Dealing with Rights of First Refusal

Devon Davidson: 0:00

The Farmland Exchange, the official podcast of CLHBid.com. Expert insights on buying and selling farmland in Western Canada. Welcome back to the Farmland Exchange, the official podcast of CLHBid.com, where we provide you with expert insights into the process of buying and selling farmland in Western Canada. I'm Devon Davidson, your host and digital media strategist for CLHBid.com. If you haven't already, please take a minute to like, rate, and review the podcast. It really helps us out and it would be greatly appreciated. On today's episode, we're going to be talking about how to deal with the rights of first refusal and their impact on farmland sales. And here to help me with that conversation is Roy Carter, CEO of CLHBid.com. Roy, how are you doing?

Roy Carter: 0:47

Good. How about you, Devon?

Devon Davidson: 0:48

Yeah. Good to have you here. And also Alle Carter, legal and member of the executive team at CLHBid.com. How are you? Good. Good. Thanks for being here. Um, I guess maybe the first thing we want to cover, uh, just for context in this conversation, is defining what is a right of first refusal and from a legal standpoint, um, what sort of obligations are triggered when that's executed. So I don't know, Alle or Roy, who wants to take that first.

Alle Carter: 1:13

I can take a stab at it first. Uh so a right of first refusal, uh often referred to as a ROFR, ROFR, um, is a contractual contractual right that the uh ROFR holder has, and it really uh comes into effect uh when the seller of the land is ready to accept uh a third party's offer. So for example, if Roy has a ROFR on my land because he's my renter, perhaps, right? Uh and it's in the lease agreement, then maybe you come along and make me an offer because you've heard that maybe I'm interested in selling. Uh, then what happens is I have to give proper notice to Roy as the right of first refusal holder. Say, look, Devon made me this offer. These are the terms of that offer, and you have a chance to match them within a specified time frame. Um and so it's important that yeah, notice has to be given, and then Roy would have to match the material terms of your offer. So that means that if you offer me 500,000 for my quarter with no financing condition, Roy's offer has to be exactly the same as that.

Devon Davidson: 2:29

I thought that was really interesting. We're talking about that off-air a little bit. Uh how many landowners understand that? Because I think that's important to know is it has to match the material terms, right? Do you is that a common misconception you're finding?

Alle Carter: 2:41

I would say yes. And I'd say probably the bigger misconception is what is even a rover to begin with. Like they they don't know the nuances of it and they because they don't know really the effect that it has, or yeah. Oftentimes I find people think that a right of first refusal is just um who can buy my land? You know, I'm I'm letting maybe my renter buy my land.

Speaker: 3:05

Right.

Alle Carter: 3:05

But that's not the case. There's a there's a lot more to it, and we'll discuss later um really why it's problematic.

Devon Davidson: 3:14

Um, that's probably a nice segue to the next question I had for you. And and how do how do ROFRs, maybe Roy I'll give us to you, but um you know, how do they they hinder the seller's ability to sell their land and how does it impact the land values as well? You bet.

Roy Carter: 3:29

Maybe we should clarify when we talk about uh right of first refusal or ROFR, that's probably in the category of the formal one, uh, probably drafted by a law firm put in the lease that deals with notice periods and that type of deal. Um people can refer to roafers as, you know, basically I told my tenant I'd give them a chance. Right. Uh, you know, it may it might be as uh, you know, just sign of kind of an oral promise, which is something quite different. Uh obviously, you know, again, there's often a really good relationship between the landlord and a tenant.

Speaker 4: 4:04

Right.

Roy Carter: 4:05

So why wouldn't they give them a chance, right?

Speaker 4: 4:07

Yeah.

Roy Carter: 4:08

They would, you know, it's just normal and it's probably the first person they're gonna go to. So I would say in this discussion, we're really talking about a formal lease with a formal write-of-first refusal in it, and sort of the legal terms and and the effect that might have. Um, it's got a huge effect, negative effect on potential sale in several different areas. One is it takes the probably the most motivated buyer out of the equation. Right. Um secondly, is other parties don't waste time even getting financing because they know they can be trumped. Um you know, and uh another one is um it doesn't always happen, but sometimes it happens where the party holding the ROFR basically tells others, you know, it's my land, basically. Don't make an offer, don't run me up. And I think, you know, the fourth category, the effect, it prevents a seller from uh using uh price discovery mechanism to sell their land, right? Which is huge.

Speaker 4: 5:14

Yeah.

Roy Carter: 5:15

So, you know, that's in the last 10 years, that's really been the trend with farmland going to price discovery, whether it be escalating tender, auction, or whatever. And uh ROFRs come in, you know, centuries ago before communication.

Devon Davidson: 5:30

Right.

Roy Carter: 5:30

And it was really a way to say, you know, you don't have to or ride your horse over if you get an offer. Uh, I just want to know about it. I don't want to be told uh that you've sold to somebody else. But with communication nowadays, um, you know, again, they're gonna communicate with the tenant, there's already no need for it. But um, the problem now is because it doesn't mesh with uh like CLH bid escalating tender auction.

Speaker 4: 5:58

Right.

Roy Carter: 5:58

Uh it requires a party to go pick a seller, say a widow, you know, on the farm to go pick one party to deal with. So she's got to rule out others, she's got to choose. And then she takes an offer to the tenant with the ROFR in the lease and presents it to him. And you're uh you're basically choosing parties, there's no price discovery, and again, then the pet tenant uh gets to park and decide whether he matches or not, right? So it can have uh enormous effects on um on the sale um in the end, right?

Devon Davidson: 6:34

Do you have any any specific examples or or stories that you've heard or seen? Like I know obviously with CLH we our advice, and correct me if I'm wrong here, but essentially it's just if you have a ROFR, wait, right, until the end of the lease. Um but maybe something that's not associated with CLH bid. Have you seen a scenario where a ROFR's really hindered a sale?

Roy Carter: 6:52

Uh definitely. You know, we've associated with us, we had one where a a lawyer, a law firm did a tender with a posted a ROFR in it. There was only two two uh tenders and they were super low. We later sold it without a ROFR for you know 40% over the highest tender, like significantly. Yeah, another sale uh that we had the tenant wanted a ROFR. The husband had passed away, and the tenant wanted a ROFR. Uh, and the widow asked us about it, you know, and it was like, you know, he he he he he can bid, he doesn't need a ROFR nowadays, like he can just bid. Yeah, uh, she wanted to treat all her neighbors the same. So um she advised them that you know just bid, right? I'm gonna put it out there. It's not like I'm gonna sell it out from under you. Yeah, it's like he had an equal chance. Um, but somehow the rumor got spread that he had this ROFR. And um so we knew what he offered as well to the widow. He went to see her um it was actually before the funeral. And uh we had seven calls from parties saying the rumor around our area is this guy's got a ROFR, and if he does, we're not gonna touch it.

Speaker 4: 8:09

Right.

Roy Carter: 8:10

And it's like, no, he doesn't have a ROFR, right? And it's like, really? Um, because we want an email to that effect, because then we'll go get our financing, right? And you know, that was a good example where if we took those seven people that contacted us out of the mix, uh, where that would have gone, and we can see on the back end, of course, where that tenant bid to and where he stopped, and then where everybody else took it. And it was it was a million bucks difference, right? Wow. Uh, so it can have um huge effects. We often say, you know, it can be a couple hundred grand a quarter, a negative um effect. That's significant.

Alle Carter: 8:49

I was doing a little bit of research in preparation for this podcast because it's really something that we deal with a lot. And so we can tell sellers all the time, you know, we see that they affect sales. But I was wondering if there's been any research done on it or um kind of any data. And I found a a study that they did in Germany, and they took 4,000 different auctions. Uh, and one set was they had the a ROFR on the land, and the other one was that the bidders knew there was no ROFR. And it was established, and this was in 2018, that on average it lowers uh the the sale price by at least 25%. Wow. And that's just rough data. Um, and it it really limits also the the buyers or bidders that even show up on sale day. And as Roy alluded to, that's just because why would like going to get financing is quite a cumbersome task? Yeah, you do all your due diligence. Why would I bother doing that when I know someone's laying in the weeds and just yeah, I'm just a price setter. That's what they feel like. Totally. And so at the end of the day, I just I want people to know that it it it really we can tell you that it affects land value, but it has been shown that it it does as well.

Devon Davidson: 10:05

Well, there's data to support what Roy's saying that you know, up to maybe 40% difference, right? Yeah, yeah. So it's safe to say there's really no scenario in which a seller benefits from a ROFR.

Roy Carter: 10:14

No, no, no, and I would say, you know, even most tenants would agree that they don't need them. I mean, they agree that that seller's got a right to true price discovery and to get fair market value. They're not there to hurt their seller. They're they're just misconstrued and they're they they're still around because they were around for 200 years. Right. And um I think um there's a tendency in law offices, uh, you know, there the this trend of new price discovery is really in the last 10 years. And I think there's a tendency to just say, oh yeah, a ROFR won't hurt you because there it's just a right to match. Right. And they don't really think through the process that they're not allowed then to use price discovery. They're not allowed to like sell with CLH bid. They're forced to go old school, pick one neighbor over the rest. And uh I don't think it's thought thought through when they're advised, yeah, it's not a big deal in a lease. Right.

Alle Carter: 11:16

That's the thing I think that surprises me a lot of the times is that a lot or quite often the seller either doesn't know that there's a right of first refusal even in their lease or what it means. And I think it's because these and nothing bad against law firms. I mean, we're a law firm, but it's just in their boilerplate lease templates. Right. This right of first refusal, because it was around for so long. And unless you are educated in egg land, it's very different. And they, as Roy alluded to, they don't think about how that affects the price or the seller, or really takes away the seller's ability to market the land in a way that they want to.

Roy Carter: 11:57

Yeah, it's detrimental to the whole process.

Alle Carter: 11:58

Completely. Yeah.

Roy Carter: 12:00

You're saying lawyers are lazy and they just use the same form?

Alle Carter: 12:03

We do like our precedents. I will admit that.

Devon Davidson: 12:07

That's too funny. Um, I think we we touched on this a little bit and this goes back to an earlier point of yours, Roy. But um, can a ROFR stand alone or are they usually tied into a lease? So and then the other part of that is um if it's poorly written, is it still enforceable by law? Because you had mentioned that sometimes it could just be a verbal agreement, right?

Roy Carter: 12:25

Yeah, I mean, we uh we always ask. It's the first thing, you know, pretty much uh virtually all the land we sell, not you know, but I would say 90% of the land we sell is under lease. Right. Uh so we want to know how what's the term of the lease, a user ROFR and that type of deal. Um so normally it's in the lease, it could be standalone and outside of it. Okay, but being in the lease, it expires with the lease. Um, they they go together. So we normally then we always sell in the last year of the lease anyway. So to a large degree, uh it's a problem if you sell in the fall and there's a ROFR there. Uh we sell and then possession subject to that crop coming off of that. Usually tenants are good and say, well, I'm not gonna force you mable to sell in January, the day the ROFR expires. Right. You know, you can sell this fall, and I know I can bid. Um, there is the odd exception. It's like, no, I'm gonna hold you to it, and I'm gonna force you to sell on um next year uh after December 31st. But that that is what it is, right?

Alle Carter: 13:27

Yeah, really with our site, you you give the same certainty to the ROFR holder that they are aware of the sale, they can participate, and they just have to pay one bid, which is typically 10,000 higher than the second highest bidder. Yeah, and it just removes all of the the you know um chill almost from the other bidders where they they will show up on sale day and participate as well. Um for the I know you asked about the wording of a right of first refusal, and they can be honestly really poorly worded, and the court is really reluctant to um disregard them or to have them void for uncertainty because of the wording. They say if it's you know a reasonable person can make sense of it, it's probably uh a a good ROFR. Um, and so the the two things that uh they say for at the Supreme Court is basically it it um needs to at minimum have how the price is determined um and a reasonable um time in which it has to be accepted.

Speaker: 14:35

Okay.

Alle Carter: 14:35

So they gave an example of um where it said in the the ROFR that uh he had the first option to meet or decline any offer. And it can be confusing because they use the word option. So then you think, is this maybe an option, which we'll talk about later, but that's still a right of first refusal. So I just want people to be weary that it it doesn't have to be perfectly worded. Um, and I mean you could argue on that, but is it worth your time paying lawyers to battle on your right of first refusal? So just it's better off not to have to.

Devon Davidson: 15:08

If it's been agreed upon, you'd probably just move forward that assumption.

Alle Carter: 15:12

Yes, yeah, I would say so.

unknown: 15:13

Yeah.

Devon Davidson: 15:13

Uh okay. Well, that was a really nice segue, Alle. So thank you for that. Uh so we're gonna talk about what is an option in farmland sales and how does it differ from a ROFR.

unknown: 15:21

Yeah.

Roy Carter: 15:21

So an option is a right to acquire an asset at a set price. Okay. So normally you pay for the option. Roafers are normally not paid for, they're just put into leases. Uh but definitely they there should be a price on them if they're affecting the value, but their their tenant the tendency is to not pay for them, to put them into the lease, which again is we went over that how it affects things. An option is uh a right during a certain period to exercise at a certain price or a price that's ascertainable. It might be a formula. So you might have an option to buy Joe's land for three years at uh the average of two appraisals, and it might say who the appraisers are. Okay. Or it might say at 500,000. So the you know, you you cannot sell land with an option on it because of course somebody else has got the right to buy it.

Devon Davidson: 16:17

Can they exercise that option at any point, Roy? Like if it says within a term.

Roy Carter: 16:21

Right. It'll it'll say that the exercise date is X date on the outside, but sometimes you that option might be there for 10 or 20 years, right? Right. Which is really a problem if it's a fixed price.

Speaker 4: 16:32

Yeah.

Roy Carter: 16:33

Because and they're really the party holding the option can have their cake and eat it too. If prices go down, they don't exercise. If prices go up, they exercise. Right. So they're not a good thing to enter into uh unless there's some crazy amount being paid for them. Where we see them a lot with farmland now is on uh solar uh projects.

Devon Davidson: 16:53

Okay.

Roy Carter: 16:54

And uh, you know, it's a bit of um bait and switch, or they come to these farmers and they offer, you know, uh we'll take an option for a solar project. And I think in some cases they probably get credits or uh carbon credits and different stuff. I don't know what's all behind that. Right. But they sign up a lot of land that'll probably never have a project, but it affects the land because they register a caveat on it where they have an option to then put a solar project on it. And often if they exercise, the price is pretty good. But the price they pay each year is nominal. So here they tie up these nice quarters that you know, if they could ever be irrigated, that's gone. Um, because somebody's holding an option to put out solar panels out there, right? And they're not paying very much for it. Yeah. And uh, you know, we some people think, well, if they exercise, look at the windfall. Yeah, but it's a bit of uh that's a big if. And uh, you know, we've uh it seems like a lot of the big farmers they want to have control, they don't want to have options on the land.

Speaker 4: 17:59

Yeah.

Roy Carter: 18:00

And we actually had one um instance of that where we had a sale and uh we had some potential bidders come and say, Can you get rid of that option? Uh and it was for uh solar. Okay. And uh we actually did go to the party holding the option and uh offered them a payout and they took it, okay, discharged the option, and the sale went well. Uh so yeah.

Alle Carter: 18:25

Yeah, I just want people to be careful with options because they might sound friendly. Oh, I give this person an option, but it gives that individual an interest in your land and it can be registered on title, and it's it's right just as serious of a thing as a right of first refusal in our minds.

Devon Davidson: 18:41

So I guess talking in terms of the liability for the seller, like the option can happen at any point within a given term or time timeline, and the ROFR is only when I as a seller determine that I want to sell.

Roy Carter: 18:52

That's right. Exactly, Devon. Um the ROFR isn't activated. If you get an offer um and somebody has a ROFR on your land and you get an offer, you don't have to take it to the party holding your offer a ROFR unless you're willing to accept that.

Devon Davidson: 19:08

Right. You could just decline the offer.

Roy Carter: 19:09

Yeah, you can you can throw offers away until you're ready to accept one and then it activates a ROFR.

Alle Carter: 19:15

Yeah, it almost just sleeps until it's it's activated by someone making an offer that you want to accept. Gotcha. Yeah.

Devon Davidson: 19:22

Um, so right, you mentioned it maybe options with fixed prices. That's that's obviously sort of a a pitfall. What other pitfalls do sellers face when they're granting options? Is there anything else that they should be leery of or aware of?

Roy Carter: 19:34

Uh that'd be the big one. It's not common on farmland. Um, it's there, but um the big pitfall is ROFRs. You see options a lot more with commercial buildings than that, where a company will lease it, but then they want to have the option to convert that lease into ownership. And uh uh but you know, the better answer, even in that case, is when you get the money to buy, come and talk to me, as opposed to setting the price ahead of time and then letting that tenant play with the market. Right. And if oil crashes, they don't exercise, and if it goes through the roof, they get this big lift when they exercise, right?

Alle Carter: 20:12

Another type of option, I guess, that you could also have in a lease is in the lease itself. So for example, if you're leasing my land for five years, Devon, and then you have an option to renew for a further three years, that's important because now that lease is an eight-year lease.

Devon Davidson: 20:27

That's right.

Alle Carter: 20:28

So sometimes people think, oh, it's five years and then we can figure out the extra three. No, you've you've really tied up your land now for eight years. Yeah, yeah. So I think that's also important when drafting a lease.

Devon Davidson: 20:40

Yeah. I if that were my land, I wouldn't want that, right?

Alle Carter: 20:44

That's yeah, who knows what's gonna happen in eight years. You know, things health-wise can change. Um, maybe you want to sell the land and and you can't now. Yeah, yeah.

Roy Carter: 20:53

That's a good point, Ellie. And and there again, they have their cake and eat it too. Uh, you know, if the economy's good and egg prices are good, they exercise. Yeah. And uh, if things are in a tank, they say, Well, I'm not gonna exercise, but you got to reduce the rent, uh, that type of deal. So they can have their cake and eat it too.

Devon Davidson: 21:11

Is there any scenarios where options can protect a seller?

Roy Carter: 21:15

No, they're I I they're one-sided. They're that's why you pay for them. Um so you need to, you know, the price needs to be big in some cases because you're giving up a lot. And that's the anomaly with roafers. They're giving out freely in law firms, and they shouldn't be, especially with new price discovery. Uh, you know, if people want ROFRs, um, they should pay a big price for them because honestly, nowadays they don't need them, they can bid.

Speaker 4: 21:45

Right.

Roy Carter: 21:45

And uh, you know, if they if they demand a ROFR in today's world where people are using somebody like CLH bid, it begs the question of what they want. You know, are they trying to force that person to sell it below market, right?

Alle Carter: 21:59

Yeah, I'd almost Ask why you know, why do you want a rover? If it's to avoid maybe you're a really good renter of mine, if it is to avoid conflict down the road, if I go to sell, well, then a process like CLH bid takes that away, anyways, because you have an opportunity. So, really, in my mind, the only reason would be you want to buy it below market value because nowadays you you know the land's being marketed.

Speaker: 22:22

Yeah.

Alle Carter: 22:22

Um and so that's often we, you know, you have a good one that if your tenant or renter wants a right of first refusal, you can give it to them. But say that you're allowed to sell using a true price discovery platform like CLH bid.

Roy Carter: 22:36

Yeah, we see that more often, Devon, where you know, um kind of I would say people in the know of what's going on out there, you know, they'll do leases where they'll give ROFRs, but it says that it only applies if it's uh basically a direct sale and not a public sale either by auction or escalating tender.

Speaker 4: 22:56

Right.

Roy Carter: 22:56

So there's still protection there. You know, it can't be sold in the night. Uh so that owner's got to keep their word too to put it out there. Um, so it's basically uh a ROFR, but it's uh with within certain boundaries, uh, that if it's not sold on the public market or like on CLH bid, that it still applies. And you're starting to see that more in leases because people are starting to realize the effect of a ROFR.

Devon Davidson: 23:22

Right. Um, I think we wanted to dive into a little bit of actionable advice for sellers. So one question I had is if I've inherited land, and I think you maybe alluded to it earlier, Alle, but how how do I find out if a ROFR option applies when I if I've inherited that land? Is that something that comes up during the uh the transition process?

Alle Carter: 23:40

Sometimes not. I would say uh it's worth having your lawyer review the the lease that's in place or the title, you know, pull title, see what's registered on there, um, pull pull the caveat itself, because if it's registered, and see the expiration of it. That's that's a big one and what the terms are.

Roy Carter: 23:59

Okay. You'll you know, the worst there, you see a will uh where you know mom or dad give, you know, 20 quarters to four different kids. Right. And then it's stipulated that they gotta give roafers to the other kids. Oh, okay. And it's just an absolute mess. So they get their four or five quarters, but then they got to give ROFRs to the other siblings. And uh sometimes it's three or four. Yeah. And they're not tied to a lease, and uh it's a huge problem for liquidity on those people trying to sell the four or five quarters they get. Uh, because it they can't use auction, they can't use like escalating tender.

Speaker 4: 24:40

Right.

Roy Carter: 24:41

They don't really know the locals that they should be selling to, but they got to run these offers all the time um to their siblings.

Speaker 4: 24:48

Yeah.

Roy Carter: 24:49

And uh it's I I don't know where it comes from, but you see it. It's kind of like I think old school mom or dad trying to keep the land in the family.

Speaker 4: 24:58

Right.

Roy Carter: 24:58

And I'll give it to you, but I sort of want strings on it. Yeah. And if you go to sell it, you gotta go deal with your siblings. Yeah, but it's not a good situation.

Devon Davidson: 25:06

So, what's your advice to them then? If you know I've inherited this land and now I found out that there's ROFRs that I have to deal with or there's options on it. Like, are are there any courses of action where I can have those voided or removed? Like, how does that work?

Roy Carter: 25:18

Yeah, they could get them, you know, they could all agree to notwithstanding what mom or dad said, right? Let's get rid of the strings and you know, prevent the uh trying to control from the grave. Yeah, and let's give up our roofers on each other and give, you know, instead of tying us at the hip. Yeah, they could definitely do that.

unknown: 25:36

Okay.

Alle Carter: 25:37

And we find too, because we often do deal with the renter if there is a right of first refusal on, and just have a good conversation with them and say, look, the the seller is 80 years old, is having health problems. Maybe they want to sell their land with CLH bid. We understand that you have a right of first refusal. How can we make this work? And for the most part, they're very understanding. And they will say, you know what, I totally understand. If it goes on your platform, I have the opportunity to bid five or ten thousand higher than the second highest guy. And I think that's fair. Okay. So we we do take that off the seller's uh hands and and try to deal with renters or family members on that.

Devon Davidson: 26:16

Okay. And let's say that I'm an active farmer and and I'm negotiating some new leases. What's some advice you can provide there? Obviously, maybe review the boilerplate. Um beyond that, what what else can we look at?

Alle Carter: 26:27

Don't put one in, or as we said earlier, you know, carve out that this only applies if it's, you know, uh over-the-table type deal, you know, it's not going to auction or or escalating tender. And also the the terms of it and and what land it applies to. Does it apply to your whole farm? Does it apply to one quarter?

Speaker: 26:47

Right.

Alle Carter: 26:47

All of that's really important, I would say.

Speaker: 26:50

Okay.

Alle Carter: 26:50

Um, and don't make long leases. I think that's another one. So if you have the option in there of renewing uh for a further three years or something, that's getting to be a really long lease.

Devon Davidson: 27:00

I was gonna say maybe just some long-term planning, right? Like just really think about what your what your goals and your plans are for the next two, three, four years.

Alle Carter: 27:07

Yeah, and understand the lease itself. You know, just because you're paying a professional to write it up, it's sometimes they don't understand your situation or farms themselves. Um, so get a couple opinions.

Roy Carter: 27:20

Yeah, you're you know, these tenants, they got you know big inputs, um rotation, big decisions. They need certainty too. I mean, certainty in business is everything. Yeah. So um it's gotta work for both sides. But uh you're starting to see more and more, you know, if they want longer term, that's okay. And you know, you're you're not gonna go lease it to somebody else. But having said that, if you want to sell and have an event, whether it be for health or maybe your kids or somebody sick, uh then often there's the ability nowadays of break fee or you know, to terminate.

Speaker: 27:56

Right.

Roy Carter: 27:57

That it only applies in the event of a sale, and and often it only applies after a couple years into the lease. So you might have a five-year lease, but it says after after year two, um, you know, on six months' notice or whatever, I've got the right to sell and terminate. And we talked about that in another episode, but in that case, then there's some compensation, a break fee. Might be that year's rent. Right. But uh it's not uh it's not just there to allow people to break leases, it's a game-changing event. It's a sale of their farm. Right. But things change in life. And it allows them to it allow gives the tenor tenant some certainty. You know, he's got a certain term.

Speaker 4: 28:36

Right.

Roy Carter: 28:36

Um, he's also got a right to buy, you know, it's not sold out from under him. And uh we're starting to see more and more of that work where it's give and take between a tenant and the owner.

Devon Davidson: 28:46

Yeah, you've given the the seller, the owner, some flexibility moving forward. Yeah, I like that. Okay. How does CLHBid.com handle these situations different relative to private sales, you know, uh traditional real estate or public auction? If there's ROFRs or options. I mean, if if I go to public auction and there's a ROFR or something, you know, like or or traditional real estate, how is that how's that approach differently?

Roy Carter: 29:07

Uh yeah, I mean, traditional real estate, they uh they'll list land with a ROFR on it. You know, I would think there's probably not much interest in it, because again, you're just I think you're probably wasting your time. Sure. Um I can't say I've seen any auction houses list with a ROFR because generally when the hammer's down, it's sold and a ROFR doesn't allow that. There's a 14-day or 21-day period after that.

Devon Davidson: 29:35

Right.

Roy Carter: 29:35

So uh that uh it's a big restriction um that uh you know needs to be uh adjusted giving the new price discovery methods out there to sell farmland.

Alle Carter: 29:48

I have seen it with tenders before or with um now realtors are trying to do those progressive tenders that we talked about before. And so they'll they won't tell the individuals tendering that there is a right of first refusal on the land, okay, which is just problematic in itself. Um so then everyone wastes their time tendering, which we know isn't a good price discovery process, anyways, and they submit their tenders and then they've just set the price for the right of first refusal holder. Right. Um so yeah, I I have seen that.

Devon Davidson: 30:21

Okay. Uh I I've got one more here, and I I'll go I'll direct this to both of you. What's one thing that you would want um landowners or farmers to understand about role first? What would their takeaway be from this episode? One thing if they took away from it.

Alle Carter: 30:35

I would say that it significantly lowers the value that you will get for your farmland, and that the same goal can be achieved by providing your your tenant or your neighbor or your family member the certainty that they'll get a chance at it by marketing it um on a true price discovery platform. You know, the the same goal is achieved, but you're not scaring off all the other interested parties and you're maximizing value for your land, which you deserve.

unknown: 31:03

Okay.

Roy Carter: 31:04

I would say um a little different than that, but they're both I would say it takes away their right to treat neighbors fairly and equally, which is pretty important to people. It's almost as important as the price they get. Alle was talking about the price, it affects their ability to maximize. Yeah, the other one, uh ROFR prevents them from de dealing with everybody and allowing everybody a chance. Yeah, and that's a big deal. So those two deals, it affects price plus the way you deal with neighbors, it's a big deal.

unknown: 31:34

Awesome.

Alle Carter: 31:35

Tugging at everyone's heart strings, Roy.

Devon Davidson: 31:37

I love it, yeah. No, but but valid points both for sure.

Alle Carter: 31:40

Yeah, yeah, yeah.

Devon Davidson: 31:42

Okay, well, I think that's all that I have for today. Anything else you guys wanted to touch on before we take off? That's good, definitely. That's gonna do it. Okay, thanks, Roy. Thanks, Sally. Really appreciate it. That's gonna do it for another edition of the Farmland Exchange. Thanks for tuning in. We really appreciate the support. As I said at the top of the show, if you haven't already, please like, rate, and review. Uh those five-star reviews really help us and it is appreciated. If you have any questions or there's topics you'd like us to uh to cover in future episodes, or if you're interested in selling farmland with clhbid.com, uh please take a minute, send us an email at infoclhbid.com, or give us a call at 866-263-7480. Uh, hopefully you found some value in this today. That's gonna do it for uh do it for now. Thanks for tuning in. I hope this has been a positive exchange for you.