Options for Tenure Arrangements

Before entering into any tenure arrangement with a land seeker, please seek legal advice. While Alaska Farmland Trust assists you in understanding available options, we do not have the depth of knowledge or capacity to offer legal advice. We do recommend that any agreement reached between two parties be put into a written contract. Handshake deals present many issues down the road. 

Below are brief synopses of different options. This list is by no means comprehensive. Much of the information provided is based on Land For Good’s Farm Access Method Guide. It provides a much more in-depth explainer of each option. 

Different Tenure Arrangements

Standard Sale – The most traditional means for transferring property. A land seeker (buyer) pays cash, borrows money from a bank/lender, or utilizes financing from government programs. Find a trusted realtor to ensure your needs are met during a property transfer. 

Owner-Financed Sale – The current property owner finances the sale instead, or in addition to, a third-party lender. A promissory note is drawn up which spells out the repayment schedule (installments to be paid), interest rate, and provisions for default. Often, this type of relationship happens between family members or other close relationships. Even among family relationships, please seek legal guidance to protect your interests. 

Sell with Life Estate (Sell land but remain living on property) – Owner retains the right to live at and/or control part of the property after selling to another party. This right remains until the holder passes or moves away. It usually focuses on the right to live in a home on the property and is often employed in family farm estate planning. For example, a farm transfer from parent to child. As with all tenure arrangements, this agreement must be recognized legally. If you would like to learn more about donating land with a reserved life estate to Alaska Farmland Trust, please visit our page. 

Short-term Lease (1-5 years) – This can be a great option for a landowner who plans to take a break from their own farming operation, but still wants to see the land in production. Short-term leases are usually annual, allowing for both parties to revisit every year to ensure the arrangement still works for both parties. Visit our page “What to Consider in a Lease” to learn more. 

Long-term Lease (5+ years) – A more complex lease agreement and legal document. This agreement will provide more security and stability for both parties, which is necessary for running a farm business. Agricultural landowners who want to remain property owners but have no plans to farm it themselves should look into leasing their land to prospective farmers. For beginning farmers, high land prices are often the biggest obstacle to starting their own operation. Long-term tenants will be invested in maintaining and stewarding your property. Visit our page “What to Consider in a Lease” to learn more. 

Lease with Option to Buy – The option to buy a property is written into a lease agreement and the terms of purchase are set forth in the lease. In some cases, lease payments can go toward the purchase payment. For a more in-depth look at different lease-to-own strategies, please read Land For Good’s guide. 

Partnership – If you are a property owner and are looking to share management, profits and losses; bringing on a partner is an option. Property can be owned in the partnerships’s name. Partnerships can be tricky for the different parties involved, which is why defining a partnership through a legal business structure such as a Limited Liability Corporation is important. 

Cooperative Farming (farming with others, sharing equipment, etc.) – Cooperative is a broad term and can be used in different ways. For example, it can mean a sharing of resources and equipment. This arrangement can be beneficial in Alaska where higher operating costs are the result of shipping needed supplies from the Lower 48. The legal entity of a Cooperative is a more involved arrangement between different parties and typically requires professional guidance. Please read about it in Land for Good’s Farm Access Method Guide and seek advice from a legal expert.