You own rented agricultural land and wish to sell it. The situation, although very common, is nevertheless quite complex: deciphering.
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Thus, in the case of a rural lease, the contract has a minimum duration of 9 years and the farmer has an automatic right to renew the lease. First of all, it is necessary to review the rights of your tenant, the farmer. The rural code is very strict (article L 411-1 et seq.) and most of the provisions of the lease are provided for by law without any possibility of derogation. |
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Even if it is not in writing, the (paid) lease of an agricultural property is a rural lease (known as a verbal lease) subject to the same rules on duration and renewal. One difficulty, however, is the uncertainty as to the starting date of the contract, as we shall see later.
Unlike residential leases, the owner's wish to sell the property does not allow him to oppose the renewal of the lease.
As a landlord you therefore have several options:
Selling the rented property
Selling the property to your farmer
Oppose the renewal of the lease to sell the property free of tenancy
This right to renewal is not universal and certain circumstances may allow you to object:
Failure of the farmer to comply with operating and living conditions
Farmer reaches retirement age
Taking over the property to build a house
When the farmer reaches retirement age, you can give him/her notice on the expiry date of the lease or after 3 years if the lease is renewed.
Example: The lease expired on 31 December 2021 and was renewed. The farmer reaches the age of 62 during the year 2023. The lessor can therefore request the non-renewal of the lease for 31 December 2024, 2027, 2030, etc.
Warning: To oppose the renewal of the lease, the owner must respect a very strict formalism: notify the farmer of his decision by bailiff's act at least 18 months before the end of the lease. The intervention of a rural law professional is recommended to avoid any error. Even more so when it is a verbal lease where the starting date (and therefore the end date) is difficult to prove officially.
The takeover to exploit the property will be the subject of a specific article in the near future.
But it is not because your landlord reaches retirement age that you can end the lease.
The farmer can transfer the lease to his spouse or descendants.
However, your consent is required. If you do not agree to this transfer, your farmer may then apply to the Tribunal Paritaire des Baux Ruraux for permission. Except for poor maintenance, repeated late payment, etc., in short faults that are attributable to the farmer in the life of the lease, the Tribunal will usually authorise the transfer of the lease.
Your farmer has a right to renew his lease and a right to transfer it to his descendants. However, there is no obligation on either party to continue the tenancy if they do not wish to.
You can talk to your farmer about your plans to sell. If you reach an agreement on the terms of the purchase, you can sign an amicable termination agreement between you and the farmer at any time during the lease or its renewals and carry out the sale.
It should be noted that if the lease is more than two years old, the farmer will benefit from reduced registration fees, which will significantly reduce the cost of the deeds (a saving of more than 5%). And the SAFER will not benefit from a right of pre-emption if the lease is more than 3 years old because in this situation the farmer's rights take precedence over those of the SAFER.
You can also offer your farmer an amicable termination of the lease in return for a termination fee. He is free to accept or not. If he accepts, you can then look for a buyer with land that is free of tenancy.
If you have not reached an agreement with your farmer, you can still look for a buyer.
This could be an investor: a person who buys agricultural land as an investment and wants to receive rent.
Or a future farmer: a buyer who will ask for the lease not to be renewed at the end of its term in order to farm it himself. Given the time required to acquire the property and the time required to give notice of termination, this future owner will have to start his project long before the end of the lease.
The fact that the property is leased has an impact on the sale price. The price is indeed subject to an average discount of 20% (cf. the price of rented land in France), which is explained by the smaller number of potential buyers and by the relatively low level of rent compared to the value of agricultural land.
Another important point is that your buyer takes over the lease with all its conditions. It will not be possible to modify the lease without the agreement of the farmer, except in the situation where the rent is excessively low in relation to normal practice. The new owner could then apply to the Tribunal Paritaire des Baux Ruraux for an increase in rent.
Your farmer has told you that he does not want to buy the farmland on the terms you offered. You have sought and found a buyer for your land.
You must still inform your farmer of the conditions of the sale because he has a right of pre-emption.
The notary will notify the farmer of the sale, who will then have 3 options:
Please note that even a small change in the conditions of the sale requires the procedure for notification of the right of pre-emption to be restarted.
Sales within the family circle and donations or successions do not give the farmer the right of pre-emption.
However, there is an exception to this right of pre-emption. The lessee can only benefit from this right if he owns himself a surface of land inferior to 3 times the Minimum Installation Surface. This area is defined at the level of each department.
The farmer who exercises his right of pre-emption is obliged to farm the property for a minimum period of 9 years.
With regard to the rights of the farmer, if your relationship is not good, it may be difficult to find a buyer who will accept these legal complexities.
However, investment in agricultural land is becoming increasingly popular and sought after by investors.
Indeed, for several years now, interest rates have been very low. This drop in profitability has made agricultural investment more attractive. In France, farm rents represent between 1 and 5% of the value of the land. Moreover, over the past 30 years, the value of land has risen sharply.
Agricultural land is therefore an attractive investment, especially as a long-term lease will allow tax advantages in the event of donation, inheritance or in respect of the Tax on Real Estate Assets.
We therefore advise you, if you wish to sell your leased agricultural land, to contact your farmer and offer to buy it.
If your farmer refuses to buy, you can propose an amicable termination of your lease in order to put a free piece of farmland up for sale.
Then, publish your ad on ma-propriete.fr in the land category: "free farmland" or "rented" depending on the situation.
