Our 2015 harvest season is making good progress. I know that there are some farms that have completed grain harvest and many farms will be done by the end of October. One piece of business that can be taken care of in the fall after harvest is completed is securing a cropland lease or rental agreement for the 2016 season. The purpose of this article is not to talk about what that rental price is, but rather the format of that agreement and lease/rental conditions included in that agreement.
A surprising number of cropland rental or lease agreements are nothing more than a verbal agreement. If you ask any agricultural law attorney they will tell you that lease agreements should be put in writing. According to Ohio’s “Statute of Frauds” a lease needs to be in writing and signed to be enforceable in a court of law. Of course very few, if any, persons enter a lease agreement intending to end up in court and many verbal agreements do work to the satisfaction of both parties. There are good reasons to put lease agreements in writing beyond the question of legal enforceability.
A written agreement reduces risk and supplies certainty. The rental price per acre is just one part of a lease agreement. A written agreement should also lay out other important provisions such as the duration of the lease, when and how a lease is renewed, termination notice, payment provisions, conservation practices, can the tenant apply fall inputs, property maintenance, and dealing with improvements such as tiling. Some other questions that can be considered in a written lease 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?
Some of these questions are not easy questions to ask or to consider, but they are questions developed from real life examples that caused disputes, and in some cases, legal action. It is easier to ask these questions and work through terms in a written agreement beforehand than relying upon good will and cooler heads to prevail when these situations arise.
The basic components of a legal, written lease agreement include a legal description, address and acreage of the land parcel, signature of all landowners and the tenant, any lease over 3 years must be acknowledged, preferably with a notary or official to certify signatures, and finally, the lease must be recorded in the county where the land exists. Ohio law does allow lease parties to file a shortened, “memorandum of lease” that only requires the names and addresses of the agreement parties, a legal description of the land, lease period and rights of renewal without having to reveal any other details or provisions of the lease.
Written lease agreements protect both the landowner and the tenant, remove the burden of trusting our memories, clarify terms and conditions and may prevent legal and relationship problems from arising. Resources and examples of written farm leases can be found on the North Central Farm Management Extension web site at: http://aglease101.org/ . For more information about cropland leases contact the Wayne County Extension office at 330-264-8722.