As with many other types of business transactions, the agreement to buy or sell timber once depended on only a handshake.
Today, a timber sale requires a well-written, legally binding contract. While every contract is unique, here are six items that a basic agreement should have in order to protect both buyer and seller.
1. Identification of all parties
The agreement should begin with the identification of all the parties involved. This includes not only the buyer but all the owners of the timber that is up for sale.
2. Description of timber for sale
Provide a detailed description of the timber that will be sold. Include an estimated volume of timber, and state who will be responsible for marketing the trees for cutting.
3. Payment for timber sold
Once registered with the clerk’s office, the information in the agreement is open to the public. Therefore, the parties to the contract may want to keep the exact payment price confidential. However, in an installment sale, the agreement must state how the buyer will pay in accordance with the preference of the seller.
4. Method of timber harvest
Describe how the timber harvest will happen. Explain the layout of logging decks, roads and areas of timber for cutting. This section should confirm that both buyer and seller can inspect the logging site and supervise logging crews.
5. Guarantee of ownership
Sometimes a buyer purchases and pays for timberland only to find that persons unknown have already cut through the area. The contract should show that the buyer requests a title search.
6. Penalties and arbitration
The contract can address penalties for timber or road damage that occur during harvesting. This section may include arbitration procedures to settle disputes and manage compensation.