Are we replacing trust and common courtesy with paperwork and documents that will uphold in a court of law?
Maybe so, but developing a written farm lease doesn’t have to erode a personal relationship between a landowner and tenant. In a day of increasing absentee land ownership, developing a written lease agreement is probably more important than ever.
In general, written lease contracts help landowners and tenants think about and agree upon essential considerations involved in leasing a farm. Having a written contract adds clarity to the lease agreement and helps to ensure accountability between the landowner and farmer. Many potential misunderstandings and disputes could be avoided through the development of a written lease.
A written farm lease should contain at least five main elements. First of all, the lease should contain a description of the land and the names of the parties involved in the agreement. Secondly, the term (or length of time the lease is to be in effect) should be agreed on and be stated in the contract. Next, the lease should describe the rental rate and/or payment type.
Basically, there are five common types of rent. They are crop-share rent; livestock-share rent; cash rent; flexible cash rent; and farm machinery, equipment and buildings rent. A description of each of these types of rent can be found in the MU Extension publication G426: Farm Lease Agreement, which can be found on the University of Missouri Extension Website exte nsion.missouri.edu.
The fourth element that should be included in the lease is a “Right of Entry” statement. This statement should describe the landowner’s legal right to enter the property. Without this kind of statement, the tenant has the right to treat any person who enters the property as a trespasser—even the landowner!
The final essential element to a lease is signatures. Signing the agreement makes it a formal contract. All co-owners of the property, including husband and wife, should sign the lease agreement when property is held in joint tenancy or tenancy by entireties.
In addition to the five essential elements described previously, other items may be appropriate to include in a lease. One additional element to include is a description of operating expenses and how they will be allocated between the parties of the contract. Two more items to include are explanations of the conservation practices to be implemented during the contract term and who is responsible for repairs or improvements to the property. Also, a description of a record-keeping method may be included; this aids in determining which party is accountable for costs pertaining to certain elements of maintaining the property.
Finally, the parties may wish to include a statement of non-partnership. This statement explains that the contract between the parties does not establish them as business partners, which may have otherwise been implied.
In conclusion, developing a written farm lease is a way to hedge against uncertainty. Yes, a handshake and a man or woman’s word is still valuable, but considering what is at stake—money, peace of mind, and reputation—taking the time to develop a written farm lease may be well worth your effort.
Area Farm & Ranch News
The value of a written farm lease
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