A Primer on the Owner-Financed Farm Sale

There are fewer farm acquisition arrangements more attractive for new farmers than the owner-financed sale.  It can be a win-win situation for both the farmer-buyer and owner-seller,  as long as both parties are well aware of the risks before entering into an agreement. In an owner-financed sale, title is passed to the farmer-buyer, and the owner-seller basically acts as the bank.  Land, the farm house(s) and existing infrastructure are subject to a mortgage from the owner-seller. This is distinct from a ‘land contract’ where the farmer-buyer does not assume title until 100% of the installments to meet the purchase price are paid. Owner financing is advantageous for farmer-buyers who have trouble meeting the credit history or collateral requirements of traditional lending institutions.  Owner-sellers are often willing to set lower interest rates due to the fact that there are no “points” on the loan or no spread (difference between the interest rate the bank is charged for obtaining its money and interest charged on loans made to customers, which goes towards paying bank employees or overhead). Owner-sellers can benefit from an owner-financed sale in two primary ways:  first, the owner seller can ge

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One thought on “A Primer on the Owner-Financed Farm Sale

  1. Thanks for this, Ben, and for all of your other work.

    Would you consider doing a similar piece about the use of the vehicle know as “Lifetime Estate”? We’ve used this once, and we are currently looking at another opportunity. It feels like a very civilized form of property succession.

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