The Texas A&M Forest Service released a report noting it expects timber needs to increase based on US Census Bureau data. This data points to a rise in demand for new, privately-owned housing developments. The completion of these developments require many different supplies, including lumber. Not surprisingly, the increased demand for timber translates to an increase in price. Texas A&M also found that the price for mixed-hardwood increased by 8% over rates from 2021.
Those looking to make the most of this opportunity and sell timber are wise to review not just the logistics of getting the timber to market, but also the potential legalities. Some tips to help reduce the risk of legal surprises include the following:
- Review boundaries. Make sure you know where you land begins and ends so that you do not accidentally harvest from land that is not your own.
- Prepare bill of sale agreements. Texas law generally requires a bill of sale for the sale or purchase of various timber products including trees, pulpwood, finished wood products, and nursery trees. This document should include a variety of legalities including details of exactly what is sold, the date of sale, the agreed upon price, any legal state and federal business requirements and dispute resolutions options.
- Tax obligations and exemptions. Whenever there is an exchange of assets, Uncle Sam may want a cut. When it comes to selling timber, sales taxes can apply. Exemptions are present for timber products raised and harvested for sale. It is important to review the particulars to qualify for this exemption carefully.
Depending on the details of your goals, it may be important to review the impact of additional regulations and plan accordingly.
These contracts are legally binding documents. As such, it is important to draft them to your specific situation.
