Timber Sales 101 – How Landowners Can Protect Themselves
By Duane McCoy
When you go to sell your timber, whether by necessity, plan, or someone knocks on your door and offers you money for your timber, please do some research and thinking before you go forward. Selling timber can be a confusing process, which can lead to financial gains or legal problems. However, the more people you talk to and the more information and help you get, the better off you are likely to be when the process is complete. Educating yourself and knowing the practices often employed in Indiana and the laws that protect you as a landowner can go a long way to help you make the right decisions.
For instance, the practice of “selling on shares”, a common practice in Indiana, is an agreement between the landowner and the Timber Buyer that states that the buyer can cut the trees and take them to the mill. Payment for those logs from the mill will be split between the landowner and the buyer by percentages, say 50:50. There are many ways in which the percentages can go, but essentially the landowner and the logger will split the payment from the mill. This system can have its advantages and disadvantages for both parties, and many of the Timber Buyers that use shares as a common method of buying timber are good, honest people that either do not have enough money to buy timber up front in lump sums or believe that this system is best for both parties. Unfortunately, there are some buyers that use this system to take advantage of landowners to increase their margin of profit or outright lie about the volume or grades of timber that they have harvested. These few bad buyers affect the trust of everyone in the forest products community of Indiana.
If you go to sell your timber, keep in mind that the average landowner has very little to no experience in selling their timber. If you go to sell your timber and want to compare bid sales with shares sales and you want to estimate what you might think is a reasonable amount of money for your timber, you could look at the Fall 2011 Issue of the Woodland Steward that contains the “2011 Indiana Forest Products Price Report.” Review the average value of species and grade of log and see how much those logs will fetch when they arrive at the mill. You might also look through the Summer 2011 Issue of the Woodland Steward at the “2011 Indiana Consulting Foresters Stumpage Timber Price Report.” The stumpage report can help you understand what the market is doing in terms of bid sales by showing the annual trends of winning bid prices given the quality of timber that is being offered in the sealed bid sales reported, as well as how many bids were being offered, volume of timber, value, etc. Both of these reports are very valuable and important information to have and I know that I read and reference both reports several times a year. However, they cannot prepare you for all you might encounter as you consider selling your timber, so you might look for additional information that can help you.
In 2010 and 2011 there were meetings in different parts of the state at which landowners listened to a local consultant forester, a local person from the forest products industry, and an experienced local landowner talk about some ways in which to protect yourself and your investment as you sell your timber. The people that attended asked questions and participated in discussions and took advantage of having the different experts available. Additional meetings can still be provided if you work with your county extension office, SWCD, RC&D or other organization and have them work with the Indiana DNR Division of Forestry (DoF).
There are many more resources that available to help you as you go to make your decisions. On the internet, there is the DoF (www.in.gov/dnr/forestry), the Woodland Steward (www.inwoodlands.org), and the Indiana Forest and Woodland Owner’s Association (IFWOA) (www.ag.purdue.edu/fnr/ifwoa) which have all kinds of information and links that can help you get information on programs, resources, and contacts that can help you. You can also find the Call Before You Cut program on the internet (www.callb4ucut.com), or you can call the Indiana Hotline for the program at 1-888-939-9493 and we can send you a packet of information and resources. You might even have neighbors and friends who have experience in selling or managing timber that can help you as well.
Beyond prices and selling methods, there are many other aspects to a timber sale that you as the seller should consider. One such aspect that often comes up at the meetings is that of property lines. How precise do you need to be about the property lines? Well, a landowner whose tree is wrongfully cut and/or taken can sue for up to 3 times the value of the tree at the time it was cut (I.C. 25-36.5), and some of that money can come from the landowner that sold the timber depending on the circumstances. Knowing your property lines and having prior agreement with your neighbor as to where the lines are can be very important to maintaining the neighborhood peace and keeping everyone out of court. If an agreement cannot be reached as to where the lines are, a survey may be advisable before the harvest.
Whether or not to have a contract, specifying which trees are to be cut and how to identify if a cut tree was one you actually sold, method and timing of payment, who is liable should there be an accident, length of time to extract the sold trees, Best Management Practices and sale closeout, streams, lakes, and sinkholes, where access roads, landings, and trails are to be located, and many more aspects are not covered in this article. As the Timber Buyer Licensing Forester for the Indiana DNR Division of Forestry, I get many calls from landowners because they thought they knew exactly how things were going to work, how they were going to paid, and how much the should have been paid, but when the harvest was over they were confused and not sure if they were paid correctly. Often it is due to a lack of understanding of how they were to figure their shares, and sometimes it is because they have been taken, either way we do the best we can to help, but it might never make that person feel better about the timber sale and could affect their timber management in the future.
Please take the time to do the research these many sources before selling your timber to help yourself and the forest products community in Indiana, of which you as a landowner are an important part.
Duane McCoy is the Timber Buyer Licensing Forestry for the Indiana Division of Forestry. Duane first joined the Division in 1996 and currently works on the Timber Buyers Licensing program, Indiana Forestry Best Management Practices (BMP) program, Watershed Conservation through Forestry program, and the Hoosier Ecosystem Experiment (HEE) Research Forest project.