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9 acres in CRP

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Lanny A Freng

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Minnesota
9 of the 40 acres in Conservation Reserve Program. Almost all of the rest of the land is wooded. Has anyone run into lenders that have issues with this... is the land contract terminated if they were to sell or is it transferred? They will probably want a comparable with similar CRP land if it is transferred. Thats gonna be like finding a needle in a haystack as this place is a manufactured home as well... oh the fun!
 

Ray Miller

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Feb 20, 2002
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State
Wisconsin
9 of the 40 acres in Conservation Reserve Program. Almost all of the rest of the land is wooded. Has anyone run into lenders that have issues with this... is the land contract terminated if they were to sell or is it transferred? They will probably want a comparable with similar CRP land if it is transferred. Thats gonna be like finding a needle in a haystack as this place is a manufactured home as well... oh the fun!


You should have no problem. CRP is a set aside and the land owner receives a yearly payment for not putting the land in production or grazing the land.

Just about any production land can become CRP land. No big deal. I doubt the lender gives a hoot unless the other forty acres is use for productive forest. Then you have a commercial farm that you are looking at.
 

Wayne Tomlinson

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Jan 25, 2005
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Certified General Appraiser
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Illinois
We have a lot of CRP in our area. In farm appraisals, when I do the income approach I do not use the CRP income because for two reasons.
1. CRP is a temporary thing and may or may not be renewed
2. Using the CRP inncome does nothiing to indicate the productive capacity of the property, just what the temporary government payment is.

I use the Soil Service productivity level of production and go at it that way

Of course I mention the CRP contract,the amount payment if available, and go on.

Wayne Tomliinson
 

murray stroupe

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Apr 27, 2005
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General Public
State
Tennessee
9 acres CRP out of 40 acres

9 of the 40 acres in Conservation Reserve Program. Almost all of the rest of the land is wooded. Has anyone run into lenders that have issues with this... is the land contract terminated if they were to sell or is it transferred?

They will probably want a comparable with similar CRP land if it is transferred. Thats gonna be like finding a needle in a haystack as this place is a manufactured home as well... oh the fun!
==========================

Think those are 10 year contracts;
but check that.

Usually contracts are transferred;
besides that CRP rents gets income in drought years.Also what they plant or do with those CRP acres tend to be good for wildlife.

My favorite banker has lots of CRP on his farm;
probably not likely to have problems with it.
 

stefan olafson

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Apr 2, 2003
Professional Status
Certified General Appraiser
State
North Dakota
CRP contracts are typically ten years in length and may be re-entered in some instances.

I've done a ton of ag work over the years. For a 9 acre piece I'd mention the fact it's in CRP, find out the rent received, find out the expenses of the owner for weed control and mowing and mention all that in your narrative. Then treat it like any other 9 acre piece of ground, there is such a little difference.
 

David Wimpelberg

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Certified General Appraiser
State
New York
is the land contract terminated if they were to sell or is it transferred?

I have no idea how your program is set up. In my neck of the woods there are various programs, and the ones I am aware of give tax breaks to the owner, but certain conditions have to be met. If the lot(s) is removed from the program, there are tax consequences. The tax consequences have to be considered in certain analyses.
 

Lanny A Freng

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Nov 28, 2006
Professional Status
Certified Residential Appraiser
State
Minnesota
thanks for the insight.
 

Stone

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Feb 1, 2002
Professional Status
Certified General Appraiser
State
Wisconsin
If you are talking about CRP and not a local/state program, it runs with the property unless cancelled. If it is cancelled prior to the end of the contract, whoever owns it at the time has to return the money (with interest). It usually isn't a big deal around here, as long as there is enough land outside of the program to develop the property.

There are different programs, but the typical contract is 10 years and can be rolled over at the going rate at the end or dropped.
 

Wayne Tomlinson

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Joined
Jan 25, 2005
Professional Status
Certified General Appraiser
State
Illinois
The CRP program is not a tax deduction program. It has a starting and ending date.

It is a part of the Ag program from the Government.

It often can be rolled into a new contractk, but not always.

It's intent is to remove "fragile" land from production to inhibit erosion. With the currrent prices of corn, soybeans and wheat, there are many who would like to put it back into crop, but the cost would be as stated above, return all the payments plus interest.

It would be less if it were a new contract like one or two years go get out.

This is a program charged to the Ag program to benefit the envionmental movement. Whether it is good or not is up to the reader.

Wayne Tomlinson
 
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