How do I sell a farm in Ontario?

Selling a farm in Ontario shares steps with selling any property: deciding what is included, having it priced by a qualified professional and finding a buyer. This guide focuses on one Ontario rule. Section 50 of the Planning Act limits how land can be divided or tied up by a long lease, and a sale of only part of a farm can fall inside it. This guide covers that rule and then three points to tell a buyer about. It covers Ontario only; if your farm is elsewhere, check the rules where you are.

What section 50 of the Planning Act says

Under s. 50(3) of the Planning Act, no person shall convey land by deed or transfer, mortgage or charge it, enter into an agreement of sale and purchase, or enter into any agreement that grants the use of or a right in the land for twenty-one years or more, directly or by entitlement to renewal, unless one of the listed exemptions applies. One exemption is land described in accordance with and within a registered plan of subdivision, subject to s. 50(4) of the Planning Act, which lets a local council, by by-law, deem a plan registered for eight years or more not to be registered. Another applies where the person does not retain the fee or the equity of redemption in, or a power or right to grant or assign, any abutting land, other than the kinds of land that clause lists. A consent given under s. 53 is a further exemption. Read the full subsection, because the exemptions carry their own conditions, and s. 50(8) to (11) add further exceptions, such as a mortgage a purchaser gives back to the vendor over all of the land conveyed.

Selling only part of the farm

If you plan to sell the fields and keep the house lot, or sell one parcel and keep the rest, you would retain land next to what you convey. The abutting-land exemption in s. 50(3)(b) then does not apply, unless the land you keep is one of the kinds that clause lists, such as, on the clause’s conditions, the identical parcel previously conveyed with a consent under s. 53. Unless another exemption does, the route is a consent under s. 53. An owner, chargee or purchaser, or an agent authorized in writing, may apply, and the municipal council or the Minister may give the consent if satisfied that a plan of subdivision of the land is not necessary for the proper and orderly development of the municipality, subject to the rest of s. 53. Under s. 54(4), an upper-tier council can delegate that authority, for example to a land division committee. Ask the municipality which body handles it for your land.

Long leases count too

The same subsection reaches leases and similar agreements. A lease of a field or a right of way can reach twenty-one years through a right of renewal, and s. 50(3) of the Planning Act counts that. Section 50(9) provides that nothing in s. 50(3) prohibits an agreement granting the use of or right in part of a building or structure, including an ancillary use of land, for any period of years. If you are leasing out part of your land as part of an exit, a retirement plan or a family arrangement, check the total term, including renewals, before the agreement is signed. The same exemptions and the same consent process apply, and the same consequence follows if the requirement is missed.

What happens if no consent was obtained

Section 50(21) says an agreement, conveyance, mortgage or charge made in contravention of s. 50 does not create or convey any interest in land. The subsection does not affect an agreement made subject to an express condition that it takes effect only if s. 50 is complied with. For a seller, the risk is a buyer who has paid and holds no interest in the land, subject to the curative rules in s. 50(14) and (22). Sequence also matters. Under s. 50(6), retained land may be conveyed before the land covered by a consent is dealt with, but only before the consent lapses under s. 53(43). Section 53(43) of the Planning Act provides that a consent lapses two years from the date of the certificate given under s. 53(42) if the transaction is not carried out within that period, though the council or Minister may provide for an earlier lapse when giving the consent.

• Ask your lawyer whether any s. 50(3) exemption applies to the parcel you are selling or leasing, and in what order the transactions should close.
• Ask the municipality which body gives consents for your land and what the application requires.
• Check the total term of any lease you are granting, including every renewal right.
• If a consent is on the way, track the date it lapses against your closing date.

What to tell the buyer about the farm itself

Three points are worth raising early. First, Ontario’s farm property class tax rate program: the province says farm properties that do not qualify are taxed at the residential rate, and that after a change in farmland ownership the owner should visit the Agricorp website to see whether the property is eligible and how to apply or reapply. Tell the buyer to do that, and see the buyer-side guide to buying a farm in Ontario for their side. Second, under s. 53(1) of the Nutrient Management Act, 2002, a certificate, licence, approval or order issued under the Act is binding on the executor, administrator and other listed representatives of the person to whom it was issued or directed, and on any other successor or assignee of that person, so list any that attach to the farm. Third, the Ontario Farm Products Marketing Commission publishes which regulated farm products may require a processor or dealer licence from it, so list which regulated products the farm sells and let the buyer check.

Where the wider farm sale is covered

Land, equipment, timing, structure and tax on a farm sale are national topics and are covered in selling a farm business in Canada. This page stays with the Ontario land-division rule and the disclosures above. It does not cover quota transfers or the way a sale is priced or taxed, and each of those needs its own advice from the body or professional responsible.