Don’t let that pretty quarter section turn your head

Spring is a busy time for farmland sales, but make sure you don’t wind up with buyer’s regret

In spring, a farmer’s fancy turns to thoughts of getting more land — but don’t rush in to a purchase agreement, says a provincial farm financial specialist.
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Spring is a prime time for buying land, but don’t rush into a purchase, says a provincial farm financial specialist.

“With farmland prices continuing to appreciate, a well-researched financial and ownership plan will guard against ill-prepared land purchases,” said Rick Dehod. “So do your homework before making a final decision.”

  • Read more: FCC sees increase in Canadian farmland values slowing

Dehod recommends farmers take a look at three documents created by his department before pulling the trigger on a land purchase.

The first is 16 Questions to Consider before Buying Farmland.

Among the questions that should be asked are:

  • Why do you want to buy farmland?
  • What is the farm business’s financial condition?
  • Have you created a pro forma cash flow?
  • Given your revenue forecast, are you overpaying?

A Legal Guide to Plan Farm Land Ownership and Sale in Alberta looks at legal issues such as what is included and excluded in a land purchase, forms of ownership and the rights of a landowner. It also examines other considerations (such as restrictions on property use; purchase and sale contracts; methods of selling; tax considerations for the buyer and the seller) and explains the sale process (including determining a price and terms; listing with a real estate agent; and the requirements of a valid sale contract).

A Guide to Agricultural Security Agreements in Alberta explains the nature of mortgages, registration, priorities and terms.

The three documents can be found on the Farm Manager home page. Go to the Farm Manager Home Page at (The 16 Questions document can be found in the Financial Management section. The other two documents can be found in the Business Arrangements and Taxation section.)

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