A Minnesota farm family sits down with a lawyer to do estate planning. The advice is the same advice I give clients in most other contexts: put the land in an entity. An LLC, maybe, or a revocable trust. Cleaner succession, no probate, easier to split among the kids.
Give that advice without one more step and you’ve walked the family straight into a statute that says an LLC may not own agricultural land and a trust may not own agricultural land.
Minn. Stat. § 500.24, subd. 3(a), is a flat prohibition, and it names exactly the entities a planner reaches for first:
No corporation, limited liability company, pension or investment fund, trust, or limited partnership shall engage in farming; nor shall any corporation, limited liability company, pension or investment fund, trust, or limited partnership, directly or indirectly, own, acquire, or otherwise obtain any interest, in agricultural land other than a bona fide encumbrance taken for purposes of security. This subdivision does not apply to general partnerships. This subdivision does not apply to any agricultural land, corporation, limited partnership, trust, limited liability company, or pension or investment fund that meet any of the definitions in subdivision 2, paragraphs (b) to (f), (j) to (m), (p) to (x), (z), and (bb), has a conservation plan prepared for the agricultural land, and reports as required under subdivision 4.
Read the middle sentence again. The general partnership is the entity nobody forms on purpose. It shows up by operation of law when two people farm together without paperwork, and it has no liability shield at all. And it’s the only business form the prohibition doesn’t reach.
Everything else has to earn its way out.
What exactly does § 500.24 prohibit?
Two things, and the second is broader than the first. Subdivision 3(a) bars the listed entities from engaging in farming, and it separately bars them from directly or indirectly owning, acquiring, or otherwise obtaining any interest in agricultural land. An entity that never plants a seed still violates the subdivision just by holding title.
The only interest carved out of the ownership half is “a bona fide encumbrance taken for purposes of security.” A bank can take a mortgage on a cornfield. It can’t just own the cornfield.
How far this reaches turns on two definitions in subdivision 2. “Farming” under paragraph (a) means the production of agricultural products, livestock or livestock products, milk or milk products, or fruit or other horticultural products. It expressly does not include processing, refining, or packaging those products, spraying or harvesting services provided by a processor or distributor, timber or forest products, poultry or poultry products, or the feeding and caring for livestock delivered to a corporation for slaughter or processing for up to 20 days before slaughter or processing.
“Agricultural land” under paragraph (g) is a lot wider than the word suggests: “‘Agricultural land’ means real estate used for farming or capable of being used for farming in this state.” Capable of being used. A vacant, unplanted parcel outside a city is agricultural land for purposes of this section whether or not anybody has ever farmed it.
The Farmer-Lender Mediation Act guide pulls its definitions of “farming” and “family farm” from the same subdivision 2. This one’s about the ownership prohibition those definitions feed.
The exceptions — all twenty of them
Subdivision 3(a) lists twenty defined categories by paragraph letter. I’m spelling every one out instead of waving at them, because the whole game is fitting one. Here they are in the statute’s order:
- (b) Family farm — an unincorporated farming unit owned by one or more persons residing on the farm or actively engaging in farming.
- (c) Family farm corporation.
- (d) Family farm trust.
- (e) Authorized farm corporation.
- (f) Authorized livestock farm corporation.
- (j) Family farm partnership.
- (k) Authorized farm partnership.
- (l) Family farm limited liability company.
- (m) Authorized farm limited liability company.
- (p) Research or experimental farm.
- (q) Breeding stock farm.
- (r) Aquatic farm — an entity owning or leasing agricultural land as a necessary part of an aquatic farm as defined in § 17.47, subd. 3.
- (s) Religious farm — a corporation formed primarily for religious purposes whose sole income is derived from agriculture.
- (t) Utility corporation.
- (u) Development organization — documented plans to use, and subsequent use of, the land within six years for a specific nonfarming purpose, or land zoned nonagricultural, or land inside an incorporated area.
- (v) Exempt land — grandfathered holdings measured from May 20, 1973 for corporations, May 12, 1981 for pension or investment funds, May 1, 1988 for limited partnerships, and the effective date of Laws 2000, chapter 477 for trusts, with normal expansion capped at 20 percent of the grandfathered acreage in any five-year period.
- (w) Gifted land — acquired by grant or devise by an educational, religious, or charitable nonprofit entity, if all of it is disposed of within ten years.
- (x) Repossessed land — acquired by process of law in the collection of debts or enforcement of a lien, if disposed of within five years.
- (z) Nonprofit corporation.
- (bb) De minimis — 40 acres or less of agricultural land where the entity annually receives less than $150 per acre in gross revenue from rental or agricultural production.
Subdivision 2 has other lettered paragraphs — (g) through (i), (n), (o), (y), and (aa) — but those are definitional support, not exception categories. Subdivision 3(a) doesn’t put them on the list.
What is the difference between a family farm corporation and an authorized farm corporation?
Kinship versus size. The family form has no acreage cap and no shareholder cap, but it demands relatives. The authorized form drops the kinship requirement and pays for that with hard numeric limits.
A family farm corporation under paragraph (c) is a corporation founded for the purpose of farming and the ownership of agricultural land in which the majority of the stock is held by, and the majority of the stockholders are, persons (or their spouses, or current beneficiaries of family farm trusts holding the stock) related to each other within the third degree of kindred under the rules of the civil law. At least one of the related persons must reside on or actively operate the farm, and none of the stockholders may be corporations. There’s no ceiling on acres and no ceiling on the number of shareholders.
An authorized farm corporation under paragraph (e) has to satisfy all seven of these: it has no more than five shareholders, with spouses counted as one shareholder; all shareholders other than an estate are natural persons or a family farm trust; it has no more than one class of shares; revenue from rent, royalties, dividends, interest, and annuities does not exceed 20 percent of gross receipts; shareholders holding 51 percent or more of the interest reside on the farm or are actively engaging in farming; it does not directly or indirectly own or otherwise have an interest in any title to more than 1,500 acres of agricultural land; and none of its shareholders are shareholders in other authorized farm corporations that in combination with it own more than 1,500 acres.
The authorized livestock farm corporation at paragraph (f) runs a near-parallel list with three differences that matter. It must be engaged in the production of livestock other than dairy cattle. Family farm corporations may be shareholders alongside natural persons and family farm trusts. And instead of a 51 percent residency-or-active-farming test, shareholders holding 75 percent or more of the control, financial, and capital investment must be “farmers,” with at least 51 percent of that required percentage actively engaged in livestock production. “Farmer” has its own definition at paragraph (n): a natural person who regularly participates in physical labor or operations management in the person’s own farming operation and files Schedule F with the person’s annual Form 1040.
Does the statute override an LLC operating agreement?
On transfers of membership interests, yes. Paragraphs (l) and (m) each close with the same restriction. Except for a state or federally chartered financial institution acquiring an encumbrance for the purpose of security or an interest under paragraph (x), a member of a family farm limited liability company or an authorized farm limited liability company “may not transfer a membership interest, including a financial interest, to a person who is not otherwise eligible to be a member under this paragraph.”
That’s a statutory transfer restriction sitting on top of whatever the operating agreement says, and it catches the bare economic interest, not just governance rights. It’s a different animal from the ordinary default rules in my guides to LLC operating agreements and what a member loses on dissociation. You can draft around those rules. You can’t draft around this one.
Fitting an exception isn’t enough
Subdivision 3(a) sets three conditions joined by “and,” not one. The entity or land must (1) meet one of the twenty definitions, (2) have “a conservation plan prepared for the agricultural land,” and (3) report “as required under subdivision 4.” A family farm LLC that qualifies on paper but never files with the Department of Agriculture isn’t inside the exception the statute actually wrote.
The reporting duty in subdivision 4 is no small thing. Paragraph (a) requires a first report identifying the entity and its place of incorporation, certification, or registration; its headquarters or registered-office address and registered agent; the acreage and location of every parcel listed by quarter-quarter section, township, and county; the officers, directors, trustees, members, partners, and shareholders owning more than ten percent of stock, with percentages; the farm products produced or intended; a copy of the title indicating the particular exception claimed; and, with the first or second report, a copy of the conservation plan proposed by the soil and water conservation district. An entity claiming one of the family or authorized statuses also has to report share, partnership, or governance-and-financial-rights ownership by persons residing on the farm or actively engaged in farming and their relatives within the third degree, and state the percentage of gross receipts derived from rent, royalties, dividends, interest, and annuities.
And there’s a pre-clearance rule that catches people off guard: “No pension or investment fund, limited partnership, corporation, or limited liability company shall commence farming in this state until the commissioner has inspected the report and certified that its proposed operations comply with the provisions of this section.”
Paragraph (b) then requires an annual report before April 15 each year. An entity that misses April 15 “must pay a $500 civil penalty,” and here’s the sentence that gives the penalty teeth: “The penalty is a lien on the land being farmed under subdivision 3 until the penalty is paid.” Each report carries a $15 filing fee under paragraph (d). Under paragraph (c) the commissioner may waive or reduce the civil penalty for good cause, but only after the annual report is completed, and only once per corporation or partnership.
Paragraph (e) is short: “Failure to file a required report or the willful filing of false information is a gross misdemeanor.”
Paragraph (f) opens one narrow relief valve. The trustee of a revocable trust in which the settlor, the settlor’s spouse, or both are the primary beneficiaries during the settlor’s lifetime doesn’t have to file a report during any period the trust is revocable. That paragraph is about the report. It isn’t written as an exemption from subdivision 3. If you’re moving Minnesota farmland into a revocable trust — see my discussion of putting real property into a trust — you should be reading paragraph (d) of subdivision 2 and asking whether the trust is a family farm trust, not assuming the question goes away because no report is due.
What if the entity fits nothing on the list?
It can petition the commissioner of agriculture. Subdivision 3(b) lets an entity that can’t meet any of the listed definitions petition for an exemption, and it sets two criteria: the exemption “would not contradict the purpose of this section,” and the petitioning entity “would not have a significant impact upon the agriculture industry and the economy.” The purpose is in subdivision 1: encouraging and protecting the family farm as a basic economic unit.
An exemption doesn’t last forever. The commissioner reviews each exempted entity annually against those same two criteria and must withdraw the exemption if the entity no longer meets them. The entity is then subject to enforcement proceedings under subdivision 5. The commissioner also sends a list of every exempted entity to the chairs of the senate and house agricultural policy committees by October 1 each year.
Who enforces this, and what is the remedy?
The attorney general, in district court, and the remedy is forced divestiture, not a fine. Subdivision 5 is the only enforcement tool the section supplies for a subdivision 3 violation, and it doesn’t read like a discretionary program:
With reason to believe that a corporation, limited partnership, limited liability company, trust, or pension or investment fund is violating subdivision 3, the attorney general shall commence an action in the district court in which any agricultural lands relative to such violation are situated, or if situated in two or more counties, in any county in which a substantial part of the lands are situated.
What comes next happens in a set order, and it’s worth knowing. The attorney general files a notice of the pendency of the action with the county recorder or registrar of titles in each county where any part of the land sits, as provided in Minn. Stat. § 557.02 — so the cloud lands on the title right at the start, in the recording system, whether the parcel is abstract or Torrens. If the court finds the lands are held in violation of subdivision 3, it enters an order saying so, and the attorney general records that order. The owner then has five years from the date of the order to divest. That five-year period “shall be deemed a covenant running with the title to the land” against any grantee, assignee, or successor, so selling into a friendly entity doesn’t restart the clock. (The action itself may be brought against any of the five entity types named in the opening sentence, but the divestiture and covenant sentences that follow name only “the pension or investment fund, limited partnership, or corporation” — the statute’s text doesn’t repeat “trust” or “limited liability company” in that specific clause.)
And if the five years run out: “Any lands not so divested within the time prescribed shall be sold at public sale in the manner prescribed by law for the foreclosure of a mortgage by action.”
Subdivision 5 separately authorizes the attorney general to enjoin any prospective or threatened violation.
What are the conservation-practice provisions doing here?
They put obligations on the lender that ends up owning a farm. An entity holding land as repossessed land under subdivision 2, paragraph (x), may not farm it during the holding period except under a lease to one of the family or authorized entities. Subdivision 3a requires that lease to include a provision prohibiting intentional damage or destruction to a conservation practice on the land. Subdivision 3b then provides that an entity that intentionally destroys a conservation practice as defined in § 103F.401, subd. 3, to which the state has made a financial contribution, must pay the commissioner an amount equal to the state’s total contributions plus interest from the time of investment, with interest “calculated at an annual percentage rate of 12 percent.”
Both subdivisions exclude entities meeting the definitions in subdivision 2, paragraphs (c) to (f) or (j) to (m) — the family and authorized corporate, partnership, and LLC forms.
Is § 500.24 the only Minnesota restriction on farmland ownership?
No. There’s a second one, and it expressly stacks on top. Minn. Stat. § 500.221, subd. 2, restricts acquisition of agricultural land by non-citizens and by entities that aren’t sufficiently owned by citizens or permanent resident aliens, and it says so in so many words: “In addition to the restrictions in section 500.24, no corporation, partnership, limited partnership, trustee, or other business entity shall directly or indirectly, acquire or otherwise obtain any interest, whether legal, beneficial or otherwise, in any title to agricultural land unless at least 80 percent of each class of stock issued and outstanding or 80 percent of the ultimate beneficial interest of the entity is held directly or indirectly by citizens of the United States or permanent resident aliens.” Notice that § 500.221 reaches general partnerships, which § 500.24, subd. 3, doesn’t. Clearing one section doesn’t clear the other.
Where this actually goes wrong
The most common way a Minnesota landowner gets crosswise with § 500.24 isn’t a hedge fund buying a section of Redwood County. It’s ordinary planning, the kind I do every month: a farm moved into an LLC for liability reasons without checking whether the membership satisfies paragraph (l); a non-farming child inheriting an interest and breaking the kinship majority that paragraph (c) requires; an authorized farm corporation crossing 1,500 acres; a family farm LLC transferring a financial interest to someone ineligible under paragraph (l); an entity that qualifies perfectly but has never filed the April 15 report and so can’t satisfy the third condition in subdivision 3(a).
None of those is a criminal problem. All of them are title problems, and the statute’s remedy is aimed straight at the title. So my rule for any plan that touches Minnesota farmland is simple: run the entity against subdivision 2 before the deed gets drafted, not after the attorney general’s notice of pendency gets recorded.
Madgett Law, LLC advises Minnesota business owners, landowners, and families on entity structure, ownership transfers, and the statutory limits sitting underneath a succession plan. If you hold Minnesota agricultural land in a corporation, an LLC, a trust, a limited partnership, or a fund — or you’re about to move land into one — send us a message or call 612-470-6529.
Sources: Minn. Stat. § 500.24 (2025 Minnesota Statutes, Minnesota Office of the Revisor of Statutes, revisor.mn.gov/statutes/cite/500.24): subd. 1 (purpose — family farm as a basic economic unit); subd. 2(a) (“farming,” including the processing, spraying-and-harvesting, timber, poultry, and 20-day pre-slaughter exclusions); subd. 2(b) (“family farm”); subd. 2(c) (family farm corporation — third-degree kinship majority, resident or active operator, no corporate stockholders); subd. 2(d) (family farm trust); subd. 2(e)(1)–(7) (authorized farm corporation — five shareholders with spouses as one, natural persons or family farm trust, one class of shares, 20 percent passive-revenue cap, 51 percent residency-or-active-farming, 1,500-acre cap, cross-ownership cap); subd. 2(f)(1)–(7) (authorized livestock farm corporation — non-dairy livestock, family farm corporations as permitted shareholders, 75 percent farmer control test with 51 percent of that percentage actively engaged); subd. 2(g) (“agricultural land” — used for farming or capable of being used for farming); subd. 2(j)–(k) (family farm partnership; authorized farm partnership); subd. 2(l)–(m) (family farm LLC and authorized farm LLC, including the closing transfer restriction on membership and financial interests and the financial-institution and paragraph (x) carve-outs); subd. 2(n) (“farmer” — physical labor or operations management plus Schedule F); subd. 2(p)–(u) (research or experimental farm; breeding stock farm; aquatic farm, referencing § 17.47, subd. 3; religious farm; utility corporation; development organization and its six-year use requirement); subd. 2(v) (exempt land and the four grandfather dates and 20-percent-per-five-years expansion); subd. 2(w) (gifted land, ten-year disposition); subd. 2(x) (repossessed land, five-year disposition, lease-only farming during the period); subd. 2(z) (nonprofit corporation); subd. 2(bb) (de minimis — 40 acres or less and less than $150 per acre in annual gross revenue); subd. 3(a) (the prohibition, the general-partnership carve-out, and the three conjunctive conditions — definition, conservation plan, and reporting); subd. 3(b) (commissioner exemption petition, its two criteria, annual review, withdrawal, and the October 1 report to the agricultural policy committee chairs); subd. 3a (conservation practice protection clause in a paragraph (x) lease); subd. 3b (payment of the state’s contribution plus interest at an annual percentage rate of 12 percent, referencing § 103F.401, subd. 3); subd. 4(a) (contents of the report, the additional information for family and authorized entities, and the pre-commencement certification requirement); subd. 4(b) (April 15 annual report, $500 civil penalty, lien on the land); subd. 4(c) (good-cause waiver or reduction, once per corporation or partnership); subd. 4(d) ($15 filing fee); subd. 4(e) (gross misdemeanor for failure to file or willful filing of false information); subd. 4(f) (revocable trust report exemption); subd. 5 (attorney general enforcement, venue, notice of pendency under § 557.02, order, five-year divestiture as a covenant running with title, public sale in the manner prescribed for foreclosure of a mortgage by action, and injunctive relief). Minn. Stat. § 500.221, subd. 2 (2025 Minnesota Statutes, revisor.mn.gov/statutes/cite/500.221) (“[i]n addition to the restrictions in section 500.24,” the 80-percent citizen or permanent-resident-alien ownership requirement for business entities). Minn. Stat. § 557.02 is named only as the provision subdivision 5 cross-references for the notice of pendency; its text is not relied on here. Sections 17.47, subd. 3 (aquatic farm), and 103F.401, subd. 3 (conservation practices), are the definitional cross-references appearing in § 500.24.
Currency note: § 500.24 as posted at revisor.mn.gov on October 1, 2026, with no 2026 amendment noted; its history line ends at Laws 2024, chapter 101, article 3, section 2. No case law is cited in this article.
This article is general legal information about Minnesota law, not legal advice, and reading it does not create an attorney–client relationship. Whether a particular entity fits an exception in § 500.24, subd. 2, depends on its ownership, its acreage, its revenue mix, and its filing history. No outcome is promised or implied.