You do not need a professional to sell a farm. In fact, you could sell your farm in a contract written on the back of a cigarette box. If not that much in a hurry, you might wish to consider what follows:

As far as the contract itself is required, there are standard legal requirements, such as writing, signatures and so on. Very often legal entities are involved, which brings common law, corporate law and trust law into play.

Land is delivered by registration, movables in a different fashion and, if the contract contains both, both have to be provided for. Where vehicles are involved, licensing and their working order need to be dealt with.

Consider the price: does one sell as a going concern and is VAT payable? The price may fluctuate, as timber farms must be maintained over a period of at least three to four months between sale and transfer, during which timber may be harvested, lost or burnt.

Keep in mind that the values of land and movables are dealt with separately tax -wise. The one invokes CGT or income tax and the other could be taxed if sold for more than the written-down value.

How will the purchase price be raised? If a bond is required, allow for assessments of such loans by financial institutions, which generally take about two months. A would-be farmer would usually require both a deposit of 30 – 50% of the purchase price and funds to farm in future, for a successful loan application.

The land, timber or enterprise sold, each come with special requirements:

  • selling agricultural land involves mining rights, title conditions and servitudes;
  • timber sales require the transfer of water-use licenses and, if you are a novice, inspections by experts. Often, take-up agreements with mills need to be considered and assigned in favour of the purchaser; and
  • sales of the whole farming enterprise has a host of further matters that need to be dealt with.

The seller should comply with legislated and commonly accepted requirements, such as providing –

  • electrical compliance certificates for all electrical installations;
  • gas safety certificates;
  • a certificate dealing with invasive plant species;
  • borer-free certificates for timber in buildings;
  • payment of municipal taxes beyond the date of sale.

The contract should deal with the legal position of labourers, occupiers and would-be occupiers of the land. If only the farm and timber is sold, the purchaser does not necessarily become liable to labourers employed on the farm. If the business of farming is sold, the purchaser becomes the employer of such employees by operation of statute. This brings into play historical issues such as the existence of employment contracts, outstanding bonuses, leave pay and the previous employer’s compliance with UIF, pension, tax and the like.

If such labourers are resident on the farm, they may well have acquired rights to reside on the farm beyond the term of their employment. Occupants of a farm cannot simply be evicted and their position needs to be dealt with. Furthermore, the process of land reform/restitution is far from over and all farm sales should be reported to the local Land Claims Commissioner.

Subdivisions of farmland bring a host of other considerations into play and will be dealt with in a later article.

Yes, you could contract on the back of a cigarette box. Doing so would be unwise. Sales of timber farms are complex and certainly not for the uninitiated. Mistakes can be very costly.