Should I sell timber lump-sum or pay-as-cut?

Lump-sum gives you a single agreed price for everything inside the marked boundary before cutting starts: it is simple, taxed as a capital gain, and the buyer carries the volume risk. Pay-as-cut (also called scaled or per-unit) pays you a set rate per ton or per thousand board feet (MBF) as logs leave the property, so you share the volume risk but capture upside if the cruise underestimated. Most landowners with a forester cruise in hand prefer lump-sum sealed bids; pay-as-cut suits stands that are hard to estimate.

What is stumpage and how is it priced?

Stumpage is the price paid for standing timber, the trees "on the stump" before they are cut. It is quoted per ton or per MBF (thousand board feet) and varies by species, grade, and local mill demand. As a rough 2026 range, Southern pine pulpwood might bring $8–$14 per ton while high-grade hardwood sawtimber can exceed $400–$600 per MBF. Always benchmark against a recent regional stumpage report before accepting a bid.

Do I need a performance deposit in the contract?

Yes. A performance deposit or bond (commonly 10–20% of the sale value, or a flat $2,000–$10,000) is held until the logger completes cleanup, repairs roads and skid trails, and leaves the property in the agreed condition. Without it you have no leverage if the crew walks off after taking the best trees, leaving ruts, debris, and a damaged road.

Who is liable if a logger is injured on my property?

The contract should require the buyer to carry general liability and workers’ compensation insurance, name you as an additional insured, and indemnify you against claims arising from the harvest. Combined with a hold-harmless clause and proof of coverage before work begins, this shifts the risk of on-site injury to the operator who controls the work.

How long should a timber sale contract run?

Most contracts set a completion deadline of 12–24 months, long enough to work around wet-weather and seasonal restrictions but short enough that prices and your plans do not change underneath you. Add a clause letting you extend in writing, and tie any extension to re-confirming the stumpage rate so a buyer cannot sit on cheap timber for years.

Timber Sale Contract: What to Include

Write a timber sale contract that protects your land: stumpage pricing, marked cutting boundaries, performance deposits, residual-tree damage, and BMP clauses.

Selling the standing timber on your land can be one of the largest single transactions a rural property owner ever makes, and one of the easiest to get wrong. A handshake deal or a one-page "buyer cuts, owner gets paid" note leaves you exposed to under-payment, damaged roads, cut-over property lines, and a liability claim if someone is hurt running a chainsaw on your dirt.

A timber sale contract fixes the price, the boundary, the cleanup standard, and the liability before a single tree falls. This guide walks through how the sale is priced, the clauses that actually protect a landowner, a step-by-step process, and the mistakes that cost owners thousands.

What Is a Timber Sale Contract?

A timber sale contract is a written agreement in which a landowner (the seller) sells the right to cut and remove standing trees to a logger or timber company (the buyer). It is a sale of severed goods: the trees are part of the real estate until they are cut, at which point they become personal property the buyer hauls to a mill.

That dual nature is why a generic bill of sale is not enough. The contract has to describe land, mark a boundary, set a price tied to volume or a lump sum, and govern how the buyer's crew behaves on your property for months. It sits somewhere between a real-estate agreement and a service contract, closer in spirit to a cell tower lease agreement, where an outside operator works on land you still own and have to live on afterward.

Lump-Sum vs. Pay-As-Cut: How Timber Is Priced

The single biggest decision is how you get paid. There are two standard structures.

Lump-Sum Sale

You sell everything inside the marked boundary for one agreed price, paid in full (or in scheduled installments) before cutting starts.

Pros: simple, no volume disputes, the buyer carries the risk if the cruise overestimated, and the IRS generally treats the proceeds as a long-term capital gain if you've owned the land more than a year.
Cons: if your stand was undervalued, the buyer keeps the upside.
Best when: you have a professional cruise and can run a sealed-bid sale among multiple buyers.

Pay-As-Cut (Scaled / Per-Unit) Sale

You're paid a set stumpage rate for each unit of wood actually removed: per ton at the truck scale, or per MBF (thousand board feet, measured on the Doyle, Scribner, or International ¼-inch log rule).

Pros: you capture upside if the stand out-produces the estimate; lower risk on hard-to-cruise tracts.
Cons: you depend on honest scaling, you carry market and volume risk, and you need mill scale tickets to verify.
Best when: the volume is genuinely uncertain or you want to share risk with the buyer.

What Stumpage Actually Pays

Stumpage is the value of the timber "on the stump." It swings with species, log grade, and how close you are to a hungry mill. As a rough 2026 benchmark:

Pine pulpwood: roughly $8–$14 per ton
Pine chip-n-saw / sawtimber: roughly $22–$40 per ton
Hardwood pulpwood: roughly $6–$12 per ton
High-grade hardwood sawtimber (oak, walnut, cherry): $400–$600+ per MBF, with veneer logs far higher

Always pull a recent regional stumpage report (state forestry agencies and university extension services publish quarterly price summaries) before you accept any number. A bid that sounds generous can still be well under the going rate for your county.

Key Clauses Every Timber Sale Contract Needs

1. Parties and Property Description

Use full legal names and the property's legal description: deed book and page, parcel/tax-map number, county, and acreage. Reference an attached map. Vague descriptions ("the back 40 off County Road 7") are how the wrong stand gets cut.

2. Description and Boundary of the Timber Sold

Spell out exactly what is being sold:

Species and product: e.g., "all merchantable pine sawtimber and pulpwood 6 inches DBH and larger," or "marked hardwood only."
Diameter limits: a minimum DBH (diameter at breast height) protects young growth.
Marked boundary: the sale area is flagged or painted on the ground, and trees to cut (or trees to leave) are paint-marked. State who marks and that no tree outside the marked area or below the diameter limit may be cut.

A clearly marked boundary is the most important physical protection you have. It is the timber equivalent of confirming an easement line before someone runs equipment across your land. Ambiguity on the ground turns into a dispute on paper.

3. Price and Payment Terms

State the structure (lump-sum or per-unit), the dollar amount or per-unit rates by product, and the payment schedule. For pay-as-cut, require mill scale tickets with every payment and give yourself the right to inspect them. For lump-sum, payment clears before the crew enters.

4. Performance Deposit / Security

Require a performance deposit (commonly 10–20% of value, or a flat $2,000–$10,000) held until final cleanup and inspection. This is your leverage. If the buyer cuts the prime trees and abandons the cleanup, the deposit covers repairs. Without it, you're chasing a logging crew that has already moved three counties over.

5. Term and Completion Date

Set a completion deadline (typically 12 to 24 months) with the right to extend in writing. Tie any extension to re-confirming the stumpage rate so a buyer can't lock up cheap timber and sit on it while prices rise.

6. Best Management Practices (BMPs) and Site Protection

This is the clause that protects what you keep:

Erosion and water quality: require compliance with your state's forestry BMPs, including stream-side management zones (SMZs), water bars on skid trails, and proper stream crossings.
Residual-tree damage: set a damages rate (for example, $50–$150 per leave-tree scarred or destroyed) so the crew is careful around the trees you're keeping.
Roads and skid trails: require the buyer to maintain and restore access roads, smooth ruts, reseed disturbed areas, and re-establish drainage.
Cleanup: debris pulled out of waterways, log decks cleaned up, trash hauled off, gates closed and locked.

7. Insurance, Liability, and Indemnification

Logging is dangerous work. The contract should require the buyer to carry general liability and workers' compensation insurance, name you as an additional insured, and provide certificates before work begins. Pair this with a hold-harmless clause and a full indemnification provision so a chainsaw injury or a log truck on the county road becomes the operator's problem, not yours.

8. Default, Suspension, and Remedies

Define what happens if the buyer cuts outside the boundary, misses payments, or violates BMPs: the right to suspend operations, retain the deposit, recover damages (including statutory treble damages many states allow for unauthorized cutting), and terminate. Add governing-law and dispute-resolution language.

How to Sell Your Timber: Step-by-Step

Step 1: Get a cruise. Hire a consulting forester to inventory the stand: species, volume, grade, and a recommended sale type. A cruise typically costs a small percentage of sale value and routinely raises the price by more than its fee.

Step 2: Decide the sale type and silviculture. Clearcut, seed-tree, shelterwood, or selective thinning: match the harvest to your long-term goals for the land, not just this year's check.

Step 3: Mark the boundary and the timber. Flag the sale area and paint the trees (or the leave-trees). This becomes the physical reference the contract points to.

Step 4: Solicit sealed bids. Send a prospectus to multiple reputable buyers and take sealed bids on the same day. Competition, not a single phone quote, is what gets you market price.

Step 5: Put it in writing. Use a full timber sale contract, never a verbal deal or a one-line receipt. Confirm insurance certificates and collect the performance deposit before anyone enters.

Step 6: Monitor and inspect. Visit during the harvest, keep scale tickets for pay-as-cut sales, and do a final walk-through before releasing the deposit.

Common Mistakes Landowners Make

Selling without a cruise. Accepting the first buyer's "estimate" of your own timber is how stands sell for half their value.
No marked boundary. Without paint and flagging, "I thought that was in the sale" cuts across your property line and the residual trees you wanted to keep.
Skipping the performance deposit. It's the only practical leverage you have over cleanup and road repair.
Ignoring residual-tree and BMP damages. A thinning that scars every leave-tree devalues the next rotation.
No insurance verification. Taking the buyer's word for coverage leaves you exposed to an injury claim.
A verbal or one-page deal. Treble-damage and trespass disputes turn on what the written contract actually said.
Forgetting the tax angle. Properly structured, timber proceeds can be a capital gain. Talk to a CPA before you sign.

Timber Sale Contract vs. Lease

A timber sale transfers ownership of the cut wood for a price. A timber or hunting lease grants ongoing use of the land without transferring the trees. If you want recurring income from the same acreage (recreation, grazing, or a future harvest), a lease structure (like the recurring-rent model in a cell tower lease) fits better than a one-time sale. For a single harvest, the sale contract is the right tool.

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A timber sale is too big to leave on a handshake. The difference between a fair deal and a costly one is whether the price, boundary, deposit, BMP standards, and liability terms are written down before the saws start. Contractable generates a customized timber sale contract in minutes: lump-sum or pay-as-cut, with the boundary, performance deposit, insurance, and cleanup clauses that protect your land. No lawyer or forestry-law degree required.