Questions Realtors Should Ask About an Agricultural Property
Questions to ask before listing an agricultural property
The following questions are designed to help realtors identify whether a MALPF easement exists on a property and understand the obligations that follow.
- Is this property assessed agriculturally? If so, is the entire property (or a portion) covered by a Maryland Agricultural Land Preservation Foundation (MALPF) easement? If so, the buyer must be notified of the existence of the easement and should be provided with contact information for the Foundation. (See Fact Sheet #13 Subsequent Owners of Agricultural Preservation Properties). If no MALPF easement, no more questions. If there is a MALPF easement, please continue.
- Are you or do you know the name of the original landowner who sold the easement to MALPF? What is the liber/folio of the recorded easement document?
- Is the property for sale a portion of a larger easement property? If yes, please contact MALPF right away to determine if this sale of a portion of the easement property has been authorized.
- There are significant restrictions associated with constructing houses and permitting lots to be separated from the MALPF easement properties. If the property for sale includes the right to construct any new homes on the easement property, a separate buildable lot, or the ability to subdivide an existing dwelling on the property, contact MALPF to confirm this is accurate. Original owners of easements have different rights than subsequent owners, so need to confirm with MALPF what residential rights are actually transferable to a new owner.
- Is the property for sale a residential lot that was subdivided from a farm that is covered by a MALPF easement? If so, follow instructions for #4 above.
- Is there a dwelling that existed prior to the easement on the property? If so, is it being sold along with the property? If a dwelling exists and it is not being sold along with the remainder of the property, please have the landowner contact the Foundation immediately.
- Is there a tenant house on the property? If yes, please contact MALPF to learn the restrictions and requirements that are associated with tenant houses.
- Did you obtain a copy of the recorded Deed of Easement to familiarize yourself and any potential buyer of the restrictions of the easement?
- Do you know that during the 2007 Legislative Session, the General Assembly passed HB 465 which gives a purchaser the right to rescind a contract for the sale of property encumbered by a conservation easement if the seller fails to give the purchaser a copy of the easement within a certain time, among other things (see copy attached)?
- Have you made every attempt to identify whether or not an easement exists on a property prior to settlement and contacted the program responsible for holding the easement?
What Realtors should know about agricultural management best practices
The Maryland Department of Agriculture (MDA) provides financial assistance to farmers to install best management practices (BMPs) on their farms to control soil erosion, manage nutrients and improve water quality in the streams and rivers that feed the Chesapeake Bay. In exchange, farmers agree to maintain these BMPs for 10 to 15 years. Although MDA has begun to record these contractual agreements for BMP maintenance in county land records, not all are documented in this way. When real estate is sold, the original landowner may be responsible for reimbursing the State of Maryland for the cost of the BMP if the maintenance life is still active. If the BMP contract is not recorded on the deed, the new landowner may elect to assume responsibility for BMP maintenance.
The following Q&A will assist realtors in advising clients about these matters.
Realtor FAQs about agricultural best management practices
If yes, proceed to the next question. If unknown, contact the local soil conservation district.
- If yes, proceed to the next question.
- If the BMP was funded by the United States Department of (USDA), advise the landowner to contact them, as there may be payback and penalty consequences.
- If the BMP was installed by the farmer without public financing, no action is required.
- If unknown, contact the local soil conservation district.
The landowner should have relevant documentation. If not, contact the local soil conservation district to obtain a copy of the agreement.
The maintenance life is 10 to 15 years and will be noted in the contractual agreement or on the deed recordation. If the maintenance life has expired, no action is required. If the practice is still within the maintenance life period, proceed to the next question.
If yes, no action is required. The maintenance obligations will automatically transfer to the purchaser at the time of sale. You may wish to notify prospective purchasers of this commitment.
If no, contact your local soil conservation district to initiate the property transfer process.
If the maintenance life of the MACS funded practice is still active and a Covenant and Notice and Recordation are not attached to the legal agreement, a property transfer must be processed by the seller. This will transfer the maintenance obligations to the purchaser. This should be initiated prior to settlement and executed at the settlement table. If the purchaser is unwilling to accept responsibility for BMP maintenance, the seller must reimburse MACS for payment received for its installation.
The property transfer paperwork is prepared by the MACS office after the completion of a Transfer of Property Worksheet (sample copy attached). This worksheet is completed by the local soil conservation district with input from the buyer and seller. The information requested on the worksheet is a description of the practice to be transferred as well as contact information for the new landowner.
If a property is sold with an active MACS funded BMP (that does not have a Covenant and Notice and Recordation attached to the agreement) without a property transfer being executed, the applicant (original landowner) remains bound by the terms of the legal agreement. The legal agreement states that the original landowner is required to pay back the money received from the state if he or she does not execute a property transfer. If the landowner is unwilling to pay back the grant money, enforced collection of the applicant’s delinquent debt will be initiated by MDA. An enforced collection fee will be added to the original grant amount. Enforced collection may adversely affect the applicant’s credit rating and ability to access other state programs and services.
Important: It is in the seller’s best interest to resolve property transfer issues before or during settlement. This will help ensure that the seller will not be required to repay the state for money received to install BMPs.
The Property Transfer documentation includes the Consent of Transfer, a copy of the legal agreement as previously executed by the seller or a previous landowner (sample copy attached), and a copy of the new deed. The Consent of Transfer contains buyer and seller information as well as a description of the practice. All parties involved in the sale affix their signature to the Consent of Transfer. The copy of the new deed cannot be attached at the time of sale, but will be attached after it is recorded at the Courthouse.