An agricultural dispute can quickly arise when farming equipment is financed jointly but responsibilities, ownership and financial risk are not clearly understood from the outset.
Modern farming businesses often rely on high-value machinery such as tractors, combines and specialist equipment, making joint finance arrangements increasingly common between family members, farming partners or neighbouring businesses. While sharing the cost of equipment can make commercial sense, it can also create complex legal questions around liability, ownership and repayment obligations.
In this article, we explore who is legally liable when agricultural equipment is financed jointly, how disputes commonly arise within farming businesses, and what steps can help prevent costly agricultural disputes before they escalate.
If you’re already in conflict, our land and farming dispute solicitors can help you resolve the matter quickly and commercially.
Understanding Liability in an Agricultural Dispute
Who is legally liable when agricultural equipment is financed jointly?
In many agricultural disputes involving machinery finance, liability depends primarily on the terms of the finance agreement. If two parties jointly enter a finance agreement there tends to be a term which normally provides for ‘joint and several liability’. This means that the finance company can choose to enforce the against both parties together or against one party, no matter who caused the liability to arise.
It is important to understand what it is you are agreeing to if financing equipment jointly with another party, considerations such as can the other party be trusted to and be able to pay if a liability does arise.
Machinery finance fallouts often require negotiation or formal action, and our Dispute Resolution team can advise on strategy and next steps.
Does joint finance automatically mean joint ownership of the equipment?
Not necessarily. In most agricultural machinery finance agreements, the finance company retains legal ownership of the equipment until the loan is fully repaid. Ownership between the borrowers themselves depends on what has been agreed in their contract.
As between the borrowers, again, this depends on the contract and how ‘ownership’ is defined. Normally, you tend to split the ownership as a percentage-based agreement reflective of what the other has contributed financially. Very much like a purchase of a property whatever is agreed and defined in the contract will be binding on the parties.
Where disputes involve farm property or rights connected to the equipment, our property dispute solicitors can support you alongside the wider dispute strategy.
Can a lender pursue one party for the full debt if the other stops paying?
Yes, if the agreement contains a provision that the borrowers have joint and several liability then the lender can pursue one or both borrowers. . Even if the finance agreement is silent, then if the borrower is a partnership then the acts on one partner can sometimes bind the partnership as a whole.
What happens if one party defaults on a joint finance agreement?
This depends on the lender. Some may move straight to default notice. Others will write to the parties and seek to find a resolution if possible. se. The lender will have a choice as to who they think will be most likely to be able to enforce the default debt against.
If the dispute stems from lending terms or refinancing pressure, we can also advise on property finance for farms and rural businesses.
Can equipment be repossessed even if only one party has missed payments?
If matters can’t be resolved then, yes, the lender will be able to seek possession even if only one party has missed a payment.
Common Farming Scenarios That Lead to an Agricultural Dispute
Agricultural disputes frequently arise when farming partners or family members jointly finance machinery but fail to clearly document how payments, usage and ownership will work in practice.
What happens if one party uses the machinery but both remain liable for the finance?
Unless specifically provided for in the finance agreement then by whom and how the equipment is used does not usually impact on responsibility for payments.
It may seem unfair that the party who doesn’t use the equipment should pay for the defaults or the liabilities but ultimately that is the agreement you have signed. If you don’t use the equipment, you should ask yourself why you are paying for it.
How do disputes arise when family members jointly finance farm machinery?
This depends on how the farming business is run. Is it a partnership, which is most common, or as a limited company.
Usually, disputes arise when one family member isn’t aware that there are difficulties with payments, arrears or other issues with the equipment or the finance agreement.
How risky are informal or “handshake” arrangements when financing agricultural equipment?
Given the sums often involved when dealing with agricultural equipment, the agreement with the finance will never be informal or done on a handshake.
Arrangements between borrowers can sometimes be informal and this should be avoided as they are extremely risky. Written documents record a parties obligations and liabilities and provide certainty of terms.
Informal agreements between farming partners can significantly increase the risk of an agricultural dispute. Without written terms confirming ownership, payment obligations and responsibilities, it can be extremely difficult to resolve disagreements.
We’ve also looked at how unclear arrangements can escalate in our article; The Cost of No Contract: Lessons from a Family Farming Dispute.
What happens if jointly financed equipment is sold or disposed of without everyone’s consent?
This depends on the type of finance agreement. Normally legal title to the equipment vests in the finance company though as this gives them security in case of a default by the borrower. Disposal without consent can lead to expensive claims including by the party who purportedly purchased it.
How are disputes handled when farming partners fall out or separate ?
This depends on the nature of the dispute and the underlying cause(s) of it. If the partners are married then that introduces additional considerations. Is property held in a Trust.
The underlying assets and interest are often very valuable and early advice is essential and there are numerous trip wires.
The Court will expect parties if possible to seek to resolve a dispute before legal proceedings are commenced.
Change, Exit and Succession in Farming Businesses
What happens to jointly financed equipment if a farming partnership dissolves?
The contract will normally provide for what happens in an event of insolvency, dissolution or separation. If the business is being carried on, then the finance company may be prepared to enter into a fresh agreement with the continuing party.
If not, then an agreement will need to be reached between all parties to establish what is happening with the equipment and the finance agreement.
Speak to an agricultural dispute solicitor
Disputes involving farming partnerships, machinery finance and agricultural assets can quickly become complex and financially significant. Our dispute resolution team, led by Nick Clarke, advises farmers, landowners and rural businesses on resolving agricultural disputes efficiently and commercially.
For wider support across rural disputes, tenancy, succession and diversification, see our Agriculture & Rural Economy team.
If you are facing an agricultural dispute involving jointly financed machinery or farming partnerships, contact our team who will provide clear, practical guidance to help resolve the issue and safeguard your farming business.
