Right of Refusals may no longer be Alright.

Once again, the Iowa Court of Appeals has ruled that a right of first refusal is not valid if it is not dealt with in some manner. While the court of Appeals isn’t binding on the entire state, it is persuasive authority and helps shape the legal landscape. This will come as a surprise to those who negotiated a right to purchase back a farm sold in the 1980s farm crisis or those who have entered into agreements for purchase rights as part of an estate plan or those who have an estate plan with a right contained in it.

It is wise to blow the dust off those documents and make sure what you think you have is what you really have for rights to purchase. Essentially, the court is saying that Iowa Code prevents the use of any right of refusal that is more than 10 years old unless a timely written statement of extension is in the county court house records. That is simply not possible in many cases where the parent died a long time ago and left the property to non-farming children, subject to the farm child’s right to purchase if the non-farming kids ever wanted to sell. It throws a number of things into uncertainty and may be a “gotcha” moment for the patient, displaced, former property owner who is waiting to see if once again they can reclaim what they have lost.

Right to Farm Laws don’t really mean you have a RIGHT to farm even if you are doing it right.

States have tried to address the conflict between urban development and ag uses for many decades. The fix was to enact “right to farm” statutes protecting a farm’s right to operate with the attendant naturally occurring sights, smells, and sounds. At this point, every state has some version of a right to farm law.

Right-to-Farm laws attempt to prevent nuisance lawsuits against farms that follow all laws and practices best for ag and who beat the complaining neighbor by being first to the party (I.e. the farm was there first Iowa’s statute specifically states that the purpose of the law is to prevent farmers who properly operate their farms from defending themselves from nuisance lawsuits. Iowa has a very tough standard on actually getting to invoke the right to farm defense compared to other states. Despite being an Ag state, the law, as interpreted by the Supreme Court, is not a robust shield for farmers, but rather narrow set of events that if followed may provide some protection. Some legal scholars have remarked that perhaps Iowa has one of the most non farmer friendly interoperation of right to farm laws.

Critics claim these laws hurt non-farm operator property owners by denying non-farm operators the right to use and enjoy their land.  This issue is not going away. Every state has had their right to farm laws tested in various manners. It is not an open and shut case by any means. This uncertainty isn’t good for ag as operations get larger and less people have a connection to ag, the amount of risk goes up and as risk goes up, the cost of managing that risk goes up as well.