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Zoning, Legal, and Title Considerations When Acquiring a Farm

The time has come.  You are ready and in position to purchase and operate your own farm.  Or, perhaps, a family farm for many generations is now being passed down to you.  Before jumping in, you should be looking through the lens of agricultural zoning.  Do state or local regulations even allow you to plant and harvest that particular crop?  Does your neighbor actually have the right to use an access lane across a portion of your land? Can you ever, in the future, subdivide pieces of the farm for your children and their families to build and live on?

The Real Estate Practice Group at Blakinger Thomas issues this article as an overview of issues that impact Central Pennsylvania’s farmers and future farmers in the areas of agricultural zoning and land use.  What follows below are high-level issues that every farmer should consider when purchasing or inheriting a farm.

Permitted Land Uses

The type of agricultural operation you intend—the specific crops, livestock, etc.—is likely regulated by local ordinances or state laws.  Each municipality in Pennsylvania is vested with the broad power (albeit, with limitations) to regulate permitted uses within zoning districts in that municipality.  There are numerous ordinance-related considerations that a farmer needs to consider when looking to purchase or inherit a farm.

As agricultural land availability in Lancaster County and Central Pennsylvania becomes more limited with surrounding development and residential growth, there is a trend for smaller acreage farms.  However, many municipalities in Lancaster County in general require a minimum of 10 acres to conduct agricultural activities such as crop or livestock production.  A review of the local ordinances will key you into how small of a farm you could operate.

In terms of limitations on types of crops, a hot-button topic right now in Pennsylvania is hemp.  But, is hemp production permitted in the particular township where you are looking? What, if any, building or other facilities are you considering t for your hemp operation?

Perhaps some of the operations that you desire on the farm, aside from the actual farming activities, are “side-businesses” or, as they are referred in many local ordinances—“home occupations” or “secondary uses” such as metal grinding, a dog kennel, or a fabric shop.  If you intend to conduct one of these home occupations, the local ordinance may regulate what kind of non-farming businesses are permitted in agricultural zones, may prescribe certain rules that must be followed, and may require township approval first before such business may operate.  Depending on the particular operation, other state or local regulations may come into play, such as the Pennsylvania Construction Code or the Pennsylvania Dog Law. Or, perhaps, a local ordinance could be challenged as illegally inhibiting a farming activity under the Pennsylvania ACRE law (Agriculture, Communities, and Rural Environment law).

Building & Subdivision Rights

Another key consideration when purchasing or inheriting a farm is the ability to construct additional dwellings, or to subdivide tracts for family members or other third parties. Often times, it is important for farm owners to be able to subdivide parcels so that children and their families can build their family homes and live as neighbors.  Or, perhaps, you have an interest in subdividing a portion of the farm and selling such to a developer or other buyer for value.

Local ordinances regulate to what extent agricultural-zoned properties can be improved with more than one dwelling, or what subdivision rights, if any, exist.  Typically, building rights (the ability to build additional residences) and subdivision rights are tied to the overall acreage of the farm.  For building rights, most townships in Lancaster County allow one lot or dwelling per a range of 20-50 acres, depending on the particular township.  For subdivision rights, most Townships require a minimum size for the subdivided residential parcel, such as one to two acres, and a minimum resulting farm size, typically around ten acres.  Additionally, some Townships require that farmland to be subdivided or built upon must consist of non-prime farming soil.

If you have any interest or intention in building additional houses, or, at some point, subdividing a farm property, it is prudent to determine what the particular Township’s zoning ordinances require prior to settling on the purchase of the farm.

Review of Title

When you are looking at purchasing a farm, you should pay close attention to any easements or rights granted to third parties, or other limitations which may affect your use of the land.  A review of title limitations is an important step that you should take before going to the settlement table and accepting the deed to the farm.  Although not technically considered “zoning,” easements or other encumbrances on your title can be just as important, and could have an impact on the ability to use your land, and should be a significant factor to consider when assessing whether to follow-through with the purchase.  Even if you are inheriting the farm, it is important for you to be aware of what third-party rights are out there which involve the property.

As years, decades, and centuries have passed, so have shapes of lots, owners of lots, and development of surrounding properties.  It is possible that, fifty years ago, a predecessor owner gave the (then) neighbor a right to build an access drive across and along the western boundary on the farm you are looking at.  Perhaps someone has the right to log trees from the patch of woodlands on the property.  Maybe there is a restriction that no poultry house or hog barn may be constructed on the property.  Or, it is possible that a natural gas company has a pipeline easement that runs directly through the middle of the cornfield, which the company can dig up and access at any time. 

While each of these examples involve or warrant different levels of concern, they all show how reviewing the title prior to purchasing a property is an essential step.  In addition, every new owner should consider getting an owner’s title insurance policy.  Blakinger Thomas gladly offers these services to purchasers of real estate.

Clean & Green

Clean and Green programs in Lancaster and the surrounding counties are popular considering the region’s rich history with open space and farmland.

The Pennsylvania Farmland and Forest Land Assessment Act 319, also known as the Clean and Green Law, provides a preferential tax assessment for land devoted to agricultural use, open space land, or forested land.  Generally speaking, land can be enrolled in the program if the parcel is at least 10 acres, or can generate at least $2,000 in annual gross income directly from an agricultural commodity, and has been for three preceding years.  Each County administers its own program for the County’s residents.

If enrolled, landowners can see an average reduction of 50% or more in their property tax assessment.  There are, however, restrictions on the ability to build or improve on the property.  Those limitations are specifically spelled-out in a contract that is in place with the particular County.  If the landowner violates those restrictions or wants to be removed from the program, he is responsible for payment of rollback taxes, plus 6% interest, for the previous seven years.

Farmland Preservation

In a similar vein to the Clean and Green program, many farms fall within public (i.e., the County) or private conservation easement areas.  Agricultural Preservation Boards purchase preservation easements from landowners, and these restrictions remain with the land despite sales to new owners.  On the private side, the Lancaster Farmland Trust is an example of an active non-profit organization that engages with the region’s farmers in an effort to preserve farmland and farm resources through the purchase of preservation easements.

There are strict building and development restrictions associated with preservation easements.  Violations thereof could be more severe than payment of rollback taxes associated with Clean and Green.  Thus, while there are many benefits with the various programs, you, as a prospective buyer, should be aware of the existence, limitations and restrictions which could significantly impact your use of the property.

If you are looking to purchase or inherit a farm in Pennsylvania, the Real Estate Practice Group at Blakinger Thomas would be glad to assist you in navigating the issues discussed in this article.

**This update is provided for informational purposes only and should not be construed as legal advice or as creating an attorney-client relationship where one does not already exist.**