A farmland foreclosure allows the creditor to take complete ownership of the land, according to bankruptcy lawyer Bruce A. Ralston. However, state laws may change the exact procedures.
Foreclosure is a repossession process that enables a creditor to claim farmland when the farmer fails to make the necessary payments, explains Ralston. Whereas the repossession of other kinds of personal property can happen overnight, farmland foreclosure gives the farmer around a month to make plans. Likewise, farmers may be eligible to cover all late fees, foreclosure costs and legal fees to reclaim the ownership of the land.
If the farmer fails to cover all fees, the creditor puts the farmland up for sale in an auction, notes Ralston. Farmers can avoid foreclosure by filing for bankruptcy before the auction.
As states have the power to enact their own land ownership laws, farmland foreclosure may have different laws in different states, reports ForeclosureLaw.org.