Get a purchase option for the lease term (2 options)
NEW : Purchase option with a 3.5% maximum annual inflation rate protection
Standard purchase option
FIRA can purchase the land of your choice, with or without buildings, in order to rent it out to you. The objective is to give you access to the land without having to expend your liquid assets, which can be invested in the development of your business instead.
Two purchase options are available to you
Standard purchase option
Offers the possibility of buying the land at market value
Purchase option with a 3.5% maximum annual inflation rate protection
(Cost of protection: additional 1% of the rent)
Offers the possibility of buying the land either at market value or based on an annual indexation of 3.5% until the time of purchase, whichever is lower
“Market value” is determined by an independent chartered appraiser
A $100,000 minimum investment per project
Buildings should not account for more than 25% of the total value of the transaction
You may terminate the yearly tenancy without obligation to purchase
The annual rent indexation is based on the consumer price index (CPI)
May include any type of farm land as well as wooded areas
The costs related to the initial purchase, such as the assessment of the building and other charges associated with the acquisition are covered by FIRA. You will have to pay the cost of the publication of the lease notice; the notice offers protection to the benefit of the lessee.
Land bought by FIRA may include farm and residence buildings. Certain conditions apply however. For instance, the relative value of the buildings at the time of purchase by FIRA must not exceed 25% of the value of the transaction.
Compliance with applicable eco-conditionality rules is also required.
FIRA will mandate a chartered appraiser to determine the market value of the land and buildings, where applicable. The appraiser will assess the property as a whole, including improvements carried out and paid for by the tenant. The sale price will be set based on the value of the property, excluding the added value of authorized improvements that the tenant carried out during the term of the lease. This will be the agreed reference market value.
If the tenant chose to pay a rent based on the purchase option with a 3.5% maximum annual inflation rate, the sale price will be either the agreed market value or the amount based on the 3.5% annual increase until the date of purchase by the tenant, whichever is lower.
You may wish to transfer the business to your successors or invest in a substantial project related to the buildings. Another such situation would be if the neighbour whose farm you have been renting or have had your eye on for years decides to put it up for sale.
YOU ARE STARTING UP A FARMING BUSINESS
You wish to start farming and have an opportunity to purchase a farm that meets your needs, but you don’t have the required funds.
In this case FIRA can purchase the property for you and rent it to you at an advantageous rate with an exclusive option to purchase for the duration of the 15-year lease term.
FIRA’s purchasing the property for you and renting it to you at an advantageous rate with an exclusive option to purchase for the duration of the 15-year lease term may also give you the necessary leeway to complete a business transfer to your successors or upgrade your buildings without missing the opportunity to buy the property at a later date.
You may be dependent on rentals, often with short-term leases. One of your landlords puts his or her farm up for sale when you have just purchased a farm in the same circumstances.
FIRA can purchase the property for you and rent it to you at an advantageous rate with an exclusive option to purchase for the duration of the lease term. In this manner you secure a part of your rental for a period of 15 years and give yourself leeway in the case where another landlord decides to sell or where another opportunity to purchase arises.
You may be in a situation where your neighbour puts his or her property up for sale right when you receive a new member in your business, with another planning to join after completing studies, a few years down the road. You judge that having the property would help this new generation become established in farming.
FIRA can purchase the property for you and rent it to you at an advantageous rate with an exclusive option to purchase for the duration of the lease term. This will allow you to continue to expand your business and prepare for the second newcomer.
1. New: Purchase option with a 3.5% maximum annual inflation rate. This option guarantees the lessee the lower of the two purchase costs between the exact market value and a price not exceeding the purchase cost increased by 3.5% per year until the time of purchase. 2. The total cost of renting: the rent-related charges are more or less equivalent to an advantageous mortgage interest rate percentage. Thus, compared to a leveraged buy-out, renting limits the annual disbursement of funds taken out of the portion in capital. 3. In the event where the capital outlay for the purchase is available, it can be used towards other productive assets and working capital. Land or farm purchase can require a capital outlay of 25% of its cost. When starting or expanding a business, it is not always possible to allocate this amount of liquidity, especially as the cash outflow may undermine operations by dissipating liquid assets.
The contents of this page are a brief overall summary of the product and are subject to change without notice. Certain particularities may be considered depending on the situation and the option chosen. Please contact our investment advisors for further details.