This post should not be construed as legal advice.
Many of you realize that the agricultural industry relies on financing to operate. Producers often take out operating loans annually to purchase necessary inputs, and the lenders in return often secure these operating loans with the crops the producers grow. What happens if a producer fails to pay the lender back for the operating loan but sells the crop to a third party? Could that third party have to pay twice, once to the producer and once to the lender who had a security interest in the crop? Read More
This post should not be considered legal advice
Happy New Year, everyone! Hope you had a restful and happy holiday season.
I want to start off 2016 looking at an issue that is not always an easy topic to discuss: farm debt. USDA projected that farm debt would grow by 6.3 percent in 2015. In periods of declining prices, producers often borrow against equity to cover input costs. But borrowing capital can come with consequences. And what happens if you become unable to pay off the debt? The Court of Special Appeals of Maryland recently dealt with this issue in Garvick’s Farms v. Agricultural Commodities, Inc. Read More
What happens if there is more than one perfected security interest in the same collateral? Perfected security interests, including agricultural liens, rank according to priority in time of filing.[i] Although some states have adopted laws giving agricultural liens priority over other types of perfected security interests, in Maryland agricultural liens have the same priority status as other types of security interests. Because priority of security interests is dictated by time of filing, failure to file a financing statement will render a security interest junior to any other creditor that first perfects a security interest in the same collateral. This is referred to as “first in time, first in right.” Read More
When a farmer enters into a credit transaction, for example the purchase of a piece of farm equipment, and secures the transaction by granting the lender a right in the farmer’s crops or livestock a security interest is created. A security interest is defined as the limited right in specific property or collateral of the debtor that allows the creditor to take the property should the debtor fail to fulfill his credit obligation. In Maryland, security interests and transactions involving security interests referred to as secured transactions are governed by the Article 9 of the Uniform Commercial Code (UCC) as amended and adopted by the Maryland Code, Commercial Law Article, Title 9. Read More