Civil Judgement? Options?

[SunnyOne]

The short story is that along with my siblings, I inherited a whole bunch of farmland from our grandparents.

A couple years ago, a guy retired from a state job and moved to this area to become a farmer (who knows?).

He bought a farm but it didn't come with much land - so he asked to rent ours for farming purposes (crop growing, animal grazing, etc). We have rented it before. We have a contract with him that refers to annual payments. He paid last year. His second payment is due later this spring.

My brother happened to be perusing the local county records online and noticed the guy has several large dollar judgements filed against him recently: banks, equipment sellers, etc. He has taken two home equity lines against his home recently - all in the public records.

Who knows if it's a related issue - but he is always bragging to everyone who will listen - about how much he wins playing slot machines at the local casino.

Now my siblings and I are concerned about whether we will see any land rent this spring...and if he fails to pay, what would we do?

We could file a judgement? but if his property is already in hock, who knows whether that would even be worthwhile? We know he has a state pension, but I believe liens cannot be placed against them.

We don't want to go after the guy to ruin him, we're just looking at what our options might be.

Has anyone here been involved in a contract breach situation? how did it work out?

 

[ivinsfan]

If you don't mind my asking, how is the second payment due this Spring? Has he already payed you the first half of 24 rent?


In my area you would do a payment in Spring and then the second payment later in Fall after the crops come out.


Your answer to my question will impact my answer but it's ok if you don't care to share.

 

[Gumby]

When you say his creditors have filed judgments, do you mean liens on the land? That would be a real headache. As for what you can do for the missed rent, it depends on what your contract says and the specific laws in your area. In general terms, you would terminate the contract and evict him if he won't leave on his own. Is there anyone else who would rent the property?

P.S. I am neither a farmer nor the owner of farmland.

 

[SunnyOne]

The rent payments are based on an annual date, not tied to any crop or farming schedules.

No, no liens placed against him on our rented land...judgements were placed against him personally.

Of course we will follow the contract rules for non-payment : send notice, ask him to remove any equipment he has there...my question is what else can we do to try to recover a lapsed payment? I guess just file a contract breach claim in local courts? if anyone has comments on that, most appreciated.

 

[ivinsfan]

When you say his creditors have filed judgments, do you mean liens on the land? That would be a real headache. As for what you can do for the missed rent, it depends on what your contract says and the specific laws in your area. In general terms, you would terminate the contract and evict him if he won't leave on his own. Is there anyone else who would rent the property?

P.S. I am neither a farmer nor the owner of farmland.

You can't file a lien on someone else's land..that's assuming this a straight cash rent contract. Now a few people will do a share or crop share rent that would be a little more iffy as to a lien.

 

[ivinsfan]

The rent payments are based on an annual date, not tied to any crop or farming schedules.

No, no liens placed against him on our rented land...judgements were placed against him personally.

Of course we will follow the contract rules for non-payment : send notice, ask him to remove any equipment he has there...my question is what else can we do to try to recover a lapsed payment? I guess just file a contract breach claim in local courts? if anyone has comments on that, most appreciated.

I'm confused has he missed a payment? Do you have a written contract with termination provisions layed out.


Depending on your contract you might have the option to simply find a different renter and head off any potential problems.

 

[ivinsfan]

The rent payments are based on an annual date, not tied to any crop or farming schedules.

No, no liens placed against him on our rented land...judgements were placed against him personally.

Of course we will follow the contract rules for non-payment : send notice, ask him to remove any equipment he has there...my question is what else can we do to try to recover a lapsed payment? I guess just file a contract breach claim in local courts? if anyone has comments on that, most appreciated.

What are the opt out provisions in your contract,I'd look there first. Proactive is the best choice if he uses your land and doesn't pay you , it's you who are behind the 8 ball. If his equipment gets repo and he can't get a crop off you are SOL.

 

[Gumby]

Yes, to recover back payments you'd need to bring a contract action. Depending on the amount, it might be possible to do it in small claims court, which would be a lot less expensive. And a simple contract action for non-payment is fairly straightforward. But one of the first questions to answer before you go down that path is what does he have of value that you can take if you win? If he already has scores of other creditors with liens on his equipment and no other unencumbered assets, you may be unable to collect on any judgment you get in court.

You and others know farming far better than I do, but I would think notice and termination is something to do quickly, so you can get someone new on the land before planting time. You can take your time to bring suit on any unpaid balance. In NY, I believe the statue of limitations on a breach of contract action is six years, but you would want to do your own research on that.

 

[ivinsfan]

Yes Gumby that's my advice....depending on the contract it might be possible to just terminate the lease. I don't understand why the OP is so worried about non payment.



OP does the renter have hay he planted on your land? Has the renter put up fencing out of his own pocket? Otherwise I can't figure out what you are concerned about.

 

[Gumby]

You can't file a lien on someone else's land..that's assuming this a straight cash rent contract. Now a few people will do a share or crop share rent that would be a little more iffy as to a lien.

Sometimes you can. In Connecticut, if you supply materials or services to make any improvement on a piece of real property by virtue of an agreement with "or by consent of" the owner, you can file a mechanic's lien on the property, even if the person with whom you contracted was not the owner. So if this gambling farmer were in Connecticut and hired a contractor to build a shed or barn on the land, or grade a road, or run power lines or something like that and didn't pay, that contractor could file a lien on the land and the owner would have to deal with it.

 

[ivinsfan]

I was more talking about machinery costs and depending on the area potential seed and fertilizer cost, I'm not sure how those works.


We do sometimes see share crop contracts where the owner is considered an active participant which is why I asked about it.

 

[SunnyOne]

Yes, to recover back payments you'd need to bring a contract action. Depending on the amount, it might be possible to do it in small claims court, which would be a lot less expensive. And a simple contract action for non-payment is fairly straightforward.

This is what we are thinking. The rent payment due will be $30K, so certainly a chunk of money, but not a ton of money....

But one of the first questions to answer before you go down that path is what does he have of value that you can take if you win? If he already has scores of other creditors with liens on his equipment and no other unencumbered assets, you may be unable to collect on any judgment you get in court.

This is the $64 dollar question lol - with liens everywhere on his equipment and home, we are guessing the only thing of value he may have is his pension, which as I understand it - is not touchable. But we are curious, as he makes payments on those equity lines - can that amount then come to us to help us recover the amounts due? This is assuming he doesn't just go bankrupt.


As far as bringing on a new tenant, we would be interested, but not as urgent as getting things squared away with him.

 

[pb4uski]

Is the rent paid in advance or in arrears? I think it would typically be in advance, so if he misses the next payment then you evict him based on the lease terms and find a new leasee. Beyond that, you can't wring blood from a stone.

 

[isisdave]

You could ask him NOW if he's still comfortable with the terms of his lease, or would he maybe like to terminate it now before he plants a crop? If he asks why, you could mention you'd heard he was having some financial challenges.

 

[Gumby]

Yes, to recover back payments you'd need to bring a contract action. Depending on the amount, it might be possible to do it in small claims court, which would be a lot less expensive. And a simple contract action for non-payment is fairly straightforward.

This is what we are thinking. The rent payment due will be $30K, so certainly a chunk of money, but not a ton of money....

But one of the first questions to answer before you go down that path is what does he have of value that you can take if you win? If he already has scores of other creditors with liens on his equipment and no other unencumbered assets, you may be unable to collect on any judgment you get in court.

This is the $64 dollar question lol - with liens everywhere on his equipment and home, we are guessing the only thing of value he may have is his pension, which as I understand it - is not touchable. But we are curious, as he makes payments on those equity lines - can that amount then come to us to help us recover the amounts due? This is assuming he doesn't just go bankrupt.


As far as bringing on a new tenant, we would be interested, but not as urgent as getting things squared away with him.

In my experience, you can't directly attach certain pensions or social security, but once the money is in his bank account, it's fair game if it is commingled with unprotected money. The most likely outcome is a bankruptcy filing, and then you'll just be another unsecured creditor.

 

[SunnyOne]

that's what I am thinking - get in line ugh

 

[Koolau]

If you are serious about "planning" for a potential non-payment, you probably need to get an attorney involved. BUT, since it hasn't actually happened yet, that could turn out to be an expense you don't need.


Here's hoping the guy shows up on the rent-due date and peels off 300 crisp $100 bills! Heh, heh, a check would be nice, but you would be wondering about it for the next month until it clears. Good luck!

 

[ivinsfan]

Yes, to recover back payments you'd need to bring a contract action. Depending on the amount, it might be possible to do it in small claims court, which would be a lot less expensive. And a simple contract action for non-payment is fairly straightforward.

This is what we are thinking. The rent payment due will be $30K, so certainly a chunk of money, but not a ton of money....

But one of the first questions to answer before you go down that path is what does he have of value that you can take if you win? If he already has scores of other creditors with liens on his equipment and no other unencumbered assets, you may be unable to collect on any judgment you get in court.

This is the $64 dollar question lol - with liens everywhere on his equipment and home, we are guessing the only thing of value he may have is his pension, which as I understand it - is not touchable. But we are curious, as he makes payments on those equity lines - can that amount then come to us to help us recover the amounts due? This is assuming he doesn't just go bankrupt.


As far as bringing on a new tenant, we would be interested, but not as urgent as getting things squared away with him.

I'm not understanding does he owe you money at this moment in time? And if he does what is it for? Last years rent, this years rent? And BTW I've seen a few local guys operate this way and the date when you will get past due rent payments is somewhere between never and never.

 

[ivinsfan]

Is the rent paid in advance or in arrears? I think it would typically be in advance, so if he misses the next payment then you evict him based on the lease terms and find a new leasee. Beyond that, you can't wring blood from a stone.

Depending on your area farm rent is usually paid in advance, sometimes the last payment can be made about harvest time. It's not an eviction so if the guys is in arrears on his last years rent payment you can boot him. Technically if you don't have a rent payment before planting you can find another renter. One that has money.

 

[Stormy Kromer]

I'm not understanding does he owe you money at this moment in time? And if he does what is it for? Last years rent, this years rent? And BTW I've seen a few local guys operate this way and the date when you will get past due rent payments is somewhere between never and never.

It appears he is complying with the contract. As ivansfan mentioned above, a farm lease typically involves a partial payment, about half, in the spring and the remainder in the fall. You're relying on the farmer to make this second payment on trust. See ivansfan's comment above regarding this.

I own farmland and rent it out. If I were you I would start looking for a new tenant when this contract expires. Beware, it may be hard to collect the last payment since you will need to notify him before the last payment is due.

I think you need an attorney to handle the new lease and possible contract termination. A Farm Management Company could help you also, I typically avoid them like I do Financial Advisors but in this situation I think they could be of value. They charge about 6% of the rent but will virtually take away any head aches and will make sure your rent is collected. They will either 1. require payment in full before the crop is planted 2. require an irrevocable letter of credit from a bank or 3. place a lien on the crop before its planted.

There are a lot of reputable farmers who will treat you fairly. If you have a tenant that causes you to lose sleep you have options. I wouldn't want just anyone farming my land whether they paid me on time or not.

 

[OldShooter]

If you are serious about "planning" for a potential non-payment, you probably need to get an attorney involved. BUT, since it hasn't actually happened yet, that could turn out to be an expense you don't need.


Here's hoping the guy shows up on the rent-due date and peels off 300 crisp $100 bills! Heh, heh, a check would be nice, but you would be wondering about it for the next month until it clears. Good luck!

This. The mere fact that he has judgments against him does not mean that he won't pay the required amount by the due date. (if a check, I would hotfoot it to his bank and cash it ASAP.)

If he files bankruptcy that is another matter. As a creditor you should get a notice. This is the point where a little legal advice might be a good idea. IANAL but at that point I think you become an unsecured creditor, behind creditors who have security interests in any of his assets. In that case you may well not get paid but its still your land and you can proceed to find another renter.

 

[ivinsfan]

Well Stormy the owner themselves can ask for payment in full before the crop goes in.



Oddly enough we have decided to rent out one of our farms for the upcoming year, baby steps...


We kept it on the QT talked to young farmer from church and a young guy who farms and owns land adjoining our to be rented farm. We've known them both since the day they were born. They were both interested. For various reasons we choose the guy adjoining our farm. In no way a price thing. We told the guy from church in person of our decision saying it's mainly a location issue as we'd have assistance with snow clearing and such with our neighbor being our renter. The guy is literally 2 minutes from our driveway.



The actual possible rent number has been discussed only briefly and we all decided we'd talk after the first of the year. There are various "big boys" in the surrounding area that no doubt bid higher, but we're not interested. In fact the mere presence of these guys raises our rent anyway.



Trust is everything when renting farmland and my advice would be to get all money owed for rent upfront this year and if push back comes start looking for a different renter.

 

[Stormy Kromer]

Well Stormy the owner themselves can ask for payment in full before the crop goes in.



Oddly enough we have decided to rent out one of our farms for the upcoming year, baby steps...


We kept it on the QT talked to young farmer from church and a young guy who farms and owns land adjoining our to be rented farm. We've known them both since the day they were born. They were both interested. For various reasons we choose the guy adjoining our farm. In no way a price thing. We told the guy from church in person of our decision saying it's mainly a location issue as we'd have assistance with snow clearing and such with our neighbor being our renter. The guy is literally 2 minutes from our driveway.



The actual possible rent number has been discussed only briefly and we all decided we'd talk after the first of the year. There are various "big boys" in the surrounding area that no doubt bid higher, but we're not interested. In face the mere presence of these guys raises our rent anyway.



Trust is everything when renting farmland and my advice would be to get all money owed for rent upfront this year and if push back comes start looking for a different renter.

This says it all.

I rent to a neighbor, I am constantly approached by "big boys with big dollars" but to me renting land is a very personal thing.

I agree that you don't need a farm manager to have any of the conditions that I mentioned met We don't have a farm manager, we write up our own contract. I applaud the way you rented your farm out, our rural communities would be better off if more land owners handled it this way.