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djsinseia
Frequent Contributor

Breaking a CRP contract

There is a neighboring farm that is selling in a few weeks.  The majority of the farm is in CRP until 2018.  Does anyone know if it is possible to break a CRP contract and begin farming it?  What is the procedure?  Exactly what would the $ that need to be paid back be?

 

 

Thanks is advance.

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5 Replies
Jim Meade / Iowa City
Senior Advisor

Re: Breaking a CRP contract

My understanding is that when the farm is sold the CRP contract is broken unless the new owner assumes it.  If the new owner doesn't assume it, the seller will have to repay the money paid out to date.

 

In other words, the CRP contract doesn't go with the farm unless it is specified.  Most sellers will be careful to specify it as a term of sale, of course, or they will have to pay back all the money.

 

Your FSA office can answer this easily.

 

When my mother died, the CRP contract did not have to be assumed by the estate.  The estate dropped the contyract without penalty and was able to sell the land unencumbered.   But, I think that is a different deal.

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Kay/NC
Honored Advisor

Re: Breaking a CRP contract

FSA/NRCS could answer that  one for you.  Depending upon how many years into the contract you are talking, it could get to be quite expensive, I think.  I found this link, which looks to be a reliable source, but there are many more:

http://www.card.iastate.edu/iowa_ag_review/spring_08/article3.aspx

 

I figured it was just a matter of time before idled land started coming back into production.  That will, of course, mean more crop chasing dollars. 

 

 

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Kay/NC
Honored Advisor

Re: Breaking a CRP contract

Contracts with a person generally don't survive their death, unless specified.  If this is nto an estate sale, I'd be REAL sure who's got to pay back Uncle Sam. 

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fernwood
Frequent Contributor

Re: Breaking a CRP contract

I purchased a farm about 3 years ago that had been put in CRP a year earlier.  I had to assume the contract when I purchased the land.  I pulled part of it out of CRP and had to pay back all rental money that had been paid to the previous owner for those specific acres.  Don't remember if there was a penalty assessed for early out but think there was..      

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Kay/NC
Honored Advisor

Re: Breaking a CRP contract

One year in is not so bad...imagine if it is nine!
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