Posted 5/15/2019 09:47 (#7498358 - in reply to #7497863) Subject: RE: Land contract do's and dont's?
How to manage improvements and their value!
If you sink a ton of money into tile, fence, ditching, driveways, put up a grain bin, or anything considered "real estate" or "real estate enhancements" you will have to pay cash when it happens. BUT what if the contract unravels for some reason?
Suggestion here is to put it on a schedule. Say, for example, ten years straight line. So if you put in $60,000.00 in tiling/drainage... and the contract somehow comes apart in 3 years, he owes you $60K - $18K or $42K for the remaining value. VERY common practice in long term rental agreements when the farmer wants improvements but the landowner isn't willing to pay.
Edit to add:
How to manage "rights" for other land use. A lot of good farms are now broken up with wind-towers and access roads. Pain in the arse to farm around. some land is sold, but the seller maintains "wind harvest rights" so even if he is no longer the owner he can put up windtowers and the necessary access roads. Much like mineral rights or water rights. They don't always go as "part of the deal". If you don't want windtowers, you better say so. If you don't care... well.. that's another thing.