Timber contracts: Remember to get the terms in writing

Timber sale contracts back in my grandfather and great grandfathers days consisted of a good ole firm hand shake and working together with the landowner to make a good timber harvest.

Times have changed

In this busy world we live in now with modern technology and everyone going in nine different directions to make ends meet, we need to be a little more specific. This can be accomplished by setting down and writing things out on paper. That’s why a timber sale contract is important when doing a timber harvest on your property. Landowners now days may not live on the property they own, or they are just unable to be at the job site every day.

Some loggers have really good contracts that need very little adjustments to fit the sellers needs. Every contract is different and should be carefully read and understood by the seller, attorney, or consulting forester. Contracts don’t have to be complicated and long winded.

Here are some things every contract should have.

• Names and addresses of the seller and buyer.

• Date of the contract execution.

• Proof of Workers Compensation, Liability Insurance, and Best Management Practices (BMP’s)

• Exact location, or legal description of the location. This can be a topographic map, aerial map, or deed.

• Description of what is exactly being sold. If individual trees are being sold make sure it is explained in the contract how they are marked.

• Make sure to also put in how the boundaries are to be marked and identified.

• Declaration of the sellers ownership and right to convey. This helps protect the buyer of the timber from any unknown third party claims of the seller.

• Value of the sale and how and when payment is to be made. When doing a (lump sum sale) the contract should say the dollar amount and the schedule of payment. Usually the buyer will put 10% down and then the remaining balance is paid before the logging crew moves in.

Whenever you have a sale by unit or sale by scale the seller is paid a certain dollar value per unit cut. This is either measured by board feet, cord, or ton. This should also be spelled out in the contract the schedule of payment, method of scaling, and who the person responsible for the scaling.

If you sell on a percentage basis, where the seller receives a percentage of money the buyer receives for the logs delivered to the mill. The buyer and seller need to include in the contract the payment schedule, percentage, the method and location of scaling, and the person responsible for scaling.

Whenever you sell timber on percentages or sale by units all the log scaling receipts should be photo copied by the buyer and given to the seller.

• Length of contract, contract extensions and cost of extensions. All contracts should have a length of time to get timber harvested. Usually one year is allowed. This sometimes varies because of weather conditions and size of the harvest area. If contracts need to be extended they should be extended for 6 months to a year. The cost to the buyer should be around 5-8 percent of the total amount paid to the seller to renew or extend the contract. Note: This is hard to do when you sell timber on percentages or by units because you don’t have a grand total or lump sum number to work from.

• Provisions of the buyers ingress and egress into the property.

• Ownership of the by-products. Basically this means what is to be done with the tops, stumps etc. I highly recommend that all tops and stumps be left in the woods. This adds organic matter back into the woods and helps protect tree seedlings from deer damage. Plus, if you start dragging whole trees or tops out of the woods will cause severe damage to the residual stand.

• Should also identify whether the seller or buyer assumes the loss of timber if it is destroyed by weather, fire, or stolen after contract is executed.

• Damage to unmarked residual trees left and what should be paid for the those trees if they are damaged. Note: Damage on some trees is expected during a harvest. By putting a dollar value of three times the value of the tree in the contract will make the buyers cutters be more cautious when cutting down marked trees next to unmarked trees.

• Performance bond. A performance bond insures contractual compliance by the buyer it is usually held in escrow in the form of a cashier’s check. Performance bonds can range from $500-$2500. This is advantage to the seller if the logger decides to skip town. Seller needs to realize that if the contract has been followed and fulfilled this money needs to go back to the buyer after completion.

• Best Management Practices will be used during and after the completion of the job to help in the aid and prevention of soil erosion. Should also state in contract how streams should be crossed with temporary crossings and how temporary crossings need removed and reclaimed. Also have in the contract about smoothing, grading, seeding, installation of water bars on all disturbed soil along with mulching any critical steep areas.

• A map layout of all the skid roads, major stream crossings, and haul roads along with locations of decking and loading areas.

• Fire protection. That the buyer has to comply with all fire laws.

• Trash is to be picked up daily.

• Cut off ends of logs, bark, and junk logs should be cleared from the decking area and scattered back through the woods or buried.

• Care of the property such as fences, roads, fields, buildings, young trees, reserved timber, telephone lines, electric lines, and gas lines. Make sure this is detailed. Example: All of the following should be fixed to at least pre-sale conditions as evidenced by a set of photographs by the buyer.

• Signatures of both parties.

• Notarization.

Hopefully these 22 things will help you out when you get ready to sell timber someday. There are a lot of resources and professionals out there at your finger tips by getting on the computer or picking up the phone and contacting your County SWCD, ODNR Service Forester, OSUE County Educator, Consulting Forester, or even your Local Loggers Chapter.

And remember — You are the landowner! And it is your ultimate responsibility to keep soil from running off your property and polluting the waters of the state. So make sure you get that logger that will work for you in accomplishing that goal. And get it in your contract!