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Timber Stand Management – Part 3


The Timber Contract


You have made the decision to harvest some of your merchantable timber. Many landowners are at this point at a loss of what to do now. Here is where your timber manager earns his stripes. Now is the time to depend on him/her to assist you in selling your timber for the highest amount and reaping the best benefit for your property. And it all starts with the timber contract.

The Timber contract is your most critical document that is drawn up before harvest of your timber. More than anything else remember that these are your trees and you control how and to whom they are sold and for how much. You never have to accept the offer of the buyer. You can try and sell your timber for as much as you like, but your timber manager can assist you with the pricing. Timber is a commodity and as such the prices fluctuate regularly often daily. The contract locks in the buyer at a specific price. Below are things you want to make sure are definitely included in your contract;

A timber sale contract generally contains the following provisions:

  • Names and addresses of the buyer and the seller.
  • Date of contract execution. (Important to keep buyer to this date – look for small print that gives buyer automatic extensions if not harvested by agreed date)
  • Legal description of the location of the timber being sold; this can be found in a warranty deed or from a county plat book.
  • Description of the trees being sold, including a description of how boundaries are being marked. The inventory, or a list of species, number, size and volume of trees, is ideal.
  • Guarantee of ownership and right to convey, generally in the form of a title search and abstract.
  • Method of sale – by the load or by the boundary. If by boundary get full payment in advance of cutting. If by the load get a deposit and specify when the checks will arrive. i.e. weekly, biweekly, at end of cutting etc.
  • Payment amount and due date. (Here is where you specify the deposit amount and date deposit is due)
  • A clause providing the buyer with entrances and exits (rights of ingress and egress, in legalese); includes any restrictions, whether rights-of-way will need to be secured from other landowners and who will be responsible for acquiring and paying for them.
  • Method of harvest; use of best management practices to limit water pollution and site degradation, the layout of roads and logging decks and special provisions for hunting season or very wet weather.
  • Penalties for non-performance, including compensation for excessive damage to or cutting of trees that were not marked for harvest.
  • Statement that seller will provide final inspection before security bond is released. Be specific.
  • Provision for use of an arbitration panel for settling disputes.
  • Statement that the seller will not be held accountable for personal injuries during the contract period, and that the buyer is required to carry adequate insurance. Could include a performance bond that is held in escrow until all contractual obligations have been met.
  • Statement that the buyer will comply with all federal, state and local laws.
  • Provision either for or against the buyer being able to resell the timber or part of the timber (like the tops and limbs) and whether the timber owner must be notified.
  • Agreement about who will bear the loss in case the timber is destroyed or stolen during the contract period.
  • Deadline for harvest completion; reasons extensions will be granted and additional costs associated with extension.
  • Notarized signatures of all parties. Registration of the contract, generally at the county recorder’s office.

This is a start –remember that as the landowner, you have full control over the sale of your timber. You can put into a timber contract anything you deem reasonable. The buyer has to agree, so being very unreasonable may not get you a buyer. Be professional and protect your assets as much as legally possible.