Every now and then a property placed into the Conservation Reserve Program (CRP) comes for sale on the market. Buyers and agents alike ask what exactly is CRP? In a nutshell, a landowner enters into an agreement with the government to implement practices that conserve the landowner’s land. Most often in northwest Colorado, the landowner agrees to refrain from grazing the land. In exchange for this land-use restriction, the owner receives an annual payment. CRP contracts are 10 years in duration and the annual payment is fixed at the time of the contract.
When property that is subject to a CRP contract changes hands, the buyer usually assumes the contract. If a buyer does not assume the contract or fails to honor it, the seller is responsible for the penalties. These penalties can be steep and depend on the time of breach in the contract and the nature of the violation. So it is in the seller’s best interest to ensure that buyers are willing to assume and uphold the contract early in the negotiations. The buyer usually benefits from the annual income for the remainder of the term. The Conservation Reserve Program has been a successful partnership between private landowners and public agencies to maintain soil health, improve water quality and enhance habitat for wildlife.