What happens to a farm lease when I sell the farm?
The sale does not end the lease by itself. Under Virginia law the buyer of leased land takes the landlord's rights against the tenant under the lease, and the tenant need not acknowledge the new landlord for that to happen. Whether a particular lease binds the buyer turns on whether it is written, recorded or known to the buyer before the purchase, and an attorney reads that.
The day the deed records, the landlord's side of the lease changes hands
Begin at the courthouse. Once the deed to leased farmland is recorded, the buyer stands where the seller stood as landlord, and the Code sections on leased land treat that as a transfer of the landlord's position, not the end of the tenancy.
Va. Code 55.1-1606 gives a grantee of leased land, or of the reversion, the same advantage against the tenant, by action or entry for any forfeiture or by action on any covenant in the lease, that the grantor or lessor might have had. The buyer can enforce what the lease says.
The tenant does not have to sign anything for that to happen. Va. Code 55.1-1608 says a grant of a reversion is good without the tenant's attornment, and adds a protection that matters in the first weeks after closing:
no tenant who, before notice of the grant, paid the rent to the grantor shall suffer any damage as a result of such payment.
Va. Code 55.1-1608
Rent the tenant paid the seller before notice of the sale stays paid, which makes the tenant's notice of the sale, and of where rent goes from then on, a point to settle at closing. How that rent is divided between seller and buyer is a term of the purchase contract.
Back before the contract: whether the lease is written, and whether it is of record
Whether the buyer takes the land subject to the lease turns on facts fixed long before recording: what kind of lease it is and what the buyer could have known.
Start with the paper. Under Va. Code 11-2, no action may be brought on a lease of real estate for more than a year unless the lease, or some memorandum of it, is in writing and signed by the party to be charged or his agent. An oral lease for a term of more than a year is exactly the arrangement that section addresses.
Then the record. Va. Code 55.1-407 makes a written contract or deed conveying any estate or term void as to purchasers for value without notice until it is recorded where the land lies, and says the mere possession of real estate is not, of itself, notice to those purchasers. A title search reads what is recorded. A lease that was never recorded will not appear there, and under that section's wording a tenant's cattle on the pasture are not, by themselves, notice.
The lease's own description of the ground matters too. A tenant may rent only the tillable fields while the owner keeps the pasture up the hollow, or rent all of it, and a buyer reads that boundary before walking the farm.
A crop already planted when the farm changes hands
A farm does not always sell between seasons, and a tenant's crop can still be in the field on the day the deed records.
Va. Code 55.1-1700 leaves the tenant's right to emblements "as at common law". How a tenant's standing hay or corn is handled when the farm closes is worked through in what happens to a hay crop in the field at closing.
For the lease itself, the middle of a crop year is also a timing problem. Which party receives the season's rent, when the buyer takes over as landlord and what the tenant is told about the sale all belong in the purchase contract, and the settlement attorney carries them through to closing.
Ending the tenancy afterward runs through the lease, then the notice statute
A buyer who wants the fields back for their own cattle or crops starts with the lease's term and its notice clause, and turns to the statute after that.
Where the tenancy runs year to year or month to month, Va. Code 55.1-1410 sets notice for nonresidential rental property. A year-to-year tenancy ends on three months' written notice before the end of any year of the tenancy. A month-to-month tenancy ends on 30 days' written notice before the next rent due date, unless the rental agreement provides a different period. Either way the notice must be a separate writing, not a clause inside the lease.
Whether a particular farm lease is nonresidential rental property under that section is an attorney's call, and a farmhouse rented along with the land can bring Virginia's residential landlord law into the picture. Selling a house with a tenant living in it is covered in selling a house with a tenant in it.
The following tax year: a farm that keeps producing under a new owner
The land use question a leased farm raises at the sale is whether the use continues under the new owner, and the tenant may already be the one keeping the land in production.
Whether roll-back taxes attach when a leased farm changes hands, and whether a tenant's farming can keep the land in its classified use for a new owner, are the Commissioner of the Revenue's to decide for a given farm. How land use taxation is handled when a farm changes hands is taken up in selling a farm that is in the land use program.
Which equipment, livestock and crops convey with the farm is its own question, taken up on selling your farm.
Selling a farm with a hay or pasture tenant on it?
Send the county, the acreage and what the tenant rents, written lease or handshake. Lowell will read the farm with the lease in view and point you to an attorney for the parts that are legal questions. No cost, no obligation.
Got it. Thank you.
We'll be in touch shortly with an honest read.
Questions this raises
What if the buyer wants the farm without the tenant on it?
The sale alone does not remove the tenant. Va. Code 55.1-1606 gives the buyer the landlord's rights under the lease, including its forfeiture provisions, so how and when the tenancy can end is read from the lease's term, its notice clause and, for a periodic tenancy in nonresidential rental property, the notice statute. Whether the seller is to deliver the farm free of the lease is something the purchase contract would have to say, and an attorney drafts that term.
Who collects the rent for the month the farm closes?
The statute protects the tenant: rent paid to the seller before the tenant had notice of the sale stays paid, with no damage to the tenant. How that month's rent is divided between seller and buyer is set by the purchase contract and handled at settlement, not by the tenant paying twice.
Will a lease that was never written down turn up in a title search?
No. A title search reads the recorded land records, and an unwritten lease has nothing in them. Va. Code 11-2 bars an action on a lease for more than a year unless it or a memorandum of it is in writing and signed, and 55.1-407 says possession alone is not notice to a purchaser. Whether an oral lease binds a buyer is an attorney's question.
Where this page's facts come from
Every rule, office and figure above traces to one of these. Rules change; check the office before you act on one.
- Va. Code 55.1-1606, rights of a grantee of leased land against the lessee Virginia General Assembly
- Va. Code 55.1-1608, grant of a reversion effective without attornment Virginia General Assembly
- Va. Code 11-2, contracts and leases that must be in writing Virginia General Assembly
- Va. Code 55.1-407, unrecorded contracts and deeds void as to purchasers without notice Virginia General Assembly
- Va. Code 55.1-1700, emblements as at common law Virginia General Assembly
- Va. Code 55.1-1410, notice to terminate periodic tenancies of nonresidential rental property Virginia General Assembly