to sell or not to sell…

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					SEMINAR 11 November 2008 - Presentation by Flora Bennett
I am a partner of Grange Wintringham, Solicitors, based at both Market Rasen and Grimsby. I have
been in practice since 1985. I am a commercial property lawyer specialising in agricultural law, in our
large property department. I am also a partner of our family farm at Brackenborough, just 3 miles from
Louth.

    CLIENT’S OBJECTIVES -

     o    Improve profitability/value. John has identified the need to look at the finances of your
          business. Chris has made some suggestions for alteration to the structure of your business.
          Many of these changes will affect your legal position, and this is where your solicitor’s
          expertise can help.

     o    Value for money. Although no-one likes to pay out for professional fees, I really do believe
          that Grange Wintringham can give you value for money by providing timely advice and
          working with you and your other professional advisers to find the best solutions for you. Good
          advice, at the right time, can save you money.

    SOME CHOICES -

          I will look at some of the possibilities Chris has explored:

     o    Machinery sharing agreement.
     o    Joint venture agreement.
     o    Contractor’s agreement.
     o    New tenancy agreement.
          These are all agreements which should be properly documented to avoid problems later. You
          will be entering into legal obligations, and your solicitor can work with through your proposals
          with you and your professional team to ensure maximum protection of your interests. Should
          differences arise between you and the other party in the future, a clearly drawn-up agreement
          can mean that these differences are quickly resolved. This can prove cheaper for you, and
          mean that you maintain good relationships with those you may wish to work with in the future.

     o    Sell/buy land. If you do decide to sell all or part of your holding, like it or not, you are really
          going to need to employ a solicitor. I recommend that you do so at the outset, so that the
          whole professional team can work together to draw up the best deal for you. If land is
          retained you will need to consider what terms are needed to preserve the value of the land
          you keep. This usually includes rights of way and drainage, new covenants, and boundary
          responsibilities.
          Conversely, you may find that your neighbour decides to sell up and you may have an
          opportunity to consolidate your holding by purchasing additional land. Again, the earlier you
          instruct your solicitor, the more impact we can have on the deal, and the sooner you can
          expect the certainty of an exchange of contracts.

     o    Redundancies. As part of your restructuring you may find that you need to make one or
          more of your employees redundant. Again, an early discussion with your solicitor can avoid
          unnecessary expensive claims which could make all the difference to your profit that year.
          We have a highly respected employment department at Grange Wintringham, headed by my
          partner, Jane Eatock, who is assisted by our associate solicitor, Katie Gladding. They will be
          happy to have an initial discussion with you to check your procedures are adequate, or to set
          them up for you.

    LAWYER’S ROLE.

     o    Early identification of key legal issues. Once you have decided that changes are going to
          have to be made, your solicitor will advise you on how your plans fit in with your current legal
          situation, the timing and the effect of the proposed structure. It will be necessary to look at
          your deeds, for example, to check the ownership. This can often be far from straightforward,
          particularly where one family has owned land for several years, and bought and sold land.



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     I have acted for a farmer where his farm was owned by various members of his family partly as
     individuals in their own capacity, both as partnership assets and otherwise, partly as individuals
     as trustees, and in part by a company owned by some of the family. The apportionment of the
     value of the land between the different owners affected the tax payable and had to be carefully
     considered when decisions were being made.

     o    Work with client and professional team. It really does help to meet you and see your farm.
          I like to see the land I am dealing with, meet those involved, and have an opportunity to
          discuss your business with you. In this way I can understand better the issues you are facing
          and your objectives in making the proposed changes. I recommend that your lawyer is
          instructed at the outset alongside your accountant and any other professionals so that the
          implications of what will be a major transaction for you can be considered whilst there’s still an
          opportunity to restructure the deal.

     o    Resolve problems. If you are already experiencing difficulties with the other parties with
          whom you are farming, the tenants, contractors, employees or others, Grange Wintringham’s
          litigation team, headed by our managing partner, Juliet Savage, will be happy to advise you.

    PREPARATION –

     o    Communication – meeting between client and professionals? Good communication is
          key to cost-effective advice, and an early conclusion to the transaction proposed. A meeting
          can allow issues and possible solutions to be worked through, so that progress is quickly
          made. Where the issues are complex, it may also be worth considering holding a meeting
          with the professional team for the other party to the proposed agreement.

     o    Owners (freeholders, trustees, tenants, occupants). It is essential to properly understand
          the nature of the existing legal interests in your land before making any changes, in order that
          the impact can be assessed, and that the agreement of all parties concerned may be
          obtained.

     o    Deeds – where are they? Do you know where your deeds are? Even if your land is
          registered it may be necessary to refer to old deeds. Often with farms which have been
          owned for many years there are numerous bundles of deeds and it can take some time to find
          and co-ordinate them.
          I acted for one client who, in the traditional manner, had lodged his deeds with his local bank,
          and when we came to request them we found that they had been sent to the head office who
          denied all knowledge of them. Fortunately, my client was able to produce correspondence
          confirming the deeds had been lodged with the bank, and remarkably, the bank agreed to pay
          compensation to us for the cost of re-constituting the title by way of statutory declaration.
          Shortly before completion, you can guess what happened? Yes – the bank wrote to me
          enclosing a large pack of deeds which had turned up in their archives!
           I do offer a deeds audit service, whereby your deeds are all checked, and a summary of
          them is produced, whether they are registered or unregistered. This can be on a fixed cost
          basis, and I am happy to discuss fees with you so that we reach an arrangement which works
          for you.

     o    Register your land. Do consider this whether or not you intend to make changes to your
          farm at present. The fees may not be as much as you think (the maximum land registry fee
          for voluntary registration is £525) and there are tremendous advantages in having an up-to-
          date digital map and a summary of your title and ownership, which can never be lost!

     o    Assess impact of changes. Only by looking at the end result can you decide if you wish to
          proceed. If tax liability will result, you need to know this from the outset and this is where
          timely advice can avoid unnecessary professional fees being incurred.
          I acted for one client on the dissolution of a partnership where we were able to save over
          £7,000 in Stamp Duty Land Tax by restructuring the transfer of land and mortgages.

    MISCELLANEOUS POINTS TO TAKE AWAY WITH YOU –




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     o    Written records – e.g. tenancies, trusts. Documenting agreements at the outset will clarify
          the terms agreed and may reduce the amount of solicitors’ time you pay for later when
          changes are made, or if disputes arise.

     o    Chancel repair liability insurance. Following the House of Lords Wallbank case in 2003
          (Wallbank v Aston Cantelow and Wilmcott with Billesley Parochial Church Council) chancel
          repair liability insurance is now available at a moderate cost. In this case the owners had to
          pay £186,969 plus VAT and costs to repair the chancel of the local church. Any land can be
          affected by similar liability.

     o    EPCs. As from 1st October an Energy Performance Certificate must be provided whenever a
          building is let or sold. There are some exceptions for agricultural premises, such as unheated
          barns, but the certificates will often be required and can cost several hundred pounds or
          more. So if you have a cottage coming vacant for which you intend to re-let, you will need to
          purchase an EPC before doing so or risk a fine.

     o    Auctions/tenders/sale on open market. If you do decide to sell, make sure you receive
          advice as to the best method of sale. In such a volatile market you risk losing out significantly
          if you do not do so before entering into any agreement.

So, to wind up, I will leave with you with 2 key ways in which your professionals can help you:

     1. good preparation; and,
     2. team work.


flora.bennett@grangewintringham.com

Telephone: 01472 253900




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