Title, lease or PTO?

When you apply for a bank loan, your type of landownership is important, says financial consultant Susan Pletts.

The type of landownership farmers have will affect their access to financing, as land is often used as collateral or security.

Title ownership means you actually own the land. Every piece of measured land is recorded in the government’s Deeds Office. This office records the name of the owner of each piece of land in a document known as a title deed. Every time land is sold, the title deed is altered.

The information is open and anyone can ask who owns a specific plot of land.

Every time the owner of the land borrows money from a financial institution such as a bank and the land is given as security, the loan amount is recorded on the title deed. If the owner of the land sells, the bank gets paid before anyone else.

Banks often do “deed searches” on their customers to check on what land (assets) they own and the size of their bonds. This is to check on their liquidity – to see if their assets are worth more than debts.

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