Ideas for getting my uncles land in Spain. Leasing examples?

Hello!

As I wrote in other forums, I am working in the regeneration of my grandma’s (rest in peace) property in Denia, Alicante, with some interesting initiatives.

This involves working the land and working the old house, so lots of work but all cool.

Also, I wrote in other forum my worries about getting control of the property, being so close to the town and possible interests in my family of selling it for urban development. The part of the property that I am working belongs to my father, but the biggest part , some 8000 square meter, is shared with my uncles.

We had good news as they approved the urban rules and they left this zone out of development for the next 20 years. Seeing how the world is going, this 20 years might be 50, wich is great. Only a tiny part of the property, in the other side of the road, is in urban zone (and it was like this before). So, for a couple of decades, no possible buildings in here.

BUT being a mediterranean town close to the sea made people crazy. Brick and mortar, tourism, sun and beach, combined with the citrus crisis (wich was the main production) made everybody think that the only good use for the land is to sell, speculate for tourism. For the last 14 years we have not seen any important development, and it looks that we will not see it for many more, but this mindset has become part of the zeitgeist, or the zeitgeist itself, it is hegemonic and people cant think out of it.

What does it mean? That even it is very unlikely that this land will be developed, for my uncles, and for many people here, you have to keep your farmland not for farming but for “lets see if there is a good offer”. I guess is loss aversion bias, they saw the train of the resorts, they saw some relatives making good money selling their farmland before 2008 and they think that “some day” this will come back and they will be the millionaires.

What does it mean? That although buying farmland could be affordable for me here, it will not happen cause they all think it has urban value.

What I want to offer them is some access to the land. I do take care of all the taxes, I take out all the burden of it or any maintenance costs, and if in the future they want to sell, that is okay… but I want to tie up some things:

1. I want to have always the right to make an offer
2. If they sell and we have a contract, I stay with the new owner
3. If I invest and they push me out, they have to compensate me for the investment, but how?
4. Also, my main focus are trees, and trees take time to grow, so a tree that costs me 10€, in 10 years might be more valuable. How could I make that specific?

I have been looking for info in Internet and found a couple of interesting ideas, but I do still have doubts, so maybe you could help me?

i’m a part owner of a company that plants and maintains orchards on leased land on a crop share model. we’ve tried to address a couple of the issues you mention in our contracts. one thing to point out is that some of these things haven’t really been tested legally, at least where i am. having a contract that is at least okayed by a lawyer that deals with real estate or land trusts or conservancies is probably worth the expense.

- our original lease was based off the longest-term agricultural lease we could find, which was for christmas tree farming. those are frequently for 7 years. since we plant long-lived nut trees, we opted for 99 year leases, on the basis that we hope our project will outlive us and stay in production after the original members of our group have passed. of course the owner needs to agree to it. we included wording that the lease agreement transfers in the case of change of ownership - but again, we haven’t yet had the need to test the strength of that agreement in court.
- we valued the individual trees in a way that their value grows quickly. i don’t have it front of me, but it’s something like $5 when they go in, and that original value is multiplied as the years pass. the owners are on the hook for that money in the event that they or their renters, etc, intentionally damage trees. it seems like that total value could be used somehow in the event that you are forced to abandon, whether via sale of the property or what have you. obviously we’d all rather have the trees than the money, but the hope is that the threat of losing that much money (hundreds of dollars per tree times hundreds of trees, by not that far in the future) would be a further deterrent to sale etc. whether that feels like too antagonistic an arrangement for you to get into with your uncles is another matter…

To protect your interests, my advice would be for you to save up your money to have these papers drawn up by a lawyer who deals in real estate transactions.

You would hire the lawyer to protect your interest and you and your uncle would both sign the paperwork.

Assuming your laws are similar to here these papers would be filed in the appropriate office.

greg mosser wrote:i’m a part owner of a company that plants and maintains orchards on leased land on a crop share model. we’ve tried to address a couple of the issues you mention in our contracts. one thing to point out is that some of these things haven’t really been tested legally, at least where i am. having a contract that is at least okayed by a lawyer that deals with real estate or land trusts or conservancies is probably worth the expense.

- our original lease was based off the longest-term agricultural lease we could find, which was for christmas tree farming. those are frequently for 7 years. since we plant long-lived nut trees, we opted for 99 year leases, on the basis that we hope our project will outlive us and stay in production after the original members of our group have passed. of course the owner needs to agree to it. we included wording that the lease agreement transfers in the case of change of ownership - but again, we haven’t yet had the need to test the strength of that agreement in court.
- we valued the individual trees in a way that their value grows quickly. i don’t have it front of me, but it’s something like $5 when they go in, and that original value is multiplied as the years pass. the owners are on the hook for that money in the event that they or their renters, etc, intentionally damage trees. it seems like that total value could be used somehow in the event that you are forced to abandon, whether via sale of the property or what have you. obviously we’d all rather have the trees than the money, but the hope is that the threat of losing that much money (hundreds of dollars per tree times hundreds of trees, by not that far in the future) would be a further deterrent to sale etc. whether that feels like too antagonistic an arrangement for you to get into with your uncles is another matter…

Hola Greg, very interesting ideas, specially the one about the value of the trees. The problem that I have is that I dont really know how many trees will go in, but I could make some estimate

Anne Miller wrote:To protect your interests, my advice would be for you to save up your money to have these papers drawn up by a lawyer who deals in real estate transactions.

You would hire the lawyer to protect your interest and you and your uncle would both sign the paperwork.

Assuming your laws are similar to here these papers would be filed in the appropriate office.

Hola Anne, no problem about lawyers, as I am a lawyer and my expertise is…contracts. I am more looking for ideas, I can translate it into “lawyerian language”, but what I do lack is inspiration on what could be done or how others are doing it

I will think about this overnight and see how to best offer advice and word my reply.

I am right now dealing with a deed done wrong from back in 2005.

A person would think that a deal done with lawyers involved back in 2005 would not show back up 15 years later. Mine is an easy fix just involves a lot of my time that could be devoted to other things.

Antonio Hache wrote:Hola Greg, very interesting ideas, specially the one about the value of the trees. The problem that I have is that I dont really know how many trees will go in, but I could make some estimate

from what i remember of how we did it, you don’t necessarily need to know. individual trees are valued at original value x years growing (perhaps also x some other factor to make the numbers make more sense, i imagine there’s lots of ways to lay the scheme out). so you need to know the age of individual trees, but there’s no real need to tally anything up using any kind of future tree numbers if you don’t want to at the start. i think we gave an example of how individual trees changed value over time. we also had worked out a snapshot example of how it might look in later decades, and in our case we actually expected the total number of trees to go down since we’re growing long-lived nut trees and starting on a tighter spacing than will eventually be reasonable. and while the total value does theoretically drop a bit every time we cut a tree down to give others room, it seemed to us that that we probably won’t get to that point until the total assigned value of the rest of the orchard is plenty high to strongly disincentivize others messing with the planting. i suppose you would need to do some estimating if you really wanted to lay out what could be expected in the future, but it could be done.

if i remember you plant a lot of seeds, right? so after a few years of taking notes about how many seeds you tend to plant, and how many actual plants you get growing from each year of doing so, you’ll probably be able to say ‘there will be approximately a* many trees of this age, b* many of this age, c* many of this age, etc.’ and be able to loosely tally it up from there.

greg mosser wrote:

Antonio Hache wrote:Hola Greg, very interesting ideas, specially the one about the value of the trees. The problem that I have is that I dont really know how many trees will go in, but I could make some estimate

from what i remember of how we did it, you don’t necessarily need to know. individual trees are valued at original value x years growing (perhaps also x some other factor to make the numbers make more sense, i imagine there’s lots of ways to lay the scheme out). so you need to know the age of individual trees, but there’s no real need to tally anything up using any kind of future tree numbers if you don’t want to at the start. i think we gave an example of how individual trees changed value over time. we also had worked out a snapshot example of how it might look in later decades, and in our case we actually expected the total number of trees to go down since we’re growing long-lived nut trees and starting on a tighter spacing than will eventually be reasonable. and while the total value does theoretically drop a bit every time we cut a tree down to give others room, it seemed to us that that we probably won’t get to that point until the total assigned value of the rest of the orchard is plenty high to strongly disincentivize others messing with the planting. i suppose you would need to do some estimating if you really wanted to lay out what could be expected in the future, but it could be done.

if i remember you plant a lot of seeds, right? so after a few years of taking notes about how many seeds you tend to plant, and how many actual plants you get growing from each year of doing so, you’ll probably be able to say ‘there will be approximately a* many trees of this age, b* many of this age, c* many of this age, etc.’ and be able to loosely tally it up from there.

Hola Greg. Thanks. This made me remember that there is something in Spain called “Norma Granada” wich might be useful for this, as it values trees based on species, age… so I could investigate it more and make some calculations based on this

Anne Miller wrote:I will think about this overnight and see how to best offer advice and word my reply.

I am right now dealing with a deed done wrong from back in 2005.

A person would think that a deal done with lawyers involved back in 2005 would not show back up 15 years later. Mine is an easy fix just involves a lot of my time that could be devoted to other things.

Yes, this happens and it is terrible. You never know when things might go wrong, and not always having lawyers involved helps. Often it is the opposite indeed