Farm MOU Agreements
What’s a memorandum of understanding (MOU)?
A memorandum of understanding (MOU) is an agreement that obliges each party involved to do/not do particular things. MOUs are often used when future of land may be uncertain (i.e. setting up trial phase before entering long-term agreement, using someone’s yard for a season of growing) and are generally less detailed than a lease or licence.
MOUs are not intended to be legally binding however, if it meets the criteria for a contract, it can be legally binding under contract law, and certain provisions must be articulated in the agreement to fit said criteria.
Registering on the title
Because it is not an interest in land, MOUs cannot be registered with the BC Land Title and Survey Authority on the title to the property. A MOU does not “run with the land” meaning that when the land is sold, the licence is terminated unless there is a provision stating otherwise in contract of purchase for property.
MOUs on part or whole of the land or having multiple MOUs on land
There are generally no legal restrictions to a landowner can enter into multiple MOU agreements for one parcel of land whether it is ALR or otherwise. Permission of the Agricultural Land Commission is not required.
Termination of a MOU
A MOU can be for a defined amount of time. A termination clause should be included in your MOU agreement. A MOU terminates:
- at the end of the specified term
- when the MOU holder voluntarily gives up the MOU with permission of the landowner (surrender)
- when the MOU holder purchases the property from the landowner (merger)
- when a court orders the MOU terminated (court order)
- when the MOU holder ceases to make use of it for a length of time where a reasonable owner may concluded it will no longer be used (abandonment)
- when the landowner cancels the MOU because the MOU holder has not been following their commitments outlined in the agreement
- when the one of the parties in MOU becomes deceased or non-competent
A sub-MOU is a MOU agreement between the MOU holder and a third party for part or all of the original MOU, a provision for this should be articulated in the original MOU. The original MOU between the landowner and the non-property-owning MOU holder still prevails, and the non-property-owning MOU holder is still liable for the obligations in the original MOU unless released from liability by the landowner. A sub-MOU cannot be registered with the BC Land Title and Survey Authority.