Can I buy a farm business that farms rented land?

A farm business that rents most of its land is a common arrangement. It is also a different purchase from a farm that owns its fields. The equipment, the crop plan and the skills come with the sale. The ground itself may not, and a buyer who forgets that can find the best fields gone within a season.

Which agreements exist

Ask for a list of every parcel, with the landlord, the acres and the kind of agreement. Some will be written leases, and some will be handshake arrangements built on years of trust. Ask for copies of everything in writing. For each handshake, ask the seller how it works in practice and whether the landlord would confirm it to you directly.

Terms and renewal

Note when each lease expires and how it renews, and raise those dates with the seller and lender. Look at how rent is set and changed, and who pays for drainage, fencing and repairs. The Business Development Bank of Canada’s article on commercial lease terms covers the kind of clauses worth reading closely, even though a farm lease is not a shop lease.

Whether the lease passes to you

Some agreements may pass to a buyer. Others may need the landlord’s consent, depending on the lease wording, and your lawyer can advise. Ask your lawyer how each agreement treats a change of tenant. Ask your lawyer whether to speak to each landlord before closing and how the offer should treat the leases you need.

What you are really getting

List what you gain: machines, a crop plan, contracts and know-how. Then list what depends on rented acres. If a few parcels carry most of the production, a lender will want to see how secure they are. See also how a lender looks at agricultural business loans.