The acquisition of a vineyard or winery can be a complex process. A buyer may start growing grapes from scratch or purchase an established vineyard or winery business.
When deciding to invest, there will be many moving parts to the transaction, but the land itself will be the main asset and specialist advice is needed.
Buying or leasing viticulture land
A buyer will need to choose whether they buy or lease the land.
Investing in a vineyard or winery usually requires a large capital investment and a long-term commitment, so a buyer may prefer to buy the land as it gives them security and control.
In cases where landowners are not prepared to sell or suitable land to buy is in short supply, parties may agree to lease the land instead. Paying a yearly rent rather than an up-front sum can be an advantage for smaller businesses.
Both landlords and tenants will need advice from their solicitor on the terms of the lease.
Tenants will want to negotiate a long lease term with security of tenure, the right to alter and erect buildings and the right to sell the lease.
Landlords may require break clauses (the option to terminate the lease early) and rent reviews. A tenant will need to consider how these terms can disrupt their business and affect their finances, considering the time it can take for a new vineyard to produce and sell wine.
Due diligence
The land acquisition will require the buyer’s solicitor to carry out substantial legal due diligence.
Searches
A full range of searches will be required to check the site’s planning history, any contaminated land or flood risks, any common land and the closest connections for the supply of services.
A highways search will establish if the land has direct access to a public highway. Boundaries to rural land can change over time and where land is sold in part, small pieces of land known as ransom strips can be left between the land and the public highway. The buyer’s solicitor will need to check the land has the benefit of a legal or prescriptive (established after long continuous use) right of way over any ransom strips and can advise whether a Land Registry application or indemnity insurance is needed.
Planning
It will be important to check the authorised planning use for the land and any existing buildings to see if planning permission for change of use is required for a vineyard or winery.
Additional buildings may be needed for growing grapes and making wine and, as the business grows, for wine tasting, vineyard tours and bottling and selling wine. Buyers should ascertain at an early stage whether planning permission will be required and if planning and environmental constraints, such as listed buildings or conservation areas, restrict future development.
Adverse rights
A buyer’s solicitor will check the Land Registry title to ensure the buyer is not at risk of obstructing any third-party rights, such as a right to work the mines and minerals under the land or a right of way for a neighbouring land owner.
Additional enquiries should be raised as there may be adverse rights that will bind the buyer which are not revealed on the Land Registry title. Depending on the current use and landscape of the land, the existence of farm business tenancies, grazing licences, public rights of way, fishing rights and sporting rights, among others, will need to be checked.
Covenants
The land may be subject to restrictive covenants (obligations which require the landowner not to do something) which restrict the number or type of buildings on the land or limit what the land can be used for. Restrictive covenants generally bind future owners of the land and can be enforced years after they are put in place.
The land may also be subject to positive covenants (obligations which require the landowner to do something), such as maintaining a fence or an accessway. They are not attached to the land but can still bind a new owner.
If there is a risk a covenant may be breached by the buyer’s proposed development or use of the land as a vineyard or winery, the buyer’s solicitor can check the likelihood of the covenant being enforced and advise on the next steps to take, such as obtaining indemnity insurance, proceeding with a planning application or seeking a release from the covenant.
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