Published Dec 13, 2011

Land Contract Sales
By Luke Gran

Are you looking to buy land on contract from a friend or relative? Do you want to buy land, but find that in your area landowners say that its too risky to sell to a beginner?

Consider utilizing a new government program to support sales of land on contract called the Land Contract Guarantee Program offered by the Farm Service Agency.

The Land Contract Guarantee Program by the Farm Service Agency will guarantee prompt payments to the land seller if you fall behind on payments for whatever reason for the first three years of the sale. A second option, instead, is a 90% guarantee on the principal of the loan from the federal government. These are favorable terms and we encourage you to use this program when negotiating land purchases with a retiring neighbor farmer, or a family member. The perceived “risk” of selling to a beginner is reduced with this program.

To apply or ask detailed questions, go to your local USDA Service Center/FSA office. Find Your Local FSA Office

Portrait of beginning farmer who used a sale on contract to purchase land.

Mark, a beginning farmer, purchased his farm from his mother by sale on contract.

 

For more resources on financing or business planning, go to the PFI Next Generation webpage and scroll to the bottom of the screen under the Resources heading.