Land Contract Program Supports Land Owners Selling to New Farmers

A land contract is a tool which can be used in transferring land to the next generation farmer as well.
Land Contract Program Supports Land Owners Selling to New Farmers - Articles

Updated: June 20, 2016

Land Contract Program Supports Land Owners Selling to New Farmers

A land contract is an installment contract between a buyer and a seller for the sale of real property, in which complete ownership of the property is not transferred until all payments under the contract have been made. This contract reduces the risk to the seller because land ownership does not change until all payments under the contract have been made. You, the farmer, must meet the requirements for Guaranteed and Direct Farm Ownership programs, and also must be the owner/operator of the farm by the end of the guarantee (or contract). To get all of the details about the land contract program, read the full report.

These documents often contain a lot of words and terms new farmers (and often experienced farmers, too) do not understand. Your local FSA office has staff that can talk you through the program and the things you need to know when considering programs.

For the land contract guarantee, "The buyer must provide a mini­mum down payment of five per­cent of the purchase price, plan to operate the farm, and be able to project the ability to make the land contract payments." Therefore, you, the farmer, will have to be prepared with a business plan prepared to show they are able to make payments. (Do not have a business plan? Consider taking the Exploring the Small Farm Dream course offered through Penn State Extension's Start Farming program.) You will also need to be organized with financial information including a balance sheet and credit report. Your local FSA office can help you prepare and gather these documents.

Although FSA offers a variety of financial services to farmers of all experience levels, they offer many services specifically for beginning, transitioning, women, or socially disadvantaged farmers. Begin your search for other grants and contracts available through FSA.

Authors

Tianna DuPont