Firm to Farm: On Fences; Agritourism; Liquidity; Solar Panels & Blight; and Trees & Motorists

With today’s post, RFD-TV Ag Legal & Tax Expert Roger McEowen focuses on some more common issues farmers, ranchers, and rural landowners frequently face.

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Fence Disputes

One of the more common questions that I get involves disputes concerning fences. Fences are often critical in agriculture, so how can a dispute over fencing get resolved within the bounds of the law? A good place to start is by checking the land records to see if prior owners had recorded a fence agreement. If they did, the agreement would bind you and your neighbor. If there is no recorded fence agreement, you could execute a new one and have it recorded with the County Register of Deeds. Once it’s recorded it will bind all future owners.

If a boundary is disputed because of conflicting surveys, any boundaries and markers set by the first survey control the conflict with a subsequent survey. This is true even if there were errors in the original survey.

When a boundary dispute involves a disagreement between surveys, consider how the use of the land has been affected by the original survey’s location of the boundary. If the fence was erected along the old but erroneous survey line, and you and your neighbor have actively farmed to the fence line, the fence should not be moved. If the fence does not follow either the original survey or the later survey, the true boundary line may need to be designated.

As a last resort, if the issue is building or maintaining a fence, the “fence viewers” can be called to come out and make a view and a determination of responsibility. Each state has a procedure for requesting a fence view and resolving fence building and maintenance disputes. Do you know the rules in your state?

Agritourism

Most states have agritourism laws designed to provide enhanced liability protection for injuries to participants or spectators associated with the inherent risks of a covered activity. Agritourism is generally defined broadly to include such things as corn mazes, hayrides, tours, roadside stands, and other similar activities. Posting warning signs might also be required to receive the protection of the statute, as might the registering of the property with the state.

On the liability issue, a landowner is generally protected except for “wanton or willful” negligence. Also, having participants sign liability release forms may be required. State law might also provide tax credits and might protect the property’s ag tax classification.

Engaging in an agritourism activity on your farm can be a good way to generate additional income, but make sure you know the details of your state’s law. Also, your comprehensive farm liability policy probably won’t cover any claim arising from an agritourism activity. That’s because it’s likely to be defined as a non-farm business pursuit of the insured that falls within an exception to coverage.

Farms and Ranches – The Liquidity Problem

Concerns about the possibility of a reduced federal estate tax exemption are big in agriculture. If a drop in the exemption would impact the farming or ranching business, is there a plan in place to pay the resulting tax? It’s a real problem because ag estates are typically illiquid – as the common saying goes, farmers are often “asset rich, but cash poor.”

Liquidity refers to how easy it is to convert an asset into cash. Farmers and ranchers often have assets worth a substantial amount in terms of market value but may lack sufficient cash to meet current needs. What is at the heart of the liquidity problem? Farming and ranching often involve a substantial investment in capital assets. There typically isn’t a pile of liquid funds or assets that can be easily converted into cash. This can create problems upon death particularly if the goal is to keep the farm or ranch in the family for subsequent generations and there are both on-farm and off-farm heirs. This is a big problem for some.

While many estates don’t have an estate tax problem under current law, they could if the exemption drops. For instance, a current gross estate of about $14 million, or twice that for a couple would not incur any federal estate tax, but if the exemption drops to about half of those levels starting in 2026 as will happen if Congress doesn’t act, the tax bill could be substantial. If there aren’t liquid funds to pay the tax, then the money will have to be borrowed or assets sold. That’s not a good result, but there are planning steps that can be taken to correct the potential problem. Yes, estate and business planning will cost, but solid plans for most people can be established for a fairly economical price – especially when you consider that the cost is for the protection and furtherance of your family’s farming/ranching legacy.

Solar Panels and Zoning

Many local zoning rules leave the door wide open to the potential for farmland to be converted into usage for solar panels – with no extra step required to go from agricultural to solar. Some of this is occurring on prime farmland. However, leasing farmland for the placement of solar panels can destroy the land’s potential to return to farming. That’s because often fine sand is spread on the farmland where the panels will be placed to kill off plant growth under the panels. This doesn’t happen in every situation, but where it does, it destroys the possibility of growing anything in that field again without incurring significant remediation costs. And solar energy agreements may only require remedial work at the end of the contract – which could be 50 years or so into the future.

One study has forecast that 83 percent of solar energy development will be on farms and ranch land unless current government policies are changed. About half of that amount is projected to be on the nation’s most productive soil.

Local zoning and planning commissions are at the forefront of the issue. Rezoning or permitting should be necessary to convert farmland to solar fields – solar power generation is an industrial use. Traditionally a change in zoning classification involves a public process. That should be the case in this instance too.

Fallen Trees...and Liability to Motorists

Bell v. Cain, No. 06-23-00060-CV, 2024 Tex. App. LEXIS 1993 (Tex, Ct. App. Mar. 21, 2024).

Here’s one I don’t get every day, although there are cases from time to time on this, and there was a somewhat related Kansas case a few years ago on the issue of a landowner’s duty (if any) to trim trees and brush near roadways. The question is: Are you responsible if a tree on your farm falls onto an adjacent road and causes injury?

The issue came up in a recent Texas case. There a windstorm uprooted a large oak tree on a farm, and it fell across a road. A driver hit the tree and sued for her injuries. She claimed the farmer failed to inspect the farm premises to ensure that objects on the farm were not a hazard to motorists. The farmer pointed out that there was no evidence that she had received any notice regarding problems with the tree and produced an affidavit from an arborist that the tree was healthy and would have required tremendous wind to blow it down.

The court ruled for the farmer – there is no duty to parties injured off-premises because the landowner is not in possession and control of those areas. In addition, the court said that a landowner doesn’t owe a duty to make an adjoining road safe or to warn travelers of potential danger. There can be exceptions in special situations, but none of those apply in this case. For example, this case involved a farm in a rural area and there was no evidence that the farmer knew or should have known of the danger posed by the tree, and any potential danger wasn’t evident by looking at the tree.

Not to mention…motorists are responsible for driving according to the conditions – that includes being able to spot a large oak tree blocking both lanes of a road in time to avoid hitting it.

Related Stories: Firm to Farm
RFD-TV News contributor Roger McOwen covers important topics in ag law and taxation, including FBAR, Read Before Signing, Reporting 4-H Income, and Attorney-Client Privilege.
RFD-TV Agricultural Law & Taxation expert Roger McEowen discusses the Supreme Court’s recent repeal of the Chevron agreement and other current topics in ag law.
Roger McOwen started a new farm law and taxation blog that contains a “Rural Practice Digest.” You can access it through a subscription to his new Substack blog. Find the link here.