Most of the attention in a farmland sale goes to price. Sellers want to know what comparable farms have sold for and which sale method will bring the most competition. Title work tends to get less attention until closing, which is often when problems come to light.
Ordering preliminary title work before a farm goes to market verifies ownership, gives sellers time to correct any issues, and makes for a smoother closing. This is especially true for auctions, where the closing date is set before sale day and there is little time to address surprises. Having the title in order early also puts sellers in a better position to decide when to sell.
What Clear Title Means
Clear title means the seller has the legal right to sell the property and no one else holds a claim against it. That includes lenders, lienholders, and family members who may hold an ownership interest that was never formally resolved.
In most farmland sales, the seller provides the buyer with an owner's title insurance policy. Before issuing that policy, the title company searches the county records and prepares a title commitment. The commitment identifies the owner of record, lists the requirements that must be met before closing, and shows any exceptions the policy will not cover.
Preliminary title work means ordering that commitment at the start of the process instead of after a buyer has been secured. Peoples Company typically works with the seller's attorney on this step or can recommend a title company it has worked with in the area.
What Preliminary Title Work Can Uncover
Every farm is different, and so is every title. Many farms have been owned by the same family for generations, and older transfers were not always handled with the same care as a sale today. Issues that can turn up include:
Mortgages that were paid off but never released of record
Ownership interests still held in the name of a deceased family member
Legal descriptions that do not match fence lines or a current survey
Older easements for utilities, drainage, or road access with unclear locations
Liens or recorded agreements tied to the property
Tenant rights under an existing farm lease
Most of these can be corrected, but there is no way to know how long a correction will take until the work begins. An interest held by a deceased owner, for example, may require documents from an estate that was closed decades ago and signatures from heirs who live across the country. Issues like that can take more than a year to resolve, and some end up in court. Once a farm sells at auction, the closing date is typically only weeks away, which leaves little room for anything that was not found ahead of time.
Real World Example
A recent Peoples Company auction in Illinois shows how this works in practice. The title work was ordered a few months ahead of the sale date. The preliminary commitment showed two mortgages from the early 1990s still on record against the farm. Both loans had been paid in full, but releases had never been recorded with the county.
Once the title work identified the mortgages, the lender cross-referenced its records and recorded both releases before the auction. By sale day, the title showed what the sellers already knew: the farm was owned free and clear.
That outcome depended on two things: the lender still had the records, and the issue was found months ahead of the sale. Not every situation goes that way. When the original lender has merged or closed, or when heirs have to be located, the same kind of issue can hold up a sale for months or longer.
Estate and Trust Sales
Estate and trust sales come with additional requirements. The title company will need to confirm who has the authority to sign, whether that is an executor, a trustee, or all of the heirs together, and it will want to see the documents that establish that authority.
These sales tend to go most smoothly when the family's attorney is involved from the beginning. When the attorney, title company, and land agent are working together early, questions about authority and ownership are answered before marketing begins, and the sale can move forward without delays.
Timing the Sale
Farmland values respond to interest rates, grain prices, and the number of farms available in a given area. A seller whose paperwork is already in order can move when market conditions are favorable instead of waiting on a title issue to be resolved.
The farm lease should be reviewed at the same time. Under Illinois law, terminating a year-to-year farm lease requires written notice at least four months before the end of the lease year, which is October 31 for leases running March 1 through the end of February. If notice was not given, the tenant typically keeps the right to farm the ground for the following crop year, and buyers will need to know that before they bid. More detail is available in Farmland Lease Termination Notices Explained.
Sellers considering a sale in the next year should begin gathering the following:
Preliminary title commitment
Current farm lease and any termination notices
FSA maps and farm records
Recent property tax bills
Survey, if the legal description is unclear or the farm may be offered in tracts
Tile maps and drainage district information
Estate or trust documents showing who has authority to sign
Take-Away
Title work is rarely the first thing sellers think about, but it is one of the few parts of a sale that can be handled well in advance. Ordering a preliminary title commitment early and having an attorney involved when an estate or trust is selling allows sellers to choose their timing and close without surprises.
Peoples Company land agents work alongside sellers, attorneys, and title companies throughout the sale process. Contact a Peoples Company land agent to discuss preparing your farm for market.
