As farmers, our connection to the land runs deep. Whether we own our land outright or lease additional acreage to maintain operations, understanding the legal landscape of unrecorded real estate leases is vital to ensure your farming endeavors remain secure and prosperous.

As a lawyer, I recently was faced with the following unfortunate fact pattern: Farmer enters into a written lease for a term of three years with a landowner. Landowner then sells the land but doesn’t disclose to the buyer that there was a written lease in place. After the land is sold, farmer attempts to enter the land to begin tilling, only to be told by the new owner that the land has been leased to someone else, since the new owner had no clue about the existence of the farmer’s lease.

You can imagine that all heck broke loose, but who was in the right?

Generally speaking, there are three scenarios involving agricultural leases:

The first two scenarios make a lawyer shudder, because they expose the tenant-farmer to risk that the land will be pulled out from under them if it is sold. The third scenario is considered ironclad insofar as protecting the tenant’s rights to continue to farm the land in the event of a sale.

Wisconsin and most other states generally have what is known as the bona fide purchaser rule. This rule states that an unrecorded interest in land (i.e., a lease, easement or other agreement) is voidable by a subsequent owner of the land where that owner did not have actual or constructive notice of existing rights in the land.

Put differently, even if you have a written lease, if that lease is not recorded with the county register of deeds, and if the owner fails to disclose the existence of the lease to the buyer, after the sale, the buyer has a legal basis to void the lease and eject you from the land. Your recourse is to then sue the prior owner for damages, which in many circumstances does you little good where, for instance, you need the land to maintain compliance with permitting.

What does “actual or constructive notice” entail? Well, ideally one can just record a copy of the lease with the county register of deeds. However, in some circumstances, there is resistance to record a lease because of concerns about disclosing rental rates. In this circumstance, instead of recording a copy of the full lease, one could instead record a “memorandum of lease” that simply states a lease exists for a certain term and identifies the tenant. This basic notice is usually sufficient to ensure a subsequent purchaser has notice of the lease.

Always put leases in writing

The point is, you should always have a lease in writing, and you should always strive to make sure that lease is recorded, or at least a memorandum is recorded. This is especially important when leasing from elderly landowners who may pass away without ever alerting their estate representative of the existence of the lease.

In the world of farming, uncertainty is a constant companion. But when it comes to land, clarity and preparation can make all the difference. By understanding the nuances of unrecorded leases and conveyances, you safeguard your livelihood and ensure that your farming operations continue uninterrupted.