What notice must a seller give before enforcing a vendor take-back against a farmer?

A seller who finances part of a farm sale price holds a vendor take-back, and the buyer may be a farmer in the Act’s sense. The federal Farm Debt Mediation Act may add a notice step.

Who counts as a farmer and a secured creditor

The Act defines a farmer as a person, cooperative, partnership or other association engaged in farming for commercial purposes that meets any prescribed criteria. A secured creditor includes a creditor holding a mortgage, charge, lien or other security interest on the farmer’s property for a debt. It also includes a person with whom the farmer has an agreement for sale, a lease with an option to purchase or a conditional sales contract on property the farmer uses or possesses. Ask a lawyer whether a note fits.

What section 21 requires

A secured creditor who intends to enforce a remedy against a farmer’s property, or to start proceedings to recover the debt, realize security or take property, must give the farmer written notice of that intention, advising the farmer of the right to apply under section 5. Under section 21(2), it goes to the farmer and to an administrator, in the form the Minister establishes and in accordance with the regulations, at least 15 business days before the act.

The farmer’s application and what a stay does

Under section 5, subject to section 6, a farmer can apply for mediation with a stay of proceedings by all creditors, or for mediation with all secured creditors. Section 6 limits this to farmers unable to meet obligations as they generally become due, who have ceased paying current obligations in the ordinary course, or whose property, at a fair valuation or if sold at a fairly conducted sale under legal process, would not be enough to pay all their obligations, due and accruing due. On receipt of a duly completed stay application, the administrator issues a 30-day stay (s.7(1)(b)), subject to extension and termination under the Act. During a stay, despite any other law, no creditor may enforce a remedy against the farmer’s property (s.12).

If the seller skips it

Subject to section 22(2), section 22(1) makes an act done in contravention of section 12 or 21 null and void, and lets the affected farmer seek remedies against the creditor in court. Section 22(2) leaves unaffected the title of a person who bought in good faith from the creditor and was not then related to it within the meaning of the regulations. The Bankruptcy and Insolvency Act has its own notice for some enforcement; see the BIA section 244 notice. Ask a lawyer which notices apply.