some of the trials and disappointments you can encounter in a farm sale.   Anything that can be done to shorten the time between an agreement in principle – as set out in any memorandum of sale prepared by the selling agents – and exchange of contracts vital.

Here are some “tips” to help you and your team of advisors ensure that the sale proceeds smoothly and efficiently :-

1. Your Accountant
   
   Not infrequently sellers and buyers decide to consult their accountant on the tax consequences of a sale or purchase just before exchange of contracts.  It is better if the accountant is consulted as soon as a sale is agreed or even when sales particulars are being prepared because if the sale has to be structured in a specific way for tax reasons, this can be considered at the outset and we can draft contracts accordingly.
   
   Golden Rule 1: Accountants are not an afterthought.

2. Holidays

   The absence of any of the professionals acting for the buyer or the seller often slows things up.  When sales are agreed over the summer months with a September completion it can seem as if the professionals are conspiring to ensure that at least one key person will be on leave at any one time.  Remember that in most firms, and certainly at Wilsons,  it can be arranged that someone who is not going on leave between the memorandum and the exchange stage can act.
   
   Beware the words:  “My assistant is fully briefed”.
   
   Golden Rule 2: Ensure key professionals will not be on leave during the pre-exchange period.
   
   
3. Lines of Communication
   
   It will avoid confusion and promote teamwork if correspondence passing between the seller, his agent, the seller’s accountant and the solicitor acting on the sale is copied to all members of the selling team.
   
   Often it helps if the selling team meets and does not simply keep in contact by email or telephone.
   
   Golden Rule 3: Copy in team on correspondence and do not underestimate the power of face to face contact.
   
   
4. Establish a Realistic Timetable
   
   Many sales are agreed on the basis that exchange of contracts is to be “as soon as possible” or “within 7 days” and whilst both these expressions sound fine they are both unhelpful.  The expression “as soon as possible” is uncertain.  The words “within 7 days” are unrealistic and unrealistically tight deadlines often are not taken seriously and ironically, can mean a contract takes longer to exchange than when a realistic timetable is imposed.
   
   So, what is realistic?
   
   On the assumption that a seller’s pack has been prepared, your timetable might look like this:-
   
   Day 1: Seller’s pack despatched to buyer’s solicitor.
   
   Day 7: Buyer’s solicitors respond with approved or amended contract and raise any further enquiries their perusal of the documents supplied has raised.
   
   Day 10: Buyer’s solicitor and Seller’s solicitor meet (preferably at the farm) to inspect and discuss what terms (if any) cannot be agreed and need to be referred to their respective clients for discussion at a round table meeting (see day 14).
   
   Day 14: Buyer/Seller/their agents/their solicitors meet to discuss matters and resolve any outstanding difficulties.  This cuts out at least a week of correspondence.
   
   Day 17: Contracts are exchanged or the farm is re-marketed.
   
   The timetable can be altered if something unexpected arises, but mere inactivity on the part of the buyer’s team is not an acceptable reason.  The seller’s team should review the timetable regularly.
   
   Golden Rule 4: Make timetable realistic and get buyer and seller to “buy in” at the commencement of the sale.
   
   
5. Seller’s Pack
   
A well advised seller will ensure that he has a pack to send to the buyer as soon as a sale is agreed in principle.  The pack should contain:-

1.1 A draft contract for the sale of the property

1.2 The seller’s title

1.3 Searches – Local search, common search etc

1.4 Information on IACS, ESA’s, Woodland Grant Scheme etc

1.5 Employee’s details – contracts of employment

1.6 Replies to the type of enquiries often raised by a buyer

Our clients find that the preparation of a pack like this enables the sort of timetable we have discussed (exchange within 17 days) to be met.  We will  keep the seller’s pack up to date.

Often we receive packs that are 6 months old where the searches are out of date, tenants have come or gone etc.  If  we prepare a pack for you we will review it every three months.

Golden Rule 5: Prepare a comprehensive seller’s pack.

If you have any questions about this or any other matters relating to selling or buying  farms, feel free to contact Robert Swift on 01722 427601 or robert.swift@wilsonslaw.com

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