The subdivision of agricultural land is not as simple as you might think and there are various aspects one should consider. As a farmer you might want to either sell a portion of your farm, lease a portion of it over a long period or even bequeath your farm to your children in your will. The (the Act) might be applicable and it is imperative that all owners of agricultural land take note of the provisions, and also the consequences of non-adherence to, the Act.
Why is the Act so important?
Should you wish to subdivide your farm in any of the ways mentioned above, you have to obtain the written consent of the Minister of Agriculture (the Minister).
The primary purpose of the Act is to prevent the subdivision of agricultural land into small uneconomic pieces that will hinder agriculture in future. According to an article in a 2019 edition of Landbouweekblad, Statistics South Africa (SSA) confirmed that from 2011 to 2016 more than 500 000 agricultural households were lost in the old homelands due to these households being relocated to agricultural land of about 0.5 hectares. These households previously used their land for agricultural purposes, however, due to the current size of the new property, farming had become unproductive, unfeasible and consequently impossible.
This demonstrates the importance of the Act, as agricultural land with a high value and yield should be protected and not subdivided into uneconomic portions. Therefore, before any subdivision of agricultural land takes place, the Minister must consent to the subdivision. There are, however, instances where the Minister’s consent will not be required and these occurrences are explained in Section 2 of the Act.
How do I go about subdividing my farm?
The process related to the subdivision of a farm will differ, depending on what the owner/ farmer intends to do. It can be a cumbersome and long process. The starting point in any case will be to approach a surveyor to draft a subdivision diagram. The subdivision diagram must be submitted to the Minister together with the application, where after the Minister will consider various aspects before making a decision. As this is a bureaucratic and lengthy process we advise that you consult with a professional to ensure that your application is processed in a timely manner. Here are some important aspects to consider as they related to different aspects of the subdivision process.
Sale of a portion of your farm
In the case of a sale of a portion of your farm it is imperative that you obtain the consent of the Minister before you enter the contract. Section 3(e) specifically states that no portion of agricultural land, whether surveyed or not, and whether there is any building thereon or not, shall be sold or advertised for sale unless you have the written consent of the Minister.
This consequently means that you may not take any preliminary steps, i.e. advertise the portion to be subdivided, sign an agreement relating to the sale of the portion etc., before obtaining the necessary consent. Furthermore, one cannot enter into a sale agreement with a suspensive condition that states that you must first obtain the consent of the Minister before the agreement comes into force and effect. If you do take any preliminary steps, the agreement will be regarded as null and void, and thus be of no force or effect.
Lease of a portion of your farm
Should a farmer wish to alienate the right to use a portion of his farm by leasing such portion to a person, the Minister’s consent will also be required, should this be regarded as a long term lease. The Act states in Section 3(e) that no right to such portion of the land shall be sold or granted for a period of more than 10 years or for the natural life of any person or to the same person for periods aggregating more than 10 years.
This provision therefore clearly prevents a lease that is concluded for 10 years or more, which includes a lease that is concluded for 5 years and thereafter renewed for another 5 years, or a lease for the natural life time of a person, unless you have the Minister’s consent.
Bequeathing your farm in your Will
It is important to note that no person may own an undivided share in agricultural land as set out in Section 3(b) of the Act. Therefore, should you bequeath your farm to, for example, two of your children in your will, each will be entitled to an undivided share, which is prohibited, unless you have the necessary consent from the Minister. Consequently, upon your death, there will be unnecessary delays and consequences in administering your estate. Alternative options would be to rather bequeath your farm to a company of which your children are directors and shareholders, or to a testamentary trust of which your children will be the beneficiaries. In this manner your children could still obtain the benefits of the farm, but through alternative measures. Should any of the above options not be followed the only alternative would be to sell the farm and divide the profit between your children.
With the above in mind, it is clear that the Subdivision of Agricultural Land Act is applicable in various circumstances, and that the farmer/ owner should be aware of its application. Should the provisions outlined in the Act not be followed, unnecessary consequences can ensue.
Shirande Schmidt is an Associate in the Commercial and Property Law department. She can be reached at shirandes@vdt.co.za | www.vdt.co.za |012 – 452 1300
© VDT Attorneys
