farm operation 3With the changing economy, many farmers today are turning towards farm leasing rather than buying the land. Gone are the old days when a man’s good word and a handshake was all the agreement you need. With Farm leases being an integral part of any operation written lease agreements are crucial.  A written lease will protect all parties involved and will stand up better in court, not to mention benefit the landowner and the farmer by starting off with a solid relationship and letting the landowner know that the farmer is in charge of how the land is farmed.  It also eliminates any conflicts that may occur between the farmer and landowner.  Here are some things to consider adding to a lease agreement so there aren’t any problems in the future.

The lease agreement between the parties is critical in negotiating what rights and duties exist between landowners and farmers.  With a written lease all parties can outline their responsibilities, rights, desires and needs of the growing season so there are no surprises.  Some of those rights can be when a landowner can come onto the land whether it’s to make repairs or collect rent.  The lease can also include when a landowner wants to sell their land before the lease is up the new buyer should be responsible for the existing lease. 

It’s important to cover the basics in writing a lease such as a description of the land, the amount of the rent and when and if the landowner raises it, the parties involved, and the length of the lease.  When hunting season occurs it’s necessary to include whether or not the landowner should have the farmer’s permission to hunt on the land during the time of the lease.  These types of decisions being made on written lease agreements leave less change for disagreement and misunderstandings.  They also provide documentation in case of a tax audit or for settling an estate. 

A written lease can consist of who benefits from capital improvements such as tilling and irrigation.  The value of the contributions made by each party in the leasing arrangement, such as labor, land, crop inputs, machinery or management can influence the terms of a farm lease.  Some other influences can be improvements and facilities on the farm, and the condition and usefulness.  Income tax credits may be available if the land is leased to a beginning farmer.  This will allow for a lower rental rate to be discussed. 

Leases have become more common in the financing of a farming operation.  It’s a formal way of handling such arrangements as agricultural real estate leases.  When your written lease is finished, it’s important to have an attorney review it so that it will hold up in court should anything happen.  The most important thing the lease should consist of is the signatures of the farmer and the landowner.

Growth and expansion is critical to any farm operation, with the acquisition of land being a large part of that. To avoid any misunderstandings in the future make sure to get your lease on paper.  Having your lease on paper gives you that added security you need to continue with on your operation without any stress or worry.  It’s one of the puzzles pieces you need for a successful farm operation.

Sources:

https://www.extension.iastate.edu/AGDM/wholefarm/html/c2-01.html

http://landstewardshipproject.org/farmtransitionssustainablelongtermleasesfaqs

http://www.agrinews-pubs.com/markets/take-hard-look-at-farmland-leases/article_07ca6c43-b26d-5d6a-97c4-bf4be843fbb1.html

http://ufarm.com/well-written-farm-lease-really-cover/

 

 

 

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