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:
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.