Written in September 2026. The market numbers below are from that month and have moved since, so ask us for today's.
Updated October 2026.
In September 2026 the grape crews were out on the hills above Lake Leelanau, which is the reliable sign that farm acreage is about to start showing up on the market. Some of that acreage is enrolled in a state program called PA 116. Buy a parcel that's in it without knowing, and you've bought land you aren't allowed to build a house on, and possibly land you aren't allowed to split.
Not permanently. But not on your timeline either, and not without two separate government bodies signing off on it.
What the agreement is
Part 361 of the Natural Resources and Environmental Protection Act (Public Act 451 of 1994) lets a farm owner sign a Farmland Development Rights Agreement with the State of Michigan. Everybody still calls it PA 116, after the 1974 law it grew out of, and MDARD's own pages call it that too.
The owner agrees to keep the land in agricultural use for a minimum of 10 years and a maximum of 90. In exchange they can claim a Michigan income tax credit equal to the property taxes on the enrolled land and buildings, minus 3.5 percent of household income, and the enrolled land is exempt from special assessments for sanitary sewers, water, lights and non-farm drainage.
In this part of the fruit belt, a good share of the orchard and vineyard ground you'll look at may sit under one of these. It's a recorded covenant and it runs with the land. The seller signed it. You inherit it.
You can't just build
The statute is specific. Under MCL 324.36104(7)(a), a structure shall not be built on enrolled land except for a use consistent with farm operations, a residence for an individual essential to the operation of the farm, or lines for utility transmission or distribution, or (and this is the whole ballgame for most buyers) "with the approval of the local governing body and the state land use agency." The local governing body is the city or village council inside a city or village, the township board if the township has a zoning ordinance, and the county board of commissioners everywhere else. Then the state on top of that.
"Essential to the farm" is a defined term and it's stricter than people assume. Under section 36110(6), you have to be involved to a material extent, which means either a financial interest equal to at least half the cost of producing the crops, livestock or products, or 1,040 hours a year working in the farming operation. Mowing on weekends doesn't get you there.
If a listing for enrolled acreage says "build your dream home," I treat the rest of that listing as unverified until somebody shows me the agreement.
You can sell the whole farm, not a slice of it
The state doesn't block the sale of PA 116 land. It blocks the carve-up. MDARD's FAQ says all of the land described in the agreement must remain under one ownership. If the agreement covers 40 acres, all 40 go to one buyer unless the agreement is formally split first.
A split only works if each resulting piece qualifies on its own: 40 acres or more with at least 51 percent in agricultural use, or between 5 and 40 acres with at least 51 percent agricultural and $200 or more a year in gross income per tillable acre. MDARD also recognizes specialty farms of at least 15 acres grossing $2,000 a year.
Run that against the most common request I hear about, where the owner keeps farming and sells the old farmhouse and two acres to someone who just wants the house. Two acres can't qualify as its own agreement. The only route for that piece is an early termination of that part, which costs money and time (next section).
Woodlots don't count. The definition of agricultural use runs long (fruits, grains, livestock, nursery stock, Christmas trees, maple syrup) and then says flatly that it does not include the management and harvesting of a woodlot. Sixty acres of hardwood behind an orchard isn't helping anybody's 51 percent.
The split request form on MDARD's site is named Split-Form_Updated-11152024.pdf, which tells you roughly how often it gets revised. If you buy the whole enrolled parcel, the agreement moves into your name with MDARD's Transfer Request Form, which asks for a copy of the complete recorded deed and the latest property tax bill.
Getting out costs money, and it costs time
MDARD lists eight conditions for early termination of all or part of an agreement: death or disability of the agreement holder or a person essential to the farm, a parcel up to two acres with a structure on it that predates the agreement, a parcel up to two acres for a residence for a person essential to the farm, land that's economically inviable, surrounding land use that restricts farming, irreversible natural change to the land, a court order restricting farming, or "public interest is served by the release."
That first two-acre option is the escape hatch for an existing farmhouse. As for the public interest one, I don't know how MDARD weighs it and I've never gotten a clean answer. Ask them, not me.
Except for death or disability, the law requires repayment of the last seven years of tax credits attributable to the part being terminated, plus 6 percent simple interest. MDARD reviews the request, sends it to Treasury to calculate the number, and then tells the landowner what's owed. Once that's paid, the state sends the landowner a relinquishment, and the landowner has to record it at the county Register of Deeds. MDARD's own page says to expect the process to take two months or more.
Set two months or more against a normal 30- to 45-day closing and you can see the problem. This is a contingency you write before you're under contract, not a phone call you make in week three.
Letting it expire doesn't reset anything
Under MCL 324.36107, the owners are supposed to tell the state, or the local unit holding the development rights, six months before the natural termination date whether they're extending or letting it lapse. Seven years before expiration, the state mails the owner a notice that a lien may attach and that they can choose not to claim credits for all or part of those last seven years.
If it expires, MCL 324.36111 calls for a lien for the credits received in the final seven years, including the year of termination. The owner gets at least 30 days' notice first, and paying within that window keeps the lien from being recorded. If it isn't paid, the lien lands at the county Register of Deeds. If nobody claimed credits in those final seven years, there's no lien. That's the whole planning play, and it has to start seven years out.
Read that again with a buyer's eyes. The credits were claimed by somebody else. The lien attaches to the dirt. If the parcel changed hands in those seven years and nobody squared up the payback, you want it surfaced in the title commitment, in writing, before you close.
If there's also a conservation easement
Plenty of protected ground on this peninsula carries both a PA 116 agreement and a conservation easement. Public Act 68 of 2025 (Senate Bill 685, signed December 23, 2025) added section 36109b, which lets the owner of farmland under both claim the PA 116 credit as long as the easement and the agreement were both executed before January 1, 2025. The easement's own restrictions still apply, so read those too.
The property tax layer underneath
PA 116 is a state contract. The qualified agricultural property exemption is a separate thing, and it shows up at closing. Per Treasury's Bulletin 7 of 2017, a transfer of qualified agricultural property isn't a "transfer of ownership" for uncapping purposes if the land stays qualified agricultural property and the new owner files Form 3676 with the assessor and records it with the Register of Deeds. Skip that and the taxable value can uncap, which on long-held farm ground is a big number. I wrote up how uncapping works on cottages, and the farm version is the same mechanic with more zeros.
If the land later stops being qualified agricultural property, the Agricultural Property Recapture Act (PA 261 of 2000) recaptures up to seven years of that tax benefit. Generally the owner at the time of the change in use owes it, within 90 days. If the buyer files a rescission notice (Form 3677) before the sale, the seller owes it and it's due when the deed is recorded. Settle who carries it in writing, and confirm the numbers with the assessor.
Before you write the offer
Pull the title commitment early and look for a recorded Farmland Development Rights Agreement. Read the legal description in the agreement itself, because that description, not the parcel lines or the listing acreage, defines what has to move as one block.
Get the agreement number and the expiration date from the seller. Ask whether credits were claimed in the last seven years, and by whom. If it expires inside seven years and credits are still being claimed, there's a repayment number attached to this property, so find out what it is before you agree on price.
If you need any piece released or split, start before you're in contract, because two months is two months, and price the seven years of credits plus 6 percent into the deal.
Confirm who files Form 3676 and who carries any recapture. Two forms, two offices, and often two different parties.
Check the rental angle. MDARD's enrollment instructions exclude land under a rental or lease that isn't consistent with the farm operation, and the example given is a second residence rented to someone not connected with the farm. I read that as a live problem for anyone eyeing an enrolled parcel as a vacation rental, stacked on top of whatever the township already says, which varies enormously from one township line to the next. Get it in writing from MDARD before you write the offer.
If you own unenrolled farm ground and are thinking about enrolling, a new application has to be approved by the local unit of government on or before November 1 to count for that year's credit.
Questions go to MDARD's Farmland and Open Space Preservation Program at MDARD-PA116@michigan.gov, or by mail at P.O. Box 30449, Lansing, MI 48909. Reference the agreement number. They're reachable and they do answer. For the contract and title side, bring in a real estate attorney and your title company.
None of this makes enrolled farmland a bad buy. The credit is real, the special assessment exemption is real, and if you want to farm the ground, the program is doing what it was built to do. At mid-year 2026, Leelanau's median sat around $640,000 against roughly $420,000 in Grand Traverse County, and protected orchard ground that can't be carved up is part of that gap. It's the buyer who sees forty acres of Leelanau hillside and pictures a house on the high spot who needs to know what's recorded against it first.
If you're looking at farm ground around Suttons Bay, Lake Leelanau or Cedar, send me the parcel number before you fall in love with it and I'll pull what's recorded. You can also browse what we currently have listed.
Checked against the sources linked above in October 2026.
Taylor Brown, Realtor
Taylor@taylorbrownrealtor.com
(231) 360-1510
