----- Message from "Douglas Daggett" <ddaggett@lawyer.com>
on Thu, 4 Jan 2007 09:33:12 -0600 -----
To:
<realestate@iabar.org>
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?