Yes, you can sell your farm if there is a first right of refusal on the property. However, you may need to give the person holding that right an opportunity to purchase the farmland before completing a sale with another buyer.
A first right of refusal can affect how you market, negotiate, and sell your farmland. If you own farmland in Iowa, understanding this agreement before listing your property can help you avoid delays and legal complications.
What Is a First Right of Refusal on Farmland?
A first right of refusal, also called a right of first refusal (ROFR), is an agreement that gives a specific person or party the opportunity to purchase a property before it is sold to someone else.
In farmland transactions, this right may be held by:
- A current farm tenant
- A neighboring landowner
- A family member
- A previous property owner
- Another person or business named in an agreement
For example, a farmer renting your land may have a first right of refusal included in their lease. If you decide to sell, you may be required to give that farmer the opportunity to purchase the property under the terms of the agreement.
However, not every farmland lease includes this right. The agreement must be reviewed to determine whether it exists and how it applies.
How Does a First Right of Refusal Work When Selling Farmland?
The process depends on the wording of the agreement. In many cases, a first right of refusal becomes relevant when the landowner receives an acceptable offer from another buyer.
Here is how the process may work:
- The landowner decides to sell. The property is offered for sale through a listing, auction, or another selling method.
- A buyer makes an offer. The seller receives an offer they are willing to accept.
- The right holder is notified. The person with the first right of refusal receives notice according to the agreement.
- The right holder makes a decision. They may have the opportunity to purchase the farm under the terms specified in the agreement.
- The sale moves forward. If the right is properly waived, declined, or expires, the seller may be able to proceed with the other buyer.
The exact process can vary. Some agreements have specific deadlines, notice requirements, or exceptions that must be followed.
Can I Sell My Farm at Auction With a First Right of Refusal?
Yes, farmland with a first right of refusal may be sold at auction. However, the auction must be structured around the existing agreement.
A farmland auction creates competition among buyers and helps establish market value. When a first right of refusal exists, the seller and auction company need to understand how that right affects the bidding and final sale.
Depending on the agreement, the right holder may have an opportunity to purchase the property based on the winning bid or other applicable terms.
This can create uncertainty for auction bidders. That is why it is important to disclose the situation and explain the applicable sale conditions before the auction.
At Whitaker Marketing Group, we recommend reviewing any first right of refusal with a qualified real estate attorney before establishing the auction terms.
Does a First Right of Refusal Lower Farmland Value?
A first right of refusal does not automatically reduce the value of farmland.
However, it can affect buyer interest and competition.
Some buyers may hesitate to spend time researching a property, arranging financing, or bidding at auction if another party has the opportunity to purchase the farm under the same terms.
Other buyers may still participate, especially when the process is clearly explained.
Several factors can influence the sale, including:
- The length and terms of the agreement
- Whether the right holder intends to purchase
- How the agreement affects the sale process
- The amount of time allowed for a decision
- The level of competition among interested buyers
A clear selling strategy can help reduce uncertainty and encourage buyer participation.
Can the Person With the First Right of Refusal Decline to Buy?
Yes. The person holding the right may choose not to purchase the farmland.
In some situations, they may be willing to sign a written waiver before the property is marketed. This can help simplify the selling process and provide greater certainty to potential buyers.
However, a waiver must be properly documented, and the agreement may contain specific requirements.
A landowner should not assume that a verbal conversation or lack of interest automatically eliminates the right.
What Happens if I Sell My Farm Without Honoring the First Right of Refusal?
Selling farmland without following an enforceable first right of refusal can create legal problems.
Depending on the agreement and circumstances, the right holder may pursue legal remedies. These could include seeking damages or asking a court to enforce the agreement.
The dispute could also delay closing or create uncertainty about the transaction.
Before selling, have an attorney review the agreement and determine what steps are required.
Does a First Right of Refusal Expire?
Some first right of refusal agreements have an expiration date. Others may remain in effect for an extended period or terminate when certain conditions are met.
The agreement may also address whether the right transfers to heirs, successors, or future property owners.
Do not assume that a right of first refusal expires when a farm lease ends or when the original parties change.
The actual language of the agreement determines whether the right remains enforceable.
What Should I Do Before Selling Farmland With a First Right of Refusal?
If you are considering selling your Iowa farmland, start by reviewing your property documents.
First, locate the agreement. Check your farmland lease, deed, purchase documents, and other recorded agreements.
Next, consult an attorney. Determine whether the right is enforceable, when it applies, and what notice requirements must be followed.
Then, discuss your selling options. A farmland real estate broker can help you evaluate whether an auction, traditional listing, or sealed bid sale is appropriate.
Finally, establish a clear plan. Address the first right of refusal before marketing the property whenever possible. This can help avoid confusion and unexpected delays.
Can Whitaker Marketing Group Help Sell Farmland With a First Right of Refusal?
Yes. Whitaker Marketing Group works with farmland owners throughout Iowa and the Midwest to develop selling strategies for a variety of property situations.
Whether your farmland is rented to a tenant, owned by multiple family members, or subject to a first right of refusal, understanding the property’s existing agreements is an important part of preparing for a sale.
Our team can help you evaluate your selling options, develop a marketing strategy, and coordinate with your attorney to help keep the transaction moving forward.
Final Thoughts: Can I Sell My Farm With a First Right of Refusal?
Yes, you can sell farmland with a first right of refusal, but you must account for the agreement before completing the transaction.
The right does not necessarily prevent a sale. It may simply require additional steps before another buyer can purchase the property.
Understanding those requirements early can help protect your interests, reduce delays, and create a smoother selling experience.
If you are thinking about selling farmland in Iowa, contact Whitaker Marketing Group to discuss your options.
