Why a grape purchase agreement needs assignment consent as a condition precedent, not a diligence item chased after deposit
A useful cautionary case in permanent crop acquisitions. Take an 88 acre vineyard in a cool-climate wine region, 71 planted, average vine age 18 years across five blocks, asking $2.31M. The underwrite often rests on one thing: a five-year grape purchase agreement with a mid-size winery covering the majority of expected tonnage at a fixed per-ton price. With that contract in place, a deal like this can pencil to a healthy unlevered yield after custom farming costs. Without it, the buyer becomes a spot seller of fruit in a region where spot tonnage often gets turned away, and the yield case falls apart. The critical risk sits in the assignment language. Many grape purchase agreements require the winery's written consent to any assignment, at the winery's sole discretion, and that consent does not automatically run with the vineyard on a sale. A deposit going hard on the strength of a physical inspection and a seller's verbal representation that the contract transfers, without written consent from the fruit buyer in hand, is a serious exposure. A winery can string along a consent request for months before ultimately offering only a renegotiated agreement at lower tonnage, a lower price, and with older, less productive blocks excluded. A second compounding risk on any older vineyard: an independent viticulturist walking the blocks properly, and early, rather than after a deposit is already hard, can surface a meaningful replant recommendation on some portion of the acreage, representing real six-figure capex per acre affected that needs to be reserved for. The lesson for underwriting any permanent crop deal: written consent from the fruit buyer becomes a condition precedent to the deposit going hard, built into the purchase agreement itself rather than chased as a diligence item afterward, and the replant schedule gets priced by an independent viticulturist in the first few weeks of diligence, because on a permanent crop that number is the deal.
