A Realtor’s Guide to Selling or Leasing Farmland

Identifying Land Use Restrictions

Most open farmland with good soils in Maryland can be used for commodity crops. However, before a farmer signs a lease or purchases a property, it is best to be safe and determine if there are any zoning, covenant, easement, or plat restrictions, particularly if the farmer is considering direct farm sales or value-added sales (e.g. wineries, creameries, etc.), or agri-tourism (e.g. corn mazes, on-farm weddings, etc.). Restrictions may be found in many places:

Zoning ordinances. Each county zoning ordinance is different. However, most counties use similar zoning terminology and most in Maryland are available on-line, along with the zoning maps which define where the ordinances apply. A zoning tutorial is available on-line, along with links to county plans, ordinances and maps.

Covenants. A covenant “running with the land” is a written agreement, usually recorded in land records, that applies conditions to the use of property. To be fairly certain as to whether or not there are covenants on a property, your client may want to consult with an attorney about conducting a title search. However, you can do some initial research on your own by:

• Asking the owner or owner’s agent if there are covenants.
• Contacting the County Program Administrator.
• Going to Maryland AgPrint to see if the state maps indicate that the property is preserved by some form of covenant.
• Accessing Maryland Assessment records to find the deed for a property. Then to view the deed, set up an account here. Reading through the deed, you might find special covenants or conditions that apply to the land. This is by no means a failsafe method. The covenant may have been recorded after the deed was recorded or the attorney may not have mentioned the covenant specifically in the deed. However, the deed may contain some information that you may want to learn early in the property selection process.

Easements. People often think of an easement as a right of access over another’s property, which may be the case in some instances (see plat restrictions below). However, an easement can also be a written agreement which applies conditions to the use of property. To determine if there is an easement on a property, use the process outlined in “Covenants” above. Also, be sure to suggest that your client consult with an attorney about conducting a title search before purchasing a property.

Plat restrictions.  If a property has been divided in the last 50 years or so, there may be a plat recorded in the land records. These plats may contain notes or conditions that are binding upon future owners of the property. Plat notes may indicate where access to the property is restricted, whether or not the property may be further divided, where a stormwater easement crosses a farm, and so on. Also, plat conditions may describe permit requirements, land clearing limitations, forest buffers from streams, etc.

Best Management Practices.  Financial incentives are available for farmers willing to install best management practices to control soil erosion, manage nutrients, provide wildlife habitats, etc. The terms for some of the written agreements extend for years and apply to subsequent owners if the properties change hands before the agreements expire. Check out Maryland Department of Agriculture’s Financial Assistance Programs to learn more.

Agricultural Use Assessment. Properties meeting state criteria for agricultural use assessment are taxed at a lower rate. A property no longer farmed after receiving agricultural use assessment could be subject to the Agricultural Transfer Tax at some later date in the event of a transfer, sale, or other action “leading to or causing a violation of the agreement as contained in any Letter of Intent that may have been filed in order to receive the Agricultural Use Assessment”.

If a property is not currently receiving agricultural use assessment, a farmer may express interest in applying using this online application form.

Lease or Purchase?

Many beginning farmers lack the financial resources to buy land. Others would rather invest in their farm business than tie up all their capital on land purchase. Land leasing is a viable option in Maryland and realtors can help them negotiate the deal. The majority of farmland is currently leased on a year-to-year basis for grain or forage production. That may be changing, as more owners are interested in getting a share of higher crop prices that owners have been receiving in the last few years.

A disadvantage of leasing is that it is difficult to secure leases long enough to justify making improvements needed for the farm business to succeed. For these reasons, it is helpful to know your clients’ long term business plans and guide them accordingly.

Leasing Options. A written lease benefits both the farmers and land owners. With a well-constructed written lease, both parties have an understanding about the terms of use of the property, buildings, resources, revenue share, provisions for breaking the lease etc. A guide entitled “Agricultural Leasing in Maryland” provides a good background about preparing leasing agreements. It also includes sample lease documents.

• Leasing Fact Sheet
• Cash Rental Rates by county
• Cash Rental Rates

Land Purchase Options. Many states have established land link websites to connect those who want to sell or lease farmland with those who want to buy or lease. In Maryland, we have the:

• Maryland FarmLINK Website 
• Land Link Montgomery
• Maryland Environmental Trust

Loan options for land or infrastructure purchase: Resources are available at the federal and state levels, including:

• USDA loans
• Farm Credit (Congress established the  Farm Credit System in 1916 to provide a reliable source of credit for the nation’s farmers and ranchers)
• Maryland Agricultural & Resource-Based Industry Development Corporation (MARBIDCO)

Land Preservation. While land preservation programs impose some limitations on the use of property (see covenants and easements above), they are the reason that much of the farmland still exists in Maryland. Being in a community of preserved farms provides stability and permanence. Farmers are more likely to invest in their farm enterprises if they know that neighboring farms cannot be developed.  And if the land has not already been preserved, land preservation programs can be used to help a farmer pay off the loan.

Maryland has some of the best local and state land preservation programs in the country.

• County land preservation programs 
• Maryland Agricultural Land Preservation Program 
• Maryland Rural Legacy Program
• Maryland Environmental Trust

Addressing Conflicts with Land Owners

Recognizing the importance of farming to the state economy and culture, Maryland adopted enabling Right-to-Farm legislation. Most counties have adopted Right-to-Farm ordinances, which provide some protection for farmers from nuisance complaints. Right-to-Farm ordinances often include a local conflict resolution team to address land use conflicts before they reach the courts and the Maryland Department of Agriculture also has a Conflict Resolution Service.