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FAQs

Lease Agreements

What is a contract? What makes a lease a legally binding contract?

A contract is an agreement for a legal purpose entered into voluntarily by two or more parties that creates obligations between them.  To be enforceable, a contract must meet certain legal criteria (i.e. it must have an “offer,” “acceptance,” and “consideration”; each of these terms has a specific legal definition).  In almost all cases, you should consult a lawyer to ensure that you have a legally binding lease.

The lease contract should contain, at a minimum, five essential components:

  1. who the parties are;
  2. a description of the premises being leased;
  3. how long the arrangement will last (i.e. the term);
  4. what the tenant will pay (i.e. the consideration); and
  5. the parties’ signatures.

In some states, to be enforceable, a lease that has a term longer than one year must be in writing.  Verbal agreements and oral contracts can be legally binding as long as they are “reasonable, equitable, conscionable and made in good faith.” Problems with oral agreements may arise if the parties remember the details of the agreement differently. If disputes wind up in court, the argument becomes one person’s word against the other’s.

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How should parties in a lease determine the rent?

There are several factors to consider when determining the rent: market rental rates; the Landowner’s costs; the amount the tenant can afford to pay; and other costs or benefits the farmer or landowner add to the arrangement.

For a more thorough explanation, including alternative methods of payment, see the Determining Rent Fact Sheet  (COMING SOON!) and resources in the Rent section of the Farm Leasing Tool (COMING SOON!)

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What is the definition of agriculture or farming – and what constitutes a “normal” or “generally accepted” farming practice?

The answers to these questions are not straightforward. Agriculture is defined differently in various Federal, state, and local laws and regulations. Perceptions of farming differ as well. For example, is agri-tourism farming? Is turning apples into apple pie on the farm an agricultural activity? Commercial composting? Horse boarding? Aquaculture? Ultimately, it’s up to the landowner and farmer to come to a mutually agreeable definition for them (provided that whatever they agree on does not contradict any laws).

Agriculture evolves, and farmers innovate to be viable. Farming practices considered customary by some may be questioned by others. Some leases simply permit “generally accepted agricultural practices,” while others are more specific. The parties may insert a definition of farming from a local or state regulation, or may use this section to expand or limit this definition through the permitted, restricted, and prohibited uses.

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How do I know what is permitted or prohibited in a lease?

The best way to avoid uncertainty about permitted or prohibited uses is to be as clear and comprehensive as possible in the lease language. That said, it’s impossible to list or anticipate every kind of use. When in doubt, check with the other party, either according to the directions in the lease for doing so, or by simply asking. The adage that it’s “better to ask forgiveness than permission” is not a best practice when it comes to harmonious farm leases.

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What happens if a tenant’s proposed activity is in conflict with an easement on the premises?

It depends upon which document – the easement or the lease – was in place first. If the easement predates the lease, the lease would have to abide by the terms of the easement. If there is an easement on the premises, it should be attached to the lease and referred to if there is any doubt about a particular activity or use. If an easement is going to be placed on property after a lease is in place, the lease has standing, and the easement must reflect the existence of the lease. However, changes to the lease could be negotiated to be consistent with an easement. In any case, the terms of the lease and the terms of the easement should not conflict.

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What is a stewardship, land management or conservation plan?

A stewardship, land management or farm conservation plan sets forth the parameters for how some or all of the premises will be used. It’s not obligatory, but it’s a valuable tool for both parties. The plan could conform to a particular format such as a Conservation Plan prepared by the USDA Natural Resources Conservation Service, or an Organic System Plan required for organic certification, for example. A stewardship plan might be customized for the parties to the lease, spelling out their shared objectives for treating the natural and built features of the premises. A lease might refer to a plan (as a lease attachment or not), who is responsible for preparing it, and the process by which the parties review and update it.  See the Land Use Stewardship Fact Sheet.

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What does “lease to own” mean?

In general, lease-to-own refers to methods by which a lease contract provides for the tenant to eventually purchase the property. One common lease-to-own strategy is to include an “option to purchase” provision in the lease. This clause states that the tenant may purchase the leased premises during a particular time period and according to terms specified in the lease. Another is with a “right of first refusal (ROFR)” written into the lease. With a ROFR, the tenant has an exclusive opportunity to make an offer on the property before it is offered to others. A third method that is sometimes seen as a lease-to-own method is a land contract. See our fact sheet Lease to Own.

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What is an “evergreen lease” and a “rolling lease”?

“Evergreen lease” and “rolling lease” describe ways that the term (the period of time the lease is in effect) is treated in a lease. See our fact sheet “About the Term.” These names do not have precise, fixed legal definitions, and sometimes they are used interchangeably. Therefore, it’s important for the lease language to define the meaning, rather than to rely on the name of the tool itself.

“Evergreen lease” is most commonly used to describe a lease that automatically renews at the end of the original lease term for another term of the same length, or on a month-to-month basis; without any action by the parties.

A “rolling lease” usually means the term automatically extends at the end of each year for another full term. For example, in a three-year lease, at the end of the first year the lease term is another three years, therefore pushing forward the end date of the lease.

 

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What is the difference between a short-term and a long-term lease?

Short-term typically describes a term of 1-2 years, sometimes up to 5 years. A long-term lease can be 10, 20, or 50 years, for example. Leases can be for up to 99 years; there are examples of leases for longer than that. Some states limit the term of an agricultural lease by statute. Typically, longer-term leases are more complex.

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What is a trial period in a lease?

A trial period in a lease is an initial short term of, say 1-2 years during which the parties decide whether to continue. The lease may allow either party to terminate without penalty during the trial period. A lease with a trial period should also specify what happens at the end of the trial to extend the term, or make a new lease. The end of a trial period is also a good time to modify any provisions of the lease.

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What is a “holdover” in a lease?

A “holdover” occurs when a tenant continues to occupy and use the premises after the term of the lease ends.  If the landowner continues to accept rent payments, the holdover tenant can continue to legally occupy the premises.  If this occurs, and if a new lease is not developed, the length of the new rental term is then dependent on each state’s laws and any relevant court decisions.  If the landowner does not accept continued payments, eviction proceedings can occur.

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What is an “option to extend” or “option to renew” a lease?

Options to extend or renew a lease are essentially the same. They give the tenant the ability, prior to the conclusion of the lease term, to continue leasing the premises. An option to renew or extend the lease means that upon the tenant’s exercise of the option (choice), the provisions of the agreed-upon option are adopted for another defined term. The terms of the option can include the length of the new term, a change in rent, and other modifications. If the option rests with the tenant to ask for a renewal, the landlord is obligated to agree under the terms of the option. If there is no option to renew in the agreement, then there is no obligation for either party to renew the lease.

The option typically delineates the timing of notification for extension, what the rent will be under the extension or how it will be negotiated, the number of permissible extensions, how long each extension will be, and which, if any, of the original terms of the lease will be excluded from the extension.

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Can the landowner (or other persons) use the premises that they lease to someone else?

The landowner may want to use the premises or a portion for certain purposes. If so, and if the tenant agrees, the lease should specify those purposes and who the additional users – beyond the tenant – will be. For example, the landowner may reserve the right to hold a wedding or barn dance within the leased premises. Or s/he may want to give the right to use one stall of a barn within the leasehold to a neighbor. If the landowner wants to retain the right to drive on any portion of the premises (such as to access another part of his or her property), this should be spelled out as a reserved right in the lease.

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What rights might a landowner reserve in a farm lease?

Reserved rights might include rights to:

  • use a portion of a barn that is part of the tenant’s leasehold
  • hold a party on a certain hayfield
  • extract minerals
  • hunt
  • harvest timber

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Can the landowner or other persons enter the premises when it’s leased to a farmer?

The landowner or other persons may enter the premises according to the provisions of the lease. The landowner does not have unlimited rights to enter the premises. Typically, the landlord is required to give reasonable notice to enter the premises for inspection or other purposes. If the parties agree that the landowner may enter the premises frequently and casually, this should be acknowledged in the lease. This arrangement gives the landowner a non-exclusive (shared) right to certain parts of the premises. For example, the landowner and the tenant may agree in the lease to have the landowner visit periodically to jointly inspect the premises, or the landowner may permit certain individuals to use an access road crossing the fields. See the FAQ: What rights might a landowner reserve?

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What happens if a leased property is sold to another owner during the lease term?

In this situation, the terms of the lease will govern. The lease will continue to apply to the subsequent owner if so stated in the lease. Or the lease may require that upon transfer, the lease terminates and the existing owner compensates the tenant per the terms in the lease.

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How should liability issues be addressed in a farm lease?

Landowners often worry about liability and insurance when it comes to leasing farmland. Although a legitimate concern, this should not be a barrier to leasing to a farmer. Established mechanisms exist to protect farm property owners and farmers and help to minimize risk. Depending on the types of activities, equipment, other aspects of the farm business, and whether a lease includes a residence, a farm lease should require particular kinds of insurance for both parties.  There are several factors to consider when determining what kinds of insurance to require or expect in a lease. See the fact sheet Liability and Insurance and additional resources below.

For general information on insurance and liability, refer to the resources listed on page 29 of the A Landowner’s Guide to Leasing Land for Farming. This detailed guide also has sections that discuss the types of insurance that should be considered, and who usually pays for them.

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What does “additionally insured” mean in the context of a farm lease?

An additional insured is a person or organization that receives the benefits of being insured under another person’s or entity’s insurance policy. An additionally insured often gains this status by means of an endorsement added to the policy, which typically identifies the additional party—in this case, probably the landlord—by name.

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What happens if the government takes a leased property by eminent domain during the term of the lease?

A lease should specify what will happen in the event the premises are taken by eminent domain (through a condemnation proceeding), whether the parties reserve the right to terminate the lease, and whether the proceeds of a condemnation will be shared between the parties. A lease may also provide that, depending on the extent of the land taken, either party has the right to decide whether it is feasible to continue the operation of the farm or to terminate the lease without penalty, as well as how such determination should be made.

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What happens if one of the parties in a farmland lease dies during the term of the lease?

As a matter of common law, the terms of a farmland lease continue after the death of either party. The deceased party’s interests and/or responsibilities descend to the applicable heirs. However, state laws, the kind of lease involved, and any applicable lease language will determine the outcome in each case.

The parties can also agree to terminate a lease upon the death of either party and can spell out in the lease what happens (e.g., to the crops and any associated income) if this occurs. Additionally, if the landowner dies during the term of a lease, the type of ownership in which the land was held will be relevant. Different states’ laws handle these situations differently. Consequently, it’s worthwhile to address this contingency in a lease.

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What happens if one of the parties, either landowner or tenant, is an entity, such as an LLC, and the entity dissolves?

The operating agreement for an entity will dictate who takes on its rights and responsibilities upon its dissolution. If there is no operating agreement, each state’s corporations and/or intestacy (dying without a will) laws will govern who takes the rights and responsibilities of the lease.

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What are the differences between “maintenance,” “repairs,” and “improvements” in a lease?

“Maintenance” typically refers to basic upkeep to prevent the deterioration of the facilities, such as annual servicing, repainting, or washing. “Repairs” generally keep the property in its ordinary, efficient, operating condition or restore the property to its original operating condition. “Improvements” can include new permanent structures, such as fencing, that materially enhance the value of the property or substantially prolong its useful life. A capital improvement materially enhances or prolongs the life of the property. For more on this topic, see our fact sheetMaintenance, Repairs and Improvements

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What are the tax implications of repairs versus improvements?

The IRS treats repairs and capital improvements differently. A tenant can deduct the cost of repairs. In contrast, the cost of capital improvements are added to the landlord’s tax basis (relating to the value of the asset) in the property.

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What is a ground lease – and how are improvements addressed in it?

In a ground lease, the tenant leases the land (or “ground”) and owns the improvements on it. The parties might enter into a ground lease in which the tenant buys the house or a barn or builds a new structure on the leased land. The tenant may then sell the asset (for example, the house) and thereby recoup his or her equity. Ground leases are common in the commercial sector; less so in agriculture. However, they are a creative option. One advantage is that the tenant builds equity in the owned infrastructure. See Equity Trust for more information on ground leases for farming.

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How are improvements to the soil and other natural resources considered in a lease?

Unless otherwise accounted for in the lease, a farmer’s soil improvements are not compensated. Some leases place a value on natural resource improvements as part of the overall calculation. See our fact sheet.

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To whom do new structures or other improvements to the premises belong?

A lease should specify the answer to this question. Generally, if the structure was placed by the tenant at his or her expense, and it can be removed, it belongs to the tenant. The lease will say if and how it should be removed at termination, or how the tenant will be compensated for the investment.

Where the improvement is permanent there are several considerations and ways to address ownership and disposition. See this fact sheet.

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Can a tenant terminate before the end date of the lease?

Yes, a tenant can terminate before the end of the lease, but depending on how the lease is written, s/he may be liable for the remaining rent. A lease may permit the tenant to terminate at any time with notice. If the landowner defaults, as defined in the lease, this may constitute grounds for early termination without penalty to the tenant. See fact sheet “Termination…”.

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Can a landowner terminate before the end date of the lease?

It depends. If a tenant defaults and does not “cure” the default, as defined in the lease, this may constitute grounds for early termination. Additionally, some leases include language permitting either party to terminate before the end of the term as long as they provide written notice before terminating. Note, however, that if the lease is for five years, but the landlord can give a six-month notice of termination, then in effect, the tenant has six months’ security. If a landowner terminates early, s/he may owe the tenant the value of their unharvested crops, at a minimum. See our fact sheet “Termination …”.

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What happens if a farmer-tenant has crops in the ground when his/her lease terminates?

In a farmland lease arrangement, annual crops produced by a tenant legally belong to the tenant. How this issue is addressed depends on the type of crop, the language in the lease, and other factors. The best approach is to include a lease provision allowing a tenant to come back on the leased property to harvest crops after the lease has terminated. In some jurisdictions, if a lease does not address the issue, the “doctrine of emblements” may apply. In some states the common law “doctrine of emblements” guarantees the farmer’s right to harvest and carry away his or her crops (“emblements”), even if the crop matures after a lease terminates.

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What does “default” and “cure the default” mean?

A “default” is a failure to comply with a provision in the lease. “Curing” or “remedying” the default means correcting the failure or omission. A common example is a failure to pay the rent on time. Failing to meet any of the requirements in a lease can legally constitute default, e.g., not showing evidence of insurance, removing trees if prohibited by the lease, not repairing a structure. A landlord can also default by not performing certain responsibilities. Typically a lease will give the parties adequate notice and time to fix the problem before more drastic action is taken.

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What are a tenant’s obligations if his/her lease is terminated due to tenant default?

If a lease is terminated due to the tenant’s default, the tenant’s obligations depend on the terms of the lease. The tenant could be required to pay the rent for the full (or remaining) lease term as damages. Typically all provisions in the lease pertaining to termination would also apply.

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What is the difference between facilitation, mediation, and arbitration?

“Facilitation” is the use of a neutral third party to help multi-party groups accomplish the content of their work by providing process leadership and expertise. “Mediation” is the use of a neutral third person to help parties reach a voluntary resolution of a dispute. It is informal, confidential, and flexible, focusing on interests rather than positions, and on practical and legal choices. “Arbitration” is an alternative to litigation in which an arbitrator or panel of arbitrators listen to the positions of the disputing parties in a relatively informal proceeding and then issue a decision on how the situation should be resolved. ADD LINK TO EXTERNAL RESOURCE?

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What types of farm leases and lease provisions should be in writing?

All agreements to use agricultural property should ideally be in writing. In some states, a lease for more than one year must be in writing.  Any changes to the lease terms should be in writing. Also, any financial transaction such as for improvements should be put in writing. Major permissions (e.g., constructing an improvement, engaging in a use not clearly permitted, etc.) should be required to be in writing by the terms of the lease. Generally, such written documents should be signed by the parties.

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What’s the best way for the parties to a lease to communicate permission or approvals to each other (e.g., regarding a particular use of a barn)?

Approvals or permission for material changes or actions pertaining to a lease should be communicated in writing and delivered as required in the lease (e.g., by surface mail, email, in person). This way, whenever questions arise about who said what to whom, there is a record showing the timing and substance of the approvals.

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What does it mean to “record a lease,” and why should the parties to a farm lease do it?

Recording a lease means that it (or a Notice of Lease) is submitted to the public record, usually at the local Registry of Deeds following the signing of it by both parties. Generally, recording of the lease protects the tenant against subsequent claims to the property. If the Landowner dies or sells the property during the lease term, a recorded lease helps ensure that the new owner adheres to the lease agreement (if that is specifically stated in the lease). Some states require that certain kinds or length of leases be recorded, so parties should review their applicable state laws.

 

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Who can attach a lease or Notice of Lease for farmland to a deed at the Registry of Deeds?

A landowner who is leasing out farmland has the right record the lease or Notice of Lease. The farm tenant may record the lease or Notice of Lease. The parties should determine whether the lease or the Notice of Lease should be recorded. It’s in the tenant’s interest to at least record a Notice of Lease.

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Why does Land For Good recommend farmland leases be in writing?

Informal (unwritten) agreements can be acceptable and work much of the time, but they may not help resolve unforeseen disputes, and would likely not be legally enforceable if disputes arise. A written document is more likely to be clear and legally enforceable.  That’s why Land For Good strongly recommends that lease agreements are thorough, carefully crafted, and put into writing. This makes the agreements legally enforceable and enables all parties to refer to a written document if  a question arises.  (Learn more about leases in the “Farmland Tenure” and “Leasing Farmland” lessons in our Acquiring Your Farm online tutorial.)

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What is non-cash or in-kind consideration?

Non-cash or in-kind consideration is an alternative to cash rent. Examples include a CSA share, cordwood, or property maintenance services (not otherwise required by the lease). Both parties should consult their respective advisors to understand the tax considerations associated with these kinds of arrangements. See In-Kind Rent Fact Sheet.

For a lease to be a legal contract, there must be some exchange of value. If there is “no rent” at all, the rights conferred are considered a gift, which renders the lease unenforceable, and subjects the relationship to different tax consequences. Therefore, an agreement in which the land user pays no rent is not a legal lease contract. Items, services, and even promises qualify as in-kind consideration. The value contributed by each party doesn’t need to be equal – it just needs to have some value. See the In-Kind Rent and the No “Free Rent” Fact Sheets.

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What is a share-lease?

A share lease (also referred to as crop-share or livestock-share) is an agreement in which the rent is a share of the crop or livestock produced on the leasehold, or more accurately, the value of the production. The landlord does not necessarily receive the actual product. A share lease may split production costs and profits 50/50 (or some other proportion). A share lease reduces risk to the tenant, while the landowner must be willing to take on a share of the expenses, risks and rewards of the operation.

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What are the tax consequences of paying or collecting rent from a farm lease?

Farm landlords who are not involved in the farm operation are subject to income tax on their rental income. Landowners who “materially participate” in the farming operation must include the rental income as earnings that are subject to self-employment tax. According to the 2014 IRS Farmer’s Tax Guide, the test of whether a landowner “materially participates” is if the arrangement with a tenant specifies the Landowner’s participation and s/he meets certain criteria demonstrating that participation.

Farm tenants can generally deduct rent paid on their Schedule F (the IRS form that itemizes farm income and expenses). However, if any part of that rent is considered payment toward a purchase of the farm (i.e., in a lease-to-own provision in the lease), that part might be considered a conditional sales contract, not rent, and is treated differently by the IRS.

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Is an oral agreement binding?

A written agreement is preferable to an oral agreement in almost every case, and sometimes it is required.  While an oral agreement can be legally binding (e.g., if it governs a term that is shorter than one year and/or if it is “reasonable, equitable, conscionable and made in good faith”), it is often harder to prove than a written agreement.

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What’s the difference between a lease and a license for farmland?

A lease is a conveyance of interests in property. A license is a permission to use the property. A license does not convey an interest or right in the property. This legal distinction is important. A license can easily be revoked, whereas terminating a lease is more complicated. Also, a license will end upon the sale of the property or demise of the licensor. Some public entities use licenses instead of leases for these reasons.

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What’s the difference between leasing and renting a farm or farmland?

In practice, the terms “leasing” and “renting” are commonly used synonymously. As a technical matter, leasing typically implies use of the land for particular purposes for a longer-term period of time (e.g., a year or longer), while the term “rent” usually either means the money paid by the tenant or involves a short-term agreement (e.g., month-to-month).

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Who is the landowner and who is the tenant? (And what if there’s more than one landowner and/or tenant?)

The landowner is the entity (for example, a person, company, agency, trust, or organization) that legally owns the property being leased. All owners should be listed in the lease as the landowner. The tenant is the entity (person, company, or organization, etc.) that is acquiring use rights and using the leased property. Here too, all tenants must be named. If the tenant is a group of farmers leasing as one entity, that entity must be named. If the farmers are leasing separately, each will have his or her own lease and be named as tenant on that lease. The parties named as landlord and tenant are jointly responsible for the terms of the agreement

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Who should be named in the lease?

The legally responsible parties should be listed in the lease as landlord (or landowner or lessor) and tenant (or farmer or lessee). It’s important to clearly state the name and contact information for each party’s primary point of contact. Sometimes the contact person is a representative of the landlord, a land manager or lawyer handling the lease.

Before entering into a lease, both landowner and tenant should confirm that they are who they say they are and that they each have the authority to enter into the lease. For example, if a corporation or trust owns the property, then the tenant should confirm that the corporation or trust legally exists and that the person signing the lease has the power and authority to enter into the lease.

Most landlords are careful to check the credit and reputation of prospective tenants before entering into a lease. Tenants also should determine that their prospective landlords actually own the premises and are solvent. To avoid unintended personal liability, the named parties in the initial “recitals” should be consistent with the forms of the signature lines at the end of the lease.

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If I’m leasing land and a residence, should I have a separate lease for the residence?

It depends. Sometimes it makes sense to rent the “whole farm” and sometimes a separate rental agreement for the residence is more appropriate

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What is a lease?

A lease is a contract between two parties: the transferor of certain rights in property (the “landlord” or “lessor”) and the transferee, the recipient of those rights (the “tenant” or “lessee”). A lease signifies a transfer of certain property rights or interests.  An “interest” is any right, claim, or privilege an individual has toward real property (land and permanent fixtures). In the case of a lease, such interests are known as “leasehold interests.” A lease governs the relationship between the parties as well as their relationship to the real property covered in the lease for the time that the contract is in force.

 

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What is a “leasehold interest?”

An “interest” is any right, claim, or privilege an individual has toward real property (land and permanent fixtures). In the case of a lease, such interests are known as “leasehold interests.”

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What if the leased premises includes a residence?

If a dwelling is included in the leased premises, various statutory provisions apply. For example, by law the residence must be habitable. Landlord-tenant and public health laws in each New England state regulate residential rental agreements to ensure safe and habitable living conditions for tenants. For this reason it sometimes makes sense to write up a separate lease for the residence, but it is not required. Additionally, if a residence is part of the lease there are different insurance considerations. (See the fact sheet “Describing the Premises” [and/or “whole farm lease” versus multiple leases]?

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What if the leased premises include perennial crops, such as orchards or blueberries?

The lease should specifically address how these crops will be valued, what will occur at the end of their productive life. If the tenant plants perennial crops on the premises, the lease should address this too. See this [FACT SHEET.]

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What if the leased property is not in “good repair”?

Unless the parties agree to the contrary, the tenant accepts the premises in “as is” condition. See Sample Language for “As is” condition.

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What constitutes a good description of the premises in a farm lease – and why is it important?

A clear, precise description of the boundaries of the premises and any buildings or structures, along with any unusual characteristics, should be included in a farm lease. The parties need to know exactly what’s subject to the agreement, as do many third parties to the lease, such as an appraiser, a judge, or subsequent owner. All need to easily identify what’s included – and not included – in the leased premises and understand its condition at the outset of the lease. Thus, a clear and thorough description of what is (and is not) being leased is paramount. An adequate description depends in part on how elaborate the premises are. It could suffice to have a sentence or two about the location and external boundaries of a hay field. The description of the leased premises should include an address, a description of the boundaries, and a plot plan or diagram (which is typically attached as an appendix to the lease document). GIS and/or assessor maps, and photos (aerial, satellite and others) may also .

It’s also important that the lease establish a baseline condition of the premises so that the two parties’ discussions about expectations for maintenance and repair have a common starting point. Thus, more elaborate descriptions would include narrative descriptions of baseline conditions, photographs, building inspection reports, etc. 

Additionally, anything that is not defined as being part of the premises at the outset of the agreement is not subject to the agreement unless and until the lease is revised to include new areas or new components.  

See the Fact Sheet Describing the Premises

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What if I’m only leasing a structure, such as a barn, but not the land?

A lease can be drawn up for a barn or other structure. The basic lease framework applies (i.e. list the parties; what is being leased, including the condition; the term; and the rent). The lease should state who is responsible for utilities, maintenance and repairs, and rights of access (for example, via a road that is not part of the lease) for that structure.

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How is the “property” different from the “premises” in a farm lease?

The “property” refers to the entirety of the land, buildings, structures, equipment, etc., owned by the landowner, while the “premises” refers to only that portion of the property and/or components of it that are the subject of the lease. Explicitly listing each component of the premises (e.g., the barn, the maple sugaring tubing and syrup tanks, etc.) in a lease helps ensure that each component will be subject to the terms of the lease. Sometimes “premises” and “property” are used synonymously, so be alert to what is meant in a particular context.

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What are the purposes and types of documents that may be attached to a lease agreement?

Attachments are documents that are referenced in the body of the lease but are not in the lease itself. Attaching documents helps streamline the actual lease document. And documents that are not part of the lease are easier to change, without having to go through the process of amending the lease. The following are examples of documents that might be attached to a lease:

  • Map(s)/photograph(s)/drawing(s)
  • Written description of property
  • Baseline conditions report
  • Evidence of insurance
  • Land use, stewardship or conservation plan
  • Conservation easement
  • Recording of the Lease, Notice of Recording or Memorandum of Lease

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How do I find farmland leasing rates for my area?

There is no simple method or standard for determining farmland leasing rates. Cash rental rates for farmland depend on the local market, the quality of the rented parcel, and the landowner.

County-level statistics can be useful in getting a general read on what renters are paying for farmland. The USDA National Agricultural Statistics Service (NASS) compiles county-level statistics for per-acre cash rental rates for irrigated farmland, non-irrigated farmland, and pasture. NASS has maps of average lease rates by state. One can subscribe to the NASS Cash Rents Report by region (Northeast) and cash rents can be searched using the NASS Quick Stats tool.  For the “Cash Rents” data in QuickSTATS, paste this into your browser: https://quickstats.nass.usda.gov/?sector_desc=ECONOMICS&commodity_desc=RENT&agg_level_desc=COUNTY

Searching “[state name] farmland lease rates” online will also yield resources, including PDF versions of the NASS reports for your state and any state extension resources.

In general, cropland rental rates are higher than hay and pasture land. New England cropland lease rates can range from $40 per acre/year to $300 per acre/year. If the soil is decent, and there is no infrastructure such as buildings, municipal water, fencing, etc. a reasonable cropland lease rate might be $75 per acre/year.

Landlords and farmers should not, however, base rental rates solely on benchmark data like NASS county-level data. These are only averages that can obscure big differences in land rental rates across a county. Actual farmland rents may diverge significantly from the available benchmarks for a variety of reasons specific to the parcel, area, and owner.

When determining rental rates, an understanding of the going rates in your area is critical.  Landlords and farmers have several potential sources of information, including other landlords and producers, ag lenders, Farm Service Agency employees and ag real estate agents. Some state extension services have information on rental rates. The staff at your local Conservation District or USDA Farm Service Agency offices might have a pulse on local cropland leasing rates.

Landlords might consider basing their rental rates on land values. Others base lease rates on the landlord’s carrying costs, which would be different for town-owned farmland than privately owned farmland.  Some farmers and landlords negotiate the rent based on a farmer’s business plan, which can show what the business can reasonably carry for land rent. Many farmers and landowners work out a payment that is flexible, such as one based on how well the farmer does financially that growing season, instead of a fixed amount of cash per acre.

Typically, landlords and renters begin thinking about rental rates for the next crop season soon after harvest.

Our Toolbox for Farm Leasing contains guides for landowners and farm tenants, as well as lease templates. See also UVM Extension’s Online Tools For Determining Farmland Rental Rates.

Coming soon! If you want to be notified of the launch of our interactive, build-a-lease tool, subscribe to our email list.

If you have a story of a successful or unusual example of leasing farmland, we’d love to hear from you. Contact us!

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