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Why you should have a written farm lease

Why you should have a written farm lease

As landowners calculate farmland rental rates for the coming year, they may want to consider completing the process with a written cropland rental or lease agreement. Such a document can go far to protect both landowners and tenants, says Rory Lewandowski, an Ohio State University Extension agriculture and natural resources educator.

While that may sound intuitive, there are a surprising number of cropland rental or lease agreements that are verbal agreements rather than written legal documents, Lewandowski said.

“Not only does a written agreement clarify the terms and conditions of the lease agreement, it also can help prevent legal problems down the line and help prevent potential problems from arising between landowners and tenants,” he said. “Although some have used verbal agreements for years, as the agriculture industry becomes more complex with a more volatile market, it becomes tougher to maintain verbal agreements.

“Without a written agreement, that could lead to more risk, especially if something comes up that wasn’t mentioned in the verbal agreement.”

Some issues typically included in a farmland lease agreement include a legal description, address and acreage of the land parcel and the signature of all landowners and the tenant, Lewandowski said.

“Any lease over three years must be acknowledged, either by a notary public or official to certify signatures, and the lease must be recorded in the county where the land exists,” he said.

Other questions that should be addressed in the written agreement include:

* Does property transfer terminate the lease?

* Does the death of either party terminate the lease?

* Can a tenant recoup expenses for tillage, nutrients, seed, cover crops or even a portion of a hay crop if those expenses were incurred before the landowner terminates the lease?

Creating a written lease agreement doesn’t suggest a lack of trust by either party, Lewandowski said.

“That’s not it at all - a written agreement is done for the benefit of all the parties involved,” he said. “It’s really about trying to reduce the amount of risk or uncertainty inherent in a verbal agreement, a way to think through all kinds of questions or potentially problematic situations before they come up.

“Really, these types of documents can help to prevent problems from arising.”

Originally posted by Purdue University.

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