Agriculture and Farming
Walsh & Partners specialise in providing legal services to the farming community and landowners. We provide clear and practical advice to members of the farming and agricultural sectors.
We have particular expertise in the area of agricultural law with Karen Walsh, Solicitor, hailing from a farming background and having a unique understanding of agricultural issues and the practicalities of day-to-day farming. She writes a weekly legal column for the Irish Examiner’s Farming Supplement. We provide advices to farmers on a range of legal issues from divorce proceedings to contract rearing of heifer’s agreements to family farm transfers and succession planning. To find out more information please visit our News Page or www.farmlaw.ie
Walsh & Partners has advised farmers, landowners and agricultural businesses on a wide range of legal issues including the following:
- Agricultural Leases
- Collaborative Farming Legal Issues
- Contract Heifer Rearing Agreements
- Cow Leasing Agreements
- Grazing Agreements
- Partnership Agreements
- Share Farming Agreements
- Succession Planning and Farm Inheritance
- Wills and inheritance
- Wind Farm Development Agreements
- Farm Transfers
- Basic Payment Entitlements Scheme
- Dispute Resolution
- Employment Issues
- Prosecutions by the Health & Safety Executive and Environment Agency
- Environmental Issues
- Voluntary Transfers
- Renewable Energy Projects
- Farm and Agricultural Land Sales and Purchases
- Commercial Mortgages
- Rights of Way Issues
- Boundary Disputes
- Divorce and Separation Agreements and Court Proceedings
Succession planning and farm transfers
We have assisted many farming families with the transfer of the farm and business to the next generation. Farming is a business and we have a strong understanding of farming and the farming way of life in Ireland. Planning for the transfer of a farm in one’s lifetime or as part of a succession plan is one of our specialist areas. For anyone who is self-employed, retirement is a lengthy process requiring complex decisions concerning work, ownership and management of the business. The movement from one generation to the next is one of the most problematic phases in any business operation especially those that are family owned and run. Farming is one such business in which the farm is five times more likely than any other family business to be passed from generation to generation.
We know that any legal decision you make can have consequences for your farm. We understand farming and know what needs to be considered before making legal decisions. Transferring the family farm is so much more than just a simple business transaction.We understand that when making any decisions with your farm it is important to consider the implications these may have on your business to include tax implications and compliance with EU Schemes and Regulations and the Department of Agriculture. At the same time, farming is unique as it is far more that a business to most who are involved in it. Farms are passed down through generation and families work hard all their lives building up their farm to provide for their families.
Another important consideration for farmers is the fact that a person’s income and assets are subject to a detailed examination to decide on the level of contribution which they must make towards nursing home costs. For farmers, there is a five-year “look back” rule and assets including the farm which they have transferred in the five-year period before entering in to a nursing home are included in the calculations. The only “safe” transfers are those where a clear five year period has elapsed between the time of the transfer and the first application for State support. This is a relatively new consideration for farmers when deciding whether to transfer land in their lifetime.
People are healthier and living longer now. Retirement brings big changes and lifestyle and income levels need to be planned for. It can be difficult to plan for the future. The advantages to doing so are obvious but one needs to be aware of the potential pitfalls and the consequences of decisions both from a tax and legal perspective.
We provide advices to farmers on a range of legal issues from divorce proceedings to contract rearing of heifer’s agreements to family farm transfers and succession planning.
We know that any legal decision you make can have consequences for your farm. We understand farming and know what needs to be considered before making legal decisions.
Transferring the family farm is so much more than just a simple business transaction. In our experience, there are a number of complex issues to be addressed including:
- A number of family members, siblings or children are to be catered for fairly. People want to be fair to all their children and ensure harmony amongst them.
- If the transfer is during the owner’s lifetime, the owner will require an income as well as possibly the recipient depending on the circumstances.
- Tax – Can you afford to transfer to the next generation? What are the costs?
- The family home is normally located on the farm and often cannot be separated.
Everybody knows that in all relationships, communication is essential. So, before you go into business, you need to enter into what is known as a partnership agreement, to protect yourself and your farming business.
In cases where there is no partnership agreement, or where the agreement is void, the partnership will be governed by the Partnership Act, 1890.
When a partner announces their intention to retire or leave, the first course of action should be to refer to the partnership agreement. A well drafted partnership agreement will also ensure that the other partners have a carefully structured plan to follow, if one partner becomes seriously ill or dies. It will secure everyone’s legal position, and ensure the continuity of the farming business.
Inserting retirement provisions into a partnership agreement holds a balance between the interest of partners who leave and those who remain in the partnership. Clauses in relation to retirement need to be very carefully drafted.
The Partnership Act also states that partners are not entitled to interest on the capital they contributed to the farming business, unless the partnership agreement says so. A well drafted partnership agreement should cover the return of any capital invested, and any interest to be paid. You do not want a leaving partner demanding immediate withdrawal of all the capital they invested in the farm. The partnership agreement can specify time scales and terms.
A partnership agreement should also cover how to resolve disputes, and in what order, from mediation, arbitration or the expensive option of courts.
Partners without an agreement may be unaware that if one partner dies or is declared bankrupt, the partnership is automatically dissolved. In the case of a partner’s death, it could be that their estate receives a certain percentage, or a payment. If there is no legal agreement, the partnership has no obligation to pay the estate anything. Before you go into partnership, contact us about putting a written agreement in place also.
Contract Rearing of Heifers Agreements
Contract rearing of heifers is an arrangement in simple terms involves a dairy farmer entering into a contractual agreement with another farmer, and the replacement stock are reared on the other farmer’s holding.
It is very important to have a written agreement in place. It provides a thinking platform, to explore possible scenarios and issues in advance of entering into an agreement. Potential problems can be addressed and ironed out before entering into an agreement. It outlines the responsibilities and expectations of both parties.
The success or failure of a contract heifer rearing enterprise can depend on the quality of the contract between the heifer rearer and the dairy farmer. Badly constructed contracts, incomplete contracts, or no contracts, often result in uncertainty, and ultimately a dispute between the parties.
Whoever is at fault in a dispute, it is without doubt the farmer who will lose out the most in the long-term. The rearer who establishes a good reputation and is delivering a quality service will need to protect his interest, by having a written agreement in place.
Most farmers who need to enlarge their holdings cannot afford the enormous cost of purchasing land, and leasing land can be attractive. Alternatively, if you are retired from farming, or have recently inherited farmland and do not intend to farm it yourself, you may wish to let your lands.
Before you think about leasing land or entering into a lease, it is critical that a lease is drawn up in writing. To avail of the tax reliefs and exemptions, it is essential that the lease document is in writing. It is also beneficial in terms of finances, goodwill and the well-being of the land, to seek advice prior to entering into an agreement.
You should think about the possible use you may have for the land in the future, for example, you may wish to give a site to a child.
You may also be fearful of being locked into high or low land rents. This can be remedied by tailoring a lease agreement to include regular rent reviews, or by linking the rental charge to, for example, the annual price of milk or barley.
What is the tenant planning to use the lands for? This should be agreed. If cattle are to be put on the lands, the tenant should covenant that no diseased animal shall be placed on the lands.
The lease must specify that the tenant must carry his or her own insurance, and must indemnify the landlord from all claims or liabilities arising from the tenant’s user of the property.
If you are leasing the basic payment entitlements, this needs to be included in the lease, and a private contract clause also needs to be signed, to ensure that the basic payment entitlements revert to the landlord, once the lease comes to an end. It is critical that you consult with your Teagasc advisor, before putting any pen to paper.
It is also worth considering inserting a clause into the lease that, in the event of the tenant not receiving his or her basic payment entitlements, this should not affect the agreement in place, and that the monies are still due and owing to the landlord.
A clause should also be inserted into the lease that the tenant is to process and lodge all paperwork with the Department of Agriculture by the required deadline, for the purposes of triggering any entitlements payable, and to deal quickly with any queries that the Department may raise in connection with the application.
A tenant should not have a right to sublet the land without the landlord’s prior written consent.
The upkeep of the land should be covered in the lease. The manner and time in which notice of termination by either party must also be given is extremely important.
If considering leasing land, you need to consider other tax implications, such as the effect on potential capital gains tax in the event of a future disposal; this should be discussed with your advisor before entering into any lease.
A common fear among landowners is that of people claiming squatter’s rights over land. This is impossible if rent is being paid for the land on a regular basis. A lease protects the security of the land. A person cannot claim squatter’s rights on land that they are paying rent for.
The Landlord and Tenant Act 1994 provides tenants with a right to claim renewal of a lease at market value, where the property in lease consists predominately of buildings, where the land attached to buildings is considered to be “subsidiary and ancillary” to the building.
For example, if the farm consists predominately of buildings such as cowsheds or slurry pits, the tenant would have a right to renewal of the lease at market value after a term of five years has elapsed. A way to get around this is by granting a lease of the land only and granting either a licence or a letting for the temporary convenience of the landowner for the buildings on the land. In this circumstance, the tenant will not have a right of renewal after five years.
Having a detailed lease agreement in place is worth it in the long run, both from a financial and practical point of view.
Farming and Divorce
We have a proven track record of negotiating successful outcomes for farmers who are facing a divorce or separation.
If you have exhausted counselling and mediation, and you find that your marriage has irretrievably broken down, the first step you should take is to consult a solicitor who has knowledge of how a farm works, and what is involved in the day-to-day running of a farm.
Do not make rash decisions. Speak with your solicitor, and weigh up the advantages and disadvantages, before you make any decision. While your personal life might be in turmoil, a farming business needs attention, and the usual day-to-day decisions and work still needs to be attended to, and this is a time when both parties need to reach an early decision on daily practicalities.
Try to avoid court, where possible. Do your best to keep the relationship on amicable terms. It is better to negotiate a settlement outside the courtroom. It will reduce costs, and the parties involved will know a great deal more about the workings of their own farming business, and what a sustainable solution is, than a learned judge.
In order to ensure that the farm is kept intact, creative solutions are required to achieve a solution that both sides are satisfied with.
Your respective solicitors can negotiate on your behalf and try to reach an agreement out of court.
Divorce in Ireland does not take fault into account. Be practical. The role of the court is to divide assets, in order to provide financial support for spouses and children, and reach agreements in relation to custody. Explore the options. Dividing the farm is rarely an option, unless the holding is significant, and the smaller holding will rarely be viable to provide an income. Often, the income from the farm is the only source of income.
A divorce does not automatically mean that the spouse is entitled to half the farm; the court must ensure that proper provision is made for both parties and dependants.
It may be possible that the spouse takes a lump sum payment and/or the family home. It may be the case that the spouse receives a property located away from the family home.
Perhaps the spouse could be given non-farming assets, such as cash, pension funds, shares or an investment property. You could examine the possibility of selling a site.
In relation to the family home, it is often located on the farm, where the sheds and outhouses are also located. Having a former spouse living in the family home on the farm can lead to difficulties and resentment, especially if another partner moves in. This should be borne in mind.
Also, if a farmer lives too far away from the farm, he is not in a position to simply walk to the outhouse in the middle of the night to check on the cow that is due to calve.
Farmers may be asset rich and cash poor, and it is important to be realistic in relation to making periodic payments to spouses, or giving lump sums. A farm may also be heavily mortgaged.
Attention also has to be given to the seasonal nature of farming and the fact that EU subsidies form a significant portion of many farm incomes.
There is no magic formula or ‘one size fits all’ solution, but what is important is who you consult and how you approach it. We care and we are here to help.
A pre-nuptial agreement is essentially a formal agreement which can be drawn up for you and your partner. It sets out how you would divide your assets if you decide to divorce in the future.
The agreement can serve as a snap-shot inventory of assets and debts owned or incurred by each spouse prior to marriage, can convey interest in property between the parties, or dictate that neither spouse will acquire an interest in each other’s property.
If you already have wealth, property, savings or inheritance, a pre-nuptial agreement could help to provide an extra level of reassurance before entering into a new marriage. It may also be helpful if you have been married before, and want to ensure that any assets you have built up over the years are safeguarded for any existing children’s inheritance.
Any asset, no matter how big or small, can be included in your pre-nuptial agreement, so that could be savings, property, income or even pensions, all of which could be split if you get divorced. Only financial matters can be dealt with within the agreement. It cannot be used to make arrangements for children.
Although there is no set formula for a pre-nuptial agreement, the kind of agreement used by most couples would be most straightforward, and state that the property owned by each party prior to marriage, will remain theirs, should the relationship end.
It would also set out how property acquired during the relationship should be treated. A statement that neither party should have a financial claim on the other, should the relationship end, is also common.
While a pre-nuptial agreement is not recognised under Irish law at present, this does not mean it is pointless getting one. Each case of course will depend on its own facts and circumstances.
In a divorce, if you have a properly drafted pre-nuptial agreement in place, the court will still more often than not take it into consideration, when deciding how your marital assets should be divided. There is every reason to expect that a properly drafted pre-nuptial agreement will one day give certainty to couples who want to arrange their own financial affairs. There is nothing stopping the court taking a well drafted pre-nuptial agreement into account in the event of a divorce.
A couple contemplating a pre-nuptial agreement should have a frank discussion about such an agreement, at least six months in advance of the anticipated wedding.
It is critical that each party receives independent legal advice, to avoid either party claiming that they were misled, did not understand, or were not fully informed when signing.
The cost of getting a pre-nuptial agreement properly drafted by a solicitor can be relatively low compared to the benefits which could be gained following separation. Both parties will need their own solicitor.
Purchase and mortgage of farmland
If you wish to purchase farmland and have obtained loan approval, the bank will appoint their own solicitor to represent their interest in the transaction. You will need to appoint your own solicitor also.
Your title to the lands will need to be investigated by your solicitor. It will be necessary to produce evidence that the buildings, if any, on your land, to be given as security, have planning permission and are in compliance with planning permission.
It will also be necessary to ensure that the maps to your lands are in order. Your family home will be excluded from the property being given as security.
If your family home is on the same folio as your farmlands, the family home will have to be marked by an engineer, to remove it from the title to the lands to be mortgaged, and placed on a separate title.
If you wish to gift, or sell, a site at a later stage, do not mortgage these lands, as you will not be able to gift, or sell, part of the land at a later stage without the bank’s written consent.
If you access your lands through a right-of-way over neighbours’ lands, a ‘deed of right of way’ must be put in place.
Alternatively, you may enjoy a wayleave to access water from a neighbour’s land, and a ‘deed of wayleave’ will need to be put in place also. In addition to the borrower entering into a ‘deed of charge’, it is common for a lender to insist upon a guarantee, by a third party, to be answerable for the default of another, and, in that instance, it is vitally important that the proposed guarantor obtains independent legal advice.
If a company is taking out the loan, the bank may also seek a guarantee by you, personally, for the default of the loan, and, in that instance, it is vitally important that independent legal advice be offered to the proposed guarantor.
In a partnership, a partner has no implied authority to bind the partnership in commercial borrowing, unless it is expressly stated in the partnership deed, so the lender will be anxious to get all partners to sign any guarantee.
While all of the above may seem a little overwhelming, it is important to seek legal advice as soon as you are granted loan approval, and we can advise you of what is required and guide you through the process.
Rights of Way
Many of us enjoy rights of way without ever really thinking about them, for example, you may access your house or land through a neighbour’s private lane or roadway.
Often, a right of way would be used for a very long time, but would not be registered as a burden on the title or granted in a document.
It is worth noting that the Land and Conveyancing Law Reform Act 2009 put in place a timeframe under which unregistered rights of way and easements must be registered. Generally speaking, all rights of way and easements must be registered by the 30th November 2021. However, there are exceptions and the facts and circumstances of each case would need to be examined closely. If you enjoy a right of way and wish to protect it, you should contact us as soon as possible.
If you own property which relies on a right of way or other right which is not yet registered in your favour in the Land Registry, you should contact us for advice before it is too late.
Wills and Probate
If we could give one single piece of advice to farmers it would be to make a Will or review their existing Will. It is vitally important for every farmer to have a valid Will made. Failure to make a Will can leave your family with an appalling mess to be resolved. This can be very expensive, cause family disputes and result in some land having to be sold, the farm becoming unviable and possibly being sold in its entirety.
When a person dies without making a Will the rules of intestacy apply governing who is entitled to receive a person’s property should they die. Very often the application of the rules of intestacy results in the deceased person’s property being distributed in a manner that they would never have wanted. This is because the rules set out a list of people who are entitled to receive shares in the deceased’s property as well as the amount of these shares and the order in which they are entitled to receive them. For example, if you die leaving a spouse and children your spouse will inherit two-thirds of your estate and your children will inherit the remaining one third in equal shares. If you die a bachelor without parent or children your brothers and sisters will inherit your estate in equal shares. By making a Will you can choose who you wish to inherit your assets rather than this decision being made by the law.
As the law stands the Basic Payment Entitlements are attached to the farmer and not to the land. If it is your wish to have the Basic Payment Entitlements go to a family member who is to inherit the farm, you should state this expressly in your Will. Otherwise the Basic Payment Entitlements could end up in the residue of your Will and could pass to someone who has no involvement with the farm whatsoever.
It is also important to mention in your Will who you intend to benefit in relation to the Livestock, Bloodstock, Plant and Machinery. If this is not mentioned specifically in the Will it may fall to the person or persons entitled to the residue of your estate. In many circumstances where the family are reasonable the Will is ignored and the beneficiary who is to receive the farmland receives the livestock, bloodstock, plant and machinery. On the other hand, you cannot depend on this. In some cases it can lead to expensive disputes.
Careful Will drafting can have a significant impact on the level of Inheritance Tax which will be paid. It provides an opportunity to assess the position and consider what steps can be taken to minimise the inheritance tax liability. The small cost of making a Will can represent excellent value when compared to the tax savings that can be made.
Voluntary Transfer of Sites to Relatives
A voluntary transfer is carried out by a Deed of Transfer. A voluntary transfer arises where a person wishes to transfer some of all of their property, usually to a close family member during their lifetime by way of gift.
Under the Solicitors (Professional Practice, Conduct and Discipline – Conveyancing Conflict of Interest) Regulation 2012 which came into force on the 1st January, 2013 it prohibits solicitors from acting on both sides of any conveyancing transaction. It is now essential that both sides be independently advised, albeit that it is a voluntary gift.
We specialise in farming and agricultural law. We support farmers and landowners. Contact us today. We are here to help.