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A Few Important Farm Lease Terms

Farmer using laptop in ploughed fieldFor those of you who are thinking about your farm lease, here are a few terms to consider:

Parties: Ensure that all intended parties to the lease are named and adequately identified by the inclusion of their addresses or other unique identifying information.

Purpose: It is recommended that farm leases note the purpose of the lease (e.g., corn production).

Property Description: Ensure an accurate description of the leased ground is included. This should include a list of buildings and structures the tenant has access to.

Lease Term: The length of the lease term should be clearly stated.

Renewal Terms: Include provisions allowing for any renewal of the lease and for notice of intent to renew (or not renew). A good farm property lease should also establish agreed-upon compensation for any fall fieldwork completion, in the event of nonrenewal of the lease.

Lease Price & Payment Terms: Whether your agreement involves crop sharing, fixed-cash, flex-cash, or some other arrangement, your lease price should be spelled out in writing. Additionally, payment terms should be memorialized (including when payment is due, where it should be sent, and how rent can be paid). Furthermore, the lease should clearly state who is responsible for property taxes, farm insurance, and utilities.

Duties and Prohibitions: The lease should clearly state the duties and prohibitions of both the landlord and the tenant in the farm lease. For example, it might be the landlord’s duty to perform all repairs and maintenance for the property.

Rights to Natural Resources: The lease should state whether the tenant or landlord will retain rights to natural resources on the property including, but not limited to: wind rights, solar rights, mineral rights, timber rights, fishing rights and/or hunting rights. It might be appropriate to also describe recreational rights such as camping.

Reporting Requirements: You should also discuss and include any reporting requirements, such as what must be reported, along with when and how the tenant must make those reports. For example, does the tenant have to provide grid sampling, yield monitor data, weigh wagon results or test plot results to the landowner? Can the landowner ask the cooperative how many bushels of grain were delivered?

Default: Your lease may include a list of actions that count as defaults in the terms of the lease, specifying whether part or all of the listed defaults can be cured or waived by the other party.

Ability to Assign or Sublease: The lease should state whether the tenant can assign or sublease its obligation to another farmer.

Notice: Include notice provisions, to specify how and when to give notice of default, notice of intent to terminate the lease, or any other notice needed to make the terms of the lease work.

Termination: The lease should include procedures for terminating the lease, either voluntarily or involuntarily (for example, in case of a default).

This is an excerpt from my book that I co-authored with Pat Dillon, an Iowa food and agriculture lawyer and author of this Iowa agriculture law book.  You can purchase a copy of the book “Field Guide:  Legal Guide for New York Farmers and Food Entrepreneurs” on Amazon.com.  A new (more user-friendly) Kindle version of my book has been recently uploaded (only $9.99 or $2.99, if you own the hard copy of the book). 

Disclaimer:
"This blog is for informational purposes only and is not intended to create an attorney-client relationship. It is recommended that you speak to an attorney licensed in your jurisdiction before relying on the information in this blog."

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