Either buying or selling a farm is a major matter.  Normally, the price is significant and often the farm has been in the family for generations such that the sale is likely to be emotional for those involved.  What follows does not propose to cover the latter aspect.

In no particular order of importance listed below are some of the matters that need to be considered when buying a farm.  If you are selling a farm this information should be available for any prospective  purchaser. If a real estate agent is involved in the sale there will likely be a Memorandum produced by the agency covering these as well as other  matters.


  • There may well be easements registered against the title(s) that need to be considered dealing with water provided to or taken from a neighbouring property or properties.
  • There may be an informal right to give or take water and consideration may need to be given to the better protection of that source of water either by way of easement or other contractual arrangement.
  • Often the source of the water will be the subject of a resource consent issued by the territorial authority.It is necessary that any such resource consent be transferred to the purchaser on the settlement.
  • There may well be other contracts that need to be considered. The Ruataniwha Water Storage Scheme is a topical example.

More often than not both the purchaser and the vendor will be registered for GST such that the contract will be zero rated in terms of the GST Act.   However, that is not always the case especially if a farmlet is involved and care needs to be taken.  Any residence on the farm and its curtilage is exempt from GST and the value of the residence and its curtilage will need to be recorded in the contract.

There may well be a forest(s) on the farm that has or  have a commercial value.  For taxation reasons values need to be established and recorded in the contract.  There may also be carbon credits and obligations under the Emissions Trading Scheme that need to be dealt with.

Any contract should contain provisions relating to how the farm is to be farmed from the date of the contract through to the date of settlement.  Normally, a standard provision will be contained in the contract but that  provision may well need modification.  For example pasture may need to be “locked up” or land that is being cropped be resown in grass following harvest of the crop.

It is important to ensure that all farm chattels included in the sale are properly described in the contract and that the value of them be dealt with. Chattels may include items of farm machinery.   Almost invariably  there is a woolshed.   The chattels contained within the woolshed normally including the wool press, fadge holders, overhead shearing plant  and ancillary items and these will need to be included in the contract.

There is likely to be not only the homestead on the farm but also other farm buildings and the values of these need to be dealt with.

Often stock is purchased in conjunction with the purchase of the farm and if so the contract should provide as to how, when and by whom the stock is to be valued.  Normally both the purchaser and the vendor will nominate their own valuers.  If those valuers are unable to agree on values then their umpire will determine the value.

There will no doubt be other incidental matters that may need to be included in the contract.  For example;

  • most farms will have septic tanks and it may well be that there should be a provision that the septic tank be cleaned prior to settlement,
  • the fencing on the farm may need to be repaired prior to settlement,
  • the water system may need to be repaired

These are but some of the matters that should be considered in the sale/purchase of a farm.  If a dairy farm is involved then there will be other matters that need to be dealt with including for example Fonterra shares.

Your lawyer, accountant and perhaps others including your banker and farm advisor should be involved at the commencement of the process of selling or buying a farm.

Leave a Reply