Timber Sale Contract Considerations

The timber sale contract is one of the most important tools used by the forest landowner.  It helps in ensuring that the landowner's desires are met with respect to the execution of the sale.  It is the landowner's best opportunity for expressing her desires to the buyer.  Keep in mind the following when preparing a timber sale contract:

• There is no "standard" timber sale contract.  Although most contracts contain very similar information, there are often cases when you, as a forest landowner, have some special considerations with respect to your forestland and the timber harvest.  Many buyers have a prepared contract that is "standard" for them; however, keep in mind that they are, first and foremost, looking out for their best interests and protecting themselves.  If you are presented with a buyer's contract, carefully scrutinize it or consider having an attorney examine it. 

• Be sure that your contract contains all the provisions you desire.  You may have some special considerations with respect to your land.  For example, you may have an old home site on your forest land that you don't want disturbed by the logging activity.  Be sure that language is included in the contract so that your special considerations will be followed and you have legal recourse should your desires be breached.  Again, it may be necessary to consult with an attorney.  The money you spend up front may be a very wise investment when compared to the money you might have to spend after the fact.

• Although you want your specific demands to be followed in the timber sale contract, don't "weigh the contract down" with unnecessary conditions or minutia.  In general, the more special considerations or provisions you put into a contract, the less a buyer will be willing to pay for your timber.  This is because the buyer will often incur additional costs in complying with your special provisions.  If you have several or many special considerations with respect to your timberland, consider offering the buyer a longer contractual period in which to remove the timber.  For example, if you have several areas on the timber tract that you won't protected, and this is likely to slow the buyer down and cost him money, consider offering him a longer contracting period (maybe 18 months or 2 years instead of 12 months, for example) in which he can complete the harvest. 

• If you are soliciting bids for your timber sale, prepare a timber sale notice that includes as much information as possible (including any special considerations that will likely be included in the contract) for dissemination to potential bidders.  Neither buyers nor forest owners like surprises.  The negotiating process will be much smoother and contractual compliance is likely to be easier if the buyer understands prior to the establishment of a contract what is expected during the harvest of your timberland.

• Consider employing a professional, such as a consulting forester, to assist you in planning and preparing your timber sale.  A professional forester will not only assist you with delineating special considerations with respect to your timberland, but will also advise you on what is practical to include in your contract.

• As a good land steward, you should include a provision in your contract that recommended forestry Best Management Practices (BMPs) for your state be followed.  For more information regarding forestry BMPs in your area, contact your state Extension Service or State Forester.

Although there is no such thing as a "standard" timber sale contract, you may wish to include the following items in your timber sale contract:

• Names and addresses of buyer and seller.

• Statement that seller is rightful owner of property (timber) to be sold and has full rights and authority to do so.

• Legal description and location of timber.

• Timber description, such as volume by species, unit of measure (for example, cords, board feet, or weight), log rule employed, and method and place of scaling. You should also include provisions for who will do the scaling, the scaling location, and who covers the scaling cost.

• The price basis (for example, a lump sum sale or a pay as cut sale), when title transfer will occur, and when payment will be made.

• Financial responsibility of the buyer, such as requiring her to carry worker's compensation insurance and requiring a performance bond.

• Contract length.

• Specific provisions, including, but not limited to, the following:

  1. Harvesting methods (equipment restrictions, ingress and egress, etc).

  2. Utilization conditions, such as stump heights and non-compliance penalties.

  3. Ownership of any byproducts.

• Signatures of buyer and seller.

• Notarization

• Public registration at your courthouse, in the case of loss or damage to the document.

More detailed information regarding timber sale contracts is provided at the following web sites:

• University of Nebraska-Lincoln website:  http://ianrwww.unl.edu/pubs/Forestry/G334.htm#ec

• Wisconsin Department of Natural Resources website: http://www.dnr.state.wi.us/org/land/forestry/Private/Assist/contract.htm

• University of Florida Extension website:  http://aris.sfrc.ufl.edu/Extension/ffws/hots.htm#tsac

• Steve Nix's forestry website:  http://forestry.miningco.com/science/forestry/library/weekly/aa090797.htm

• University of Georgia website:  http://www.forestry.uga.edu/efr/olddocs/docs/950-sample-contract.html

• North Carolina Cooperative Extension website:  http://www.ces.ncsu.edu/nreos/forest/woodland/won-10.html

• Virginia Department of Forestry website:  http://www.people.virginia.edu/~rmf8a/TimbrCut.htm