Hoping one of the Tman experts may have a bit of experience with this. I was handed a buyers contract for a farm yesterday, the seller had a note inserted saying "seller has first right to buy back property at purchase price", obviously that's poison unless there's some sort of reasonable time frame attached. Wondering if it's even legal to have a buy back clause like that? I think the seller wants to make sure we don't just subdivide and flip it (we wont) but there's no way I can fence the farm and fix the buildings then sell it back for what we paid if something goes wrong.

I can ask a lawyer on Monday but this seems almost unenforceable anyways

Just add a amended clause that reads seller can buy back at purchase price plus improvements cost and that way you can set your own wages and materials cost and add another % of money for this or say no way and walk away sounds to me like they want you to loan them money and come get there property back for a NO INTEREST Loan just me thinking out loud

Good Plan

And also see a lawyer

My first thought is a one year buyback is okay. Beyond that inflation and improvements would kill me after more than a year.

I doubt that clause would hold up in court but I would sure see a real estate lawyer about it. Sellers put all kinds of conditions on land contracts that are not legal, and not upheld.

Appreciate it. That was my first thoughts as well. Her kid wants to farm, we're actually hoping to help him do it but we are unfortunately not rich enough to just "hold it" for him. If he wants it in the future I may be able to give him a bit of a deal but not at a major loss to myself

If you never decide to sell it doesn’t matter but the buy back clause should be at the appraised value at the time. I would also want a time frame of some kind especially if you are paying market value for it now.

As suggested, I’d get a lawyer to look this over.

I’d have to assume that if legit, it would crush your investment potential. We bought our property 7 years ago and it’s appreciated substantially. I’m hoping that I’d never have to, but there’s also piece of mind knowing that if we ever get into a bind that I could section off 5 acre lots one or two at a time and we’d be in good shape.

Seems like a pretty unfair ask on their part.

Sounds like they want you to be a pawn shop.

I have done things like this for family on a small scale I came out in the hole on but was glad i could help them out. One example was buying horses and taking care of them for a year and half and selling back for what I bought them for. It cost me time, feed and shoes and vet care. I was in the place I could do it so I did. I have also held guns for family they were going to sell but didnt want to due to sentimental reasons. I would have gave them the cash and they keep the gun as I offered but they insisted I hold the gun.

These were much smaller amounts of cash than a land deal and for family. I have to assume you are wanting to buy it becuse you have a use for it not to help them out.

Just consider if you have your capital tied uo in this and other land becomes available and you miss out on it.

Hard to say without knowing your plans and goals but I would not consider a deal with strings like that. Legal fees alone can eat up any good deal let alone possibilities of the hassle and time and potential hard feeling . Hard pass unless there is more to it.

The only legit clause I've ever seen like that is, that the original owner has the "right of first refusal" if you decide to sell in the future.....at whatever the asking price is.

We had that clause in a purchase at one time. We ended up settling on changing the wording to (at fair market value) and only if we decided to resell it. I believe there was a time period put on it also.

I had "right of first refusal "added to the property I gave my son for $1.00.It was in the deed registered at court house. Price is $10.000 .The paper work was done by an real estate attorney.

I have seen contracts like that. In fact I was going to buy some land that had that exact wording. It would not stopped me from buying the guy was 25 years older then I and my council wasn't concerned about the clause. Any yes it could be bought back what the going price and value of that property at the time.

This is what most here use, my understanding is though that the asking price needs to a realistic number, it can be higher than appraised value but still needs to be close.

"At purchase price" - no way. When you try to sell it in 20 years and the value has doubled, you have to accept his offer at the price you bought it for? "Current fair market value", maybe , but even that is hard to define. If he wants it when you're ready to sell he need to pay what it's worth by competing with all the other bidders. I would not agree to this clause in any form.

He can buy it back any time he wants too, he just needs to pay what it's worth at the time. Free market competition is the only way to do that.

Don't think we would be making a deal

And doubt anyone would buy it with those terms in the contract

We removed the buy back clause entirely, I told her again what we intended to do with the property and she agreed to remove it. Supposed to be signing tonight.

Sounds like things are working out.