September 29, 2020
Several issues related to leases still confuse not only farmers and landlords, but also attorneys and professionals. Following are some clarifications on these issues:
Binding contract. Farm leases, whether written or oral, are legal, binding contracts. Under Missouri law, a lease is a binding contract to which both parties and their assigns (heirs or buyers) must adhere. To clarify, heirs (children or grandchildren) are bound by a lease as well as new buyers of the property.
For example, a five-year written lease, where the landowner dies in the second year of the contract, will continue for the three remaining years. If either party does not fulfill the terms of the lease, then the other party has the right to force the contract through legal action. If either party wants out, it could cost him or her. Written lease contracts are always preferable.
Terminating a farm lease. A written farm lease should have a termination date on the contract. If it does not, then it is a year-to-year lease. At the conclusion of a written lease, another written lease must be signed, or it will become an oral lease if it continues. Within the first year, either party of an oral lease can terminate without the 60-day notice.
Oral lease termination after Year 1 is more complex in Missouri. An oral lease can only be terminated by a written notice to either party 60 days before the anniversary date of when the lease was first discussed or agreed upon.
For example, two parties agree on a farm lease on Feb. 1, 2016, and the lease continues. The landlord wants to terminate for 2021. The landlord must send the tenant a written notice no later than Dec. 1, 2020, or the tenant can force another year.
The initial agreement date is when the lease began, not when possession occurred. For example, if a tenant does not take possession until April 1, the lease date is still Feb. 1, when the lease was agreed upon. March 1 is not the date all leases start in Missouri. The termination date in Iowa is Nov. 1, so notice is required before Sept. 1. However, this does not apply to Missouri land.
Oral lease concerns. Oral agreements have some unique concerns. The landlord does not legally have the right to inspect their property during the lease term. Also, the landlord cannot legally hunt or let someone else hunt on the property since the tenant has those rights.
Oral leases limit what a landowner can make the tenant do and not do. Oral leases that have gone on for many years can be difficult to remember.
Specific lease concerns. There are some extra concerns to address in a lease.
First, does the landlord or tenant pay for lime? If the tenant pays, is he or she assured the farm will be theirs for future years to justify the expense?
Second, if the tenant wants to use a grain bin or buildings, is that a part of the lease? If not, how much will the landlord charge?
Third, is there a specific time the landlord wants animals off the pasture? For a specific number of days?
Fourth, are subleases allowed? It can become an issue, especially if a son or daughter of the tenant wants to farm.
Fifth, does the landlord want the property mowed or kept up?
Sixth, is there a limit on the number of acres in annual crops?
All of these concerns can be addressed in a written lease.
Written lease forms are available at county Extension offices or by contacting your agricultural business specialist. Legal lease forms are available at a small fee. MU Extension will hold lease classes from 6 to 9 p.m. Nov. 10 and Jan. 14. Call local the local Extension office for further details.
Koenen is a University of Missouri Extension ag business specialist. He writes from Unionville, Mo.
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