Who gets the CRP payment?

Unruh

Member
If land is sold after five years and is under a 10-year CRP contract. Who is entitled to the payment? Seller or buyer?
 
When I bought my place, it still had two years left in crp, it was in the contract that I got those two years payment. But each case may be different, and you need to find out how its going to go before you buy.
 
I agree with the others. Make sure that is settled and in the sales contract. But after the official sale date the former owner does not have ownership. So how can he collect when he has no land? Just a thought.
 
Better check with the FSA office and see if the payments on the contract are transferable.
Even if you have a contract where they go to the buyer,if FSA pays the seller,he'll be taxed for the income. Better find a way to make it deductible if he turns it over to the buyer.
 
As I understand it the contract goes with the ground. The buyer is entitled to the payment. If the contract is broken the cumulative payments up until that time have to be paid back. While this is not prohibitive in the first or second year it gets pricey after that. If there is only one or two years left in the contract it's best to let it run out first. Unless the buyer and seller make other arrangements the contract payment goes with the ground, regardless of who owns it. Mike
 
Mike has it right. The payment is always to the owner.

Buutttt if the new owner decides he does not want to sign the contract with the FSA office he does not have to unless it is stated in the sales contract he has to.

If the new owner does not continue the contact for its full term with the FSA for the CRP then the seller has to pay back the money he has collected for the years he owns it.

It has happened.

Seller sold a farm with 4 years left on a 10 year contract for CRP. Seller did not put it in the contract that the new owner had to continue the contract. New owner went in and said he is taking the land out of the CRP program and did.

Seller had to pay back the 6 years of payments he received because the 10 year contract was broken early.

Buyer of the land knew what he was doing when he bought the land and wanted to raise $6 corn instead of $125 an acre payments and hoped the seller did not put a clause in the contract to continue the contract for CRP.

Seller really screwed up.

Gary
 
The buyer would need to sign a contract to keep the crp ground in the program and would receive the payments.If the buyer doesn't want the crp the owner would have to buy out the crp contract.That's usually a full payback of 5 year payments plus a penalty.I took 50 acres out of the crp 2 years ago that had been in 4 years of a 10 year program at 75 bucks an acre.It cost me 20000 to get out.
 
In ohio real esate taxes will also be recouped buy the county if the ground is sold. If the ground was in a tax zone that reduces taxes on farmed ground and the buyer is not going to farm it,say build a house or some other purpose other than farming.That can amount to thousands.
 
The CRP contract is a lease, and just like any other lease the buyer is stuck with the terms of the original contract to which the seller signed.

As to who gets the PAYMENT, that depends on the sales contract between the buyer and seller. Normally the buyer gets the payment, but they can assign it back to the seller. The buyer and seller need to fill out a form with FSA to assign the payment. I went through this a couple of years ago when we sold some property that had a year left on the CRP contract. The buyer gave us the last year's CRP payment to sweeten the deal.

If you have a payment assigned to you and you don't receive the payment when you expect it, follow up! In our case, the local FSA office messed up and the payment reassignments didn't get processed so the payment went to the buyer. He sent us a check when we figured out what happened.

Now in our case it was only one year's rent, and we knew and trusted the buyer. Under no circumstances would I want to have the payment reassigned back to me if I was selling property that had five years left on the CRP lease! Think about it: the buyer has zero motivation to abide by the lease. He might run cattle on the property, or break it up to plant crops. What then? You won't get your payment, and the cost of taking the buyer to court might well be more than the amount of the lost payments.
 
when i bought 40 acres in 03 i signed what looked like a book of the claims on it. i asked someone that had knowledge about it and told me it wasn't worth the paper it was written on. said current owner has the rights. here in ca anyhow.
 

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