Have you ever played the game telephone? You know, where you whisper something to the person next to you, they whisper it to the person next to them and so on until that sentence makes it around the circle.

Usually, what the last person hears is vastly different than what you originally said. “I like to buy pickles from the store” turns into something like, “At night, I tickle the door.”

Tony Crowell of Gordon & Associates P.C. drew the comparison between “telephone” and verbal leases during the Indiana Farm Bureau Understanding Agricultural Contracts and Leases workshop.

“With telephone, 99% of the time it isn’t anything like what the initial statement that was made,” Crowell says. “That’s kind of what we deal with when we work with verbal leases.”

What to include

During the INFB workshop, Crowell polled attendees to see how many people opt for verbal leases. One-third of attendees responded that they are involved with verbal leases in some form.

This prevalence of verbal leases calls for a refresher of what is required to make them valid. Crowell outlines necessary components to uphold these agreements:

Parties. Ensure you are entering into a lease agreement with the right party. Know if you are dealing with a corporation, a partnership, an individual or an LLC. It is important to know if the person you are making the agreement with has the authority to enter that agreement. This goes for both tenant and landlord.

“In a situation with a landlord, you need to be very careful that the landlord has the right and the ownership of that land to enter into the lease agreement with you,” Crowell says.

Rent. Determine what the rent arrangement will be, whether that is a per-acre dollar amount, a crop share or some sort of hybrid arrangement.

“I would argue that if you don’t have an agreement on rent, you don’t have an agreement,” Crowell says. He adds that it is important to have a specific rent agreement in a written lease. If you opt for a verbal lease, ensure both parties are on the same page.

Term. When you enter a verbal lease, the term length may be unclear. If you make a verbal agreement without specifying the term, Indiana law states that the term is one year with the possibility for renewal.

However, if you specify the term and that term exceeds three years, you must record the agreement in writing in the county where the land is located. This protects the tenant in case the landlord dies or sells the land.

“If that agreement was not recorded and the recipient of that land didn’t have actual knowledge of the lease, then you’re going to have a difficult time enforcing that lease against that third party,” Crowell says.

Termination. A verbal lease renews automatically unless the parties terminate the agreement according to what the law requires. So, if you have a one-year lease, it will renew for one-year terms if not terminated.

Unless the verbal lease provides for a specific method of termination, Indiana law requires a three-month written notification to the other party to terminate that lease. This causes some confusion if the verbal lease does not have a clear end date.

“Trying to determine when you give that notice to terminate that verbal lease may be very difficult,” Crowell says. Even if you have a verbal lease, you cannot verbally terminate the lease unless the termination date was included when entering the agreement.

Ultimately, Crowell advises using written leases when entering agreements to avoid confusion and misunderstandings. It is a way to protect both parties.

“I’d try to stress that, ‘It’s not because I don’t trust you, it’s just that I don’t want you to get hurt because we have a disagreement over our verbal agreement,’” Crowell says. “‘It protects you as well as it protects me if we put things in writing.’”