By Kathleen A. Reagan, Esq.
Open pastures and grazing horses may be the dream of most horse owners, but such a vision requires at least a passing familiarity with farmland basics, and the kinds of issues which are likely to occur in dealing with farmland and in preserving it.
The following is a guideline to farmland use and preservation under Massachusetts state law, which may help to make the dream real.
Horse farms, the stabling of horses, and the operation of a riding establishment, do qualify as an "agricultural use" under most circumstances.
Having the agricultural use designation is important because of the protection it offers under the law, mainly in the form of decreased costs for owning the land, and protection in preserving the land use.
(However, stabling one, two, or even three horses for private use on residential property may not push the land into the "agricultural use" designation though, depending on local zoning ordinances, as one Newburyport horse owner discovered in 2003.
The key distinction in that case seemed to be private use of the horses, and the fact that the owners derived no income from the horses.)
First, farm land put to "agricultural use" qualifies for a lower property tax rate from towns.
Owners of such land can apply to municipalities for that lower rate, under Massachusetts General Law Chapter 61A [In shorthand, the "61A lien."]
In return for granting that lower rate, towns have the right to recoup the lost taxes at any later sale for a non-agricultural use.
This lien also comes with the right of first refusal to buy the property if there is a proposed sale for non-agricultural use.
This right of first refusal allows the town to purchase the land and prevent development should it so desire.
So, property owners taxed at the farm rate, and buyers of farmland must always get town permission to sell the land (usually a vote from the Board of Selectmen), and notify the town whether the new buyer will use the land for agriculture or not.
The town has 120 days from the date of notification of a non-farm-use-sale to decide whether to exercise its option.
Sellers must make provision to pay the town back for the rolled back taxes if the land is leaving farm use.
Even if the land will still be used for horses, such permission will be needed if the lot sold is less than five acres.
Second, owners of agricultural land can preserve land as farmland and still get developed land prices upon sale, or a loan, for upkeep and construction purposes, if they apply to the state for an Agricultural Preservation Restriction. [APR].
The APR program was devised as a way to safeguard the land and offer farmers ongoing assistance.
Developed land is more valuable than farmland; land sold to developers fuels the spiral of rising prices, diminishes the overall number of farms, and prices future farmers out of the business of farming.
As part of this program, the state will step in and, with funds from local, state, and federal sources, will pay the farmer the difference between the "fair market value" of the land and the "agricultural value of the land" in return for a deed restriction that runs with the land, typically in perpetuity (a very long time), keeping the land as farmland.
Buying or owning APR land, then, will often land buyers and owners in the middle of trying to decide if their proposed use of the property will have a negative impact on the "agricultural viability" of the land.
APR restrictions can be more restrictive than the 61A lien, and can involve seeking permission from the APR commission for permits or in constructing structures or otherwise using the property.
The APR rules can be found at Massachusetts General Laws Chapter 20, sections 23, 31, and 32, but the deed itself is usually negotiated individually and described; so you want to engage legal counsel when wrestling with such issues.
Buyers of farms, when looking at land, should at least consider using agriculture-friendly lenders.
Agriculture lending, as opposed to usual credit offered by mortgage companies and banks, offers competitive rates and lenders may also offer long term assistance and services associated with farming.
Note also that most typical real estate attorneys who only deal with residential or commercial matters may be unfamiliar with the provisions discussed above. So don't be afraid to ask whether YOUR attorney has dealt with the "61A problem" yet, and keep a copy of this article for educational purposes.
Horses need land, and therefore, so do horse owners. With the basic guidelines above, horse farmland use and acquisition headaches will hopefully be kept to a minimum.
Kathleen A. Reagan, Esq. is an equine attorney practicing in Braintree, MA, available at www.kathleenreaganlaw.com, has developed a course in equine law at www.concordlawschool.com, and is co-founder and Vice President of QueryHorse, the largest horse information resource on the Internet.
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