Many readers have probably heard this story: A farmer leases land for years on a handshake deal, the landlord dies or receives a better rental offer, and the landowner tries to boot the farm tenant before planting season. It’s an unfortunate series of events, and one that happens all too often in the farm community.
Ohio passed a new law that targets this fact pattern and protects the farmer. House Bill 397, which Gov. Mike DeWine signed into law on April 21, provides new rules for a landlord seeking to terminate an existing crop lease. Reps. Brian Stewart and Darrell Kick co-sponsored this impactful bill. The law adds Ohio to the list of Midwestern states with similar rules.
HB 397 states that a verbal crop lease, or a written crop lease that is silent on termination terms, can be terminated by the landlord by providing written notice before Sept. 1 in the year the termination is to be effective. If this written notice is provided, the farm lease is terminated on Dec. 31 or upon the completion of harvest, whichever is sooner.
Let’s pretend a farmer has maintained a handshake, year-to-year lease with a landowner for 10 years. The farmer completes harvest, applies cover crops and prepays inputs at the end of the year. The landowner dies Feb. 1, and the heirs provide a termination notice on March 1 to prevent the farmer from planting.
With HB 397 now in play, the farmer can proceed with farming the land in the upcoming crop season, and the lease is terminated upon the earlier of harvest completion or Dec. 31. The law would also protect the tenant farmer if the same heirs sought to sell the farm right away.
What type of farm leases are not subject to the law? Rental arrangements for timber, equipment, livestock or buildings do not receive the protections of HB 397. Furthermore, if a farmer and landlord have signed a written lease that outlines lease termination procedures, that written lease supercedes the new law.
This new law is effective July 19, meaning landlords who wish to terminate leases at the end of 2022 must provide written notice by Sept. 1. Whether you are a landowner who is interested in terminating, or a tenant who receives a termination notice, make sure you consult legal counsel to ensure the new law is followed.
Conklin is an attorney and new owner of Wright & Moore Law Co. LPA.