Farm Legal Advice: Buying farmland from a receiver

A purchaser is expected to assume certain risks and take on some of the due diligence that might otherwise stay with the Receiver of the property.

Dear Karen,

I am interested in buying some farmland to expand my farming business. It is being sold by a Receiver. It is not land local to me but it would be useful to me if I got it at a reasonable price. I am worried about buying from a Receiver? Would I get good title to it? It is being sold through a reputable auction website.

Dear Reader, 

The commercial reality is that the purchaser in a case like this is typically buying a distressed asset when they are buying from a Receiver which is often being sold at a competitive price and may represent “a bargain”. However, in acquiring same, a purchaser is expected to assume certain risks and take on some of the due diligence that might otherwise stay with the Receiver of the property.

Receivers are typically appointed by a bank pursuant to a bank’s mortgage. Once appointed, the Receiver takes possession of the property and the property is disposed of by way of sale. Although appointed by the bank the Receiver acts as an agent of the borrower. The bank will have suffered a loss on the property and will want to dispose of it as soon as possible to minimise that loss and the bank will want to sell the property as it stands and will not want to incur any expense if they can avoid it. The Receiver has a duty to obtain the best price possible.

As the property is being advertised through an auction website they usually upload legal documents and you can download the contract and the title documents. It is imperative that you instruct a solicitor to review the contract and title documents in advance of bidding on the property. 

Normally the contract will limit your rights to make standard enquires and will not deal with title queries which Vendors must reply to ordinarily. Receiver contracts contain pages of special conditions which are not found in a standard contract. 

The purpose of these special conditions is to exclude many of the warranties and representations that a Purchaser would generally expect when buying a property from a private Vendor. It is also imperative that you instruct an engineer to check the map that accompanies the contract for sale.

In receivership sales, the receiver contracts give no warranty as to boundaries. This is because he has no personal knowledge of the property and is only acting as agent of the borrower.

If there are any buildings on the property your engineer should check the planning status of the land and various buildings i.e. are they exempt; where they built prior to coming in force of the Planning Acts?; or is there Planning Permission in place in respect of same and are Certificates of Compliance being furnished with the contract?

Call to the property. Make sure it is vacant and that there is no rubbish on the property, that there are no animals on the property and that there does not seem to be any evidence of a tenant or squatter in place. Sometimes it is helpful to call to neighbours or see what the lie of the land is locally in respect of the property.

You will be asked to pay an initial deposit in order to bid normally and then you will be asked to pay the balance deposit if you are successful at auction and normally the sale closes 2-4 weeks from the signing of the Contract for Sale. Once the nature and extent of the risk being assumed by you is understood, you and your advisors, through careful due diligence, can assess the risks and then you can make an informed decision.

Karen Walsh, from a farming background, is a solicitor practising in Walsh & Partners, Solicitors, 17, South Mall, Cork (021-4270200), and author of Farming and the Law . Walsh & Partners also specialises in personal injury claims, conveyancing, probate and family law.

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• While every care is taken to ensure accuracy of information contained in this article, solicitor Karen Walsh does not accept responsibility for errors or omissions howsoever arising, and you should seek legal  advice in relation to your particular circumstances at the earliest possible time.

• Karen Walsh, from a farming background, is a solicitor practising in Walsh & Partners Solicitors, 17 South Mall, Cork, and 88 Main Street, Midleton, Co Cork, and also the author of 'Farming and the Law'. Walsh & Partners also specialises in personal injury claims, conveyancing, probate, and family law.

  While every effort is taken to ensure the accuracy of the information contained in this article, Karen Walsh does not accept responsibility for errors or omissions howsoever arising. Readers should seek legal advice in relation to their particular circumstances at the earliest opportunity.