§ 9.4 - Transfers of Crops

• Jurisdiction: Washington

§9.4 TRANSFERS OF CROPS

This section discusses the transfer of crops under a variety of circumstances.

(1) Transfers with land

When a landowner sells land upon which unsevered crops exist, absent a reservation in the deed or exception in the contract, the crops pass with the conveyance or sale of the land. Miller v. Smith, 119 Wash. 163, 205 P. 386 (1922) (potatoes); Woody v. Wagner, 89 Wash. 429, 154 P. 819 (1916) (wheat); cf. McNulty v. Dean, 154 Wash. 110, 281 P. 9 (1929) (wheat); Rudy-Patrick Co., 16 Wn.App. 911 (seed); 21A AM. JUR. 2D Crops §12 (2008). No special language is needed in the deed or contract to include the unsevered crops in the transfer.

Practice Tip: In deeds and real estate contracts, no special language is needed to include the unsevered crops in the transfer. It may be advisable, however, for tax purposes to mention the crop in the purchase and sale agreement and specifically allocate a portion of the purchase price to the growing crop. If the crop is to be excepted or reserved, that should be done specifically. A post-closing reservation of possession of the land may be insufficient. See 21A AM. JUR. 2D Crops §12 (2008). See §9.4(2).

This general rule also applies after an option to purchase is exercised, thus giving the optionee title to the crops. In re Estate of Niehenke, 117 Wn.2d 631, 117 Wn.2d 631 (1991). The rule appears to apply equally to perennial (natural) crops and annual (industrial) crops. See 21A AM. JUR. 2D Crops §12 (2008).

Application of this general rule to sales on execution or foreclosure may be modified by statute.

MCNULTY V. DEAN, 154 Wash. 110, 281 P. 9 (1929). A landowner-mortgagor was held entitled, as against a purchaser at a foreclosure sale, to the proceeds of crops grown but not severed during the period of redemption. This departure from the general rule was dictated by the court's interpreting the forerunner of RCW 6.23.110.

After a grantor has conveyed the land, an attempted transfer or mortgage of the growing crops by the same grantor passes no title to the crops against the first grantee. See 21A AM. JUR. 2D Crops §12 (2008).

The purchaser of the land should be sure to determine whether the seller attempted to sell the unsevered crops to a third party prior to selling the land, because the general rule may be limited in such circumstances by application of the Washington Uniform Commercial Code. See §9.4(3).

(2) Oral reservations

Although an express reservation of a crop from a conveyance or contract to sell land will prevent passage of the crop with the land, an oral reservation probably will not be effective. RCW 62A.2-201; RCW 64.04.010. Authorities elsewhere are split on the question. See 21A AM. JUR. 2D Crops §§15, 17 (2008).

(3) Transfers of severed crops separate from the land

Severed crops or crops that are owned by one other than the grantor usually do not pass with the land because they are considered personal property. 21A AM. JUR. 2D Crops §7 (2008). Sales of severed crops generally are governed by Article 2 of the Uniform Commercial Code. RCW 62A.2-105, .2-107. Crops may be severed actually (by harvest) or constructively by contract. Constructive severance may arise by sale or mortgage of the crop apart from the land or a reservation or exception of the crop from a land sale. 21A AM. JUR. 2D Crops §7, 17 (2008); Rudy-Patrick Co., 16 Wn.App. 911; Benhart v. Gorham, 14 Wn.App. 723, 544 P.2d 87, review denied, 87 Wn.2d 1001 (1976). Delivering a bill of sale for crops works a constructive severance against subsequent purchasers with notice. Kirby v. First Nat'l Bank, 136 Wash. 214, 239 P. 556 (1925). See §9.4(4). However, a sale by the landlord does not pass title to the growing crops that remain the personal property of the tenant. 21A AM. JUR. 2D Crops §13 (2008). See §9.3(2).

(4) Transfers of unsevered crops separate from the land

Sales of unsevered crops apart from the land generally are governed by Article 2 of the Uniform Commercial Code (U.C.C.). Whether a present sale of an unsevered crop is covered by Article 2 depends on a number of factors. Key factors include (1) whether the crop is to be severed by buyer or seller, (2) identification of the crop to the sale contract, and (3) the status of the crop as a growing crop or a future crop.

In Morgan v. Stokely-Van Camp, Inc., 34 Wn.App. 801, 663 P.2d 1384 (1983), the court ruled that a contract between Morgan, a farmer, and Stokely-Van Camp, Inc., for the sale of 336 acres of peas being grown by Morgan was governed by RCW 62A.2-105 and 62A.2-107(2) (the Washington U.C.C.).

"Goods" are defined in RCW 62A.2-105(1) to include growing crops and other identified things attached to realty as described in the section on goods to be severed from realty. Growing crops may be sold as "goods" under RCW 62A.2-107(2), which provides:

A contract for the sale apart from the land of growing crops or other things attached to realty and capable of severance without material...