Price reductions on land sale deals are being negotiated at the eleventh hour because of the devastating storm damage to trees across Scotland in the wake of recent storms. Our rural services lawyers are involved in advance-stage purchases where expert assessments about the cost of fallen forestry are taking place. In some cases this is leading to talks about lowering sale prices to take into account the reduced value of woodlands.
The scale of damage across parts of Scotland over the past fortnight or so - through Storms Arwen and Barra - has prompted a call for buyers to check the details of missives to see what arrangements are in place should trees be felled or damaged by the weather mid-transaction.
Andrew Duff, a Director in our Rural Services team at Lindsays, explained that in one farm deal, an agreement had already been in place that an independent valuer would assess any damage to trees before final settlement because the seller did not have timber insurance.
He said: “This was a small area of woodland on a farm, so the landowner had not considered it worth obtaining the insurance. But we had recognised early in the negotiations that the right to resile for the purchaser would have been disproportionate, so made provisions for that. The agreement we had was effectively self-insurance for the seller.
“Then Storm Arwen hit on a Friday night, with settlement due on Tuesday. There was no time to get an independent valuation done before then, but we agreed the purchasers could retain part of the price pending the valuation. They would then deduct what the valuer determined and pay the balance.”
Our lawyers are aware of some sales where sellers have opted not to do this - potentially leaving purchasers with the choice of being able to pull out should damage happen before the deal is settled.
Andrew added: “The point for people - particularly sellers - to consider is that if missives are concluded and something happens, look at these details and see what they say.
“If they are silent, the buyer has to go ahead at the agreed price despite the damage but it is rare for this to be the case. If missives are not concluded then consider how you would want to deal with the scenario if it were to arise, whether be that through an insurance policy, price reduction or the right to resile, which would see the transaction abandoned.
“The scale of damage we have seen in recent weeks is perhaps a wake-up call that this sort of fine detail cannot be left to chance, with the cost implications of fallen forestry beyond what physical damage that might cause to buildings, fencing or any other infrastructure.
“Proper advice is vital in these situations.”
Reports have suggested that damage caused to trees by Storm Arwen - which struck on November 26 - could be among the worst caused by a single weather incident in up to 300 years.
An estimated 1.5 million cubic metres of woodland - about 20% of the total harvested annually in Scotland - is thought to have been brought down by that storm alone. Forestry experts are carrying out satellite mapping to assess the true scale.
Aberdeenshire and the Scottish Borders were the worst-affected areas, with areas including Angus, Perthshire, East Lothian and Dumfriesshire also hit by damage.
Landowners and estates are understood to be working with tenants to assess and repair damage caused.
Article published 13 December 2021.
