Doug,
I just represented a seller in
Muscatine County who had land in CRP and was very concerned about this
same issue as he had been burned in the past.
First, make sure that the Offer
to Purchase specifically states that the offer to sell is contingent on
the buyer continuing the property in the CRP program or is willing to pay
back the difference and hold the seller harmless. That will give
you a breach of contract claim if buyer does not follow through. It
also confirms that the buyer understands the land is restricted.
If the buyer is on board to take
over the balance of the contract, then the FSA office is going to require
that the new buyer sign a CRP contract with them for the remainder of the
contract term. However, the FSA office will not/cannot obligate the
buyer until the buyer is the owner, therefore, they will require a copy
of the recorded Deed. In Muscatine County, we have gotten the FSA
office to print the contract with the new buyers' information in it prior
to closing. The Contract was then signed by buyers at closing and
delivered to the Seller to take down to the FSA office That way the
seller knew it was transferred. We also marked the Deed to be returned
to our office after recording so that we could make a copy of it and forward
it to the FSA office. We then mailed the original Deed back to the
buyers' attorney.
This worked really well for us,
and we have made it our new policy for sellers with CRP ground. The
FSA office liked it because they do not have to chase people around after
the closing. The buyers should like it because they do not have anything
to do post closing.
Hope this helps!
Rosy Avalos Eichelberger, JD
John R. Eichelberger, P.C.
208 West 2nd Street, Suite 201
Muscatine, IA 52761
Telephone: 563-263-6900
Fax: 563-263-6902
Email: rosy@jrelaw.com
----- Original Message -----
From: "Douglas Daggett"
To: realestate@iabar.org
Sent: 1/04/2007 9:33AM
Subject: CRP contract assignment
Hello everyone,
I am trying to brush up on my future interests and would
like some feedback. I am representing a farmer who is getting ready
to sell a farm that has CRP contracts in place. The local FSA office
has informed him of a least one situation recently where USDA is seeking
damages of approximately $50,000 from a farm seller whose farm buyer took
the property out of CRP after the sale and refused to reimburse FSA for
the contract penalties for early termination of the contract.
I am contemplating an addendum to the purchase agreement
that survives closing saying that Seller assigns the CRP contract and Buyer
accepts responsibility for performance and will hold seller harmless. In
addition to the addendum I am also considering the use of conveyance by
fee simple determinable with a reverter (i.e. A to B so long as B performs
CRP contract; in event B materially breaches CRP contract then title shall
revert to grantor). Since the CRP contracts are less than twenty
years and the seller does not have a stale uses issue. The rationale
for adding the deed language is to protect my client from an insolvent
buyer in the future who will be judgment proof from a contract judgment.
Questions:
This is all good for my seller, but will a buyer's attorney
and mortgagee find that such title (fee simple determinable) is marketable?