Achieving Land Security

Angelic Organics has leased for 15 years an adjacent 38 acre parcel of land from a group of CSA shareholders. These shareholders pooled funds to acquire the land in order to provide the farm with land security, to convert the tract to organic agriculture and to keep the parcel from being developed. A limited liability company was formed to hold the land.

A great legal labyrinth had to be navigated in order to put the deal into place. The lease had to be non-cancellable under all normal circumstances; Angelic Organics required the right to purchase the land at any time at appraised market value during the 15 year lease period; Angelic Organics required the right to make improvements on the land at its discretion. The investors needed to be assured that the land would be used according to organic principles and on behalf of the CSA; they needed to be provided with a way to transfer their interest in the property without dismantling the lease agreement. There were many other concerns.

When you review the Frequently Asked Questions, and the preceeding letter from Angelic Organics to those interested in participating, you will notice the myriad of questions and considerations that we, the farmers, anticipated in structuring the deal. When we got further into the process--into the creation of the Operating Agreement for the Limited Liability Company and later into some Securities issues--the questions and concerns became overwhelming. It is a miracle that we ever completed the transaction. Gathering 20 people together to pool their money for a shared vision is an enormous challenge on its own, but having to make the process comply with the regulations that apply to Limited Liability Companies and especially to Securities regulations is an almost insurmountable challenge for people who are out of the legal and big money loop.

By the time the deal was implemented, over $14,000 dollars in legal fees had been incurred. (Fortunately, these fees were folded into the cost of the land; however, if the deal had died, this would have been the farm's expense.) Probably another $7,000 in fees were written off by compassionate, generous or guilty attorneys. The legal documentation that went out to each investor was about 85 pages. We did everything we could to keep the documentation friendly and CSA-like, but every attorney we consulted said that we had to comply with the regulations that governed these transactions, or Angelic Organics would be vulnerable to lawsuits and breaches of Securities Law in the future. It was a nightmarish journey; months of relentless work were required to put the deal together. Some of the originally supportive investor candidates balked at the impersonal, bloated legal manuscripts they finally received.

In the end we triumphed. (Angelic Organics Shareholders Buy Rural Land!)

I must include this warning--if you have some land you are eying, and you have some people with money who want to help, get some good legal advice before you start the process. You are welcome to examine our documents about the deal, but there are legal protocols that must be followed, and the right attorney can tell you what they are. I wish life was different, that the impulses to keep our land healthy would not meet such powerful obstacles, but that's how it is. We have done much of the groundbreaking work, so, hopefully, we can make the process easier for you.