June 26, 2014. Often time’s farmers and ranchers are content with doing business on the strength of their word and a simple handshake. However, with the increasing complexity of modern agricultural operations, and the varied financial and legal implications, this informal way of conducting business can lead to numerous problems. By drafting complete and comprehensive written lease agreements the parties can not only remove any uncertainty about the scope of the lease agreement but also protect themselves from subsequent disputes that could arise.

Written farm leases don’t necessarily need to be overly complex and complicated documents, although certain scenarios may require some additional complexities. A best practice for farmers and ranchers is to format a standard written lease agreement that covers many of the following issues:

1) Identification of the parties

2) Description of the purpose of the lease

3) Description of the property to be leased

4) The term of the lease

5) Terms and conditions regarding renewal of the lease

6) Lease price and payment terms

7) Access

8) Responsibilities of Landlord/Tenant and Prohibited Activities

9) Natural Resources Rights

10) Reimbursement of expense

11) Property Improvements

12) Insurance

13) Federal Farm Program Payments

14) Requirements to Report Information

15) Production Inputs

16) Farm Management Practices

17) Actions/Activities triggering Default

18) Assignability of lease and/or right to sublease

19) Notice provision

20) Termination procedures

21) Additional Provisions to Note:

  • Confidentially and/or non-disclosure
  • Indemnification
  • Alternative dispute resolution
  • Choice of law and forum
  • Severability
  • Execution in counterparts
  • Not a joint venture

By putting together a simple written lease agreement that covers these topic areas, you can provide clarity concerning your lease arrangement and substantially reduce the potential for future disputes. For additional information regarding Farm Land Leases please register to attend the upcoming Farm Business Law seminar (June 30, 2014 – Sioux Falls, SD) where attorney Chris Barondeau will be presenting on Negotiating and Drafting Farm Land Leases. For questions regarding Ag Law, writing a farm lease, or the upcoming seminar, contact the Goosmann Law Firm at info@goosmannlaw.com or call 712-226-4000.

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