Leasing farmland can be a good situation for both the land owner and the farmer. The land owner has excess acreage that would otherwise go to waste and the farmer needs land to plant crops to sell. The arrangement can be ideal for both parties when you avoid the common pitfalls of farm leases. It is best to consult with an attorney with experience in agriculture.
Basic Legal Elements of a Farmland Lease
There are two main types of farmland leases including a cash lease and crop share lease. There are other types of farmland leases such as those that provide livestock or labor share. There are some essential elements that should be part of every farmland lease. The lease must be a valid contract that is preferably in writing. Oral leases can be enforceable in some situations. The lease must contain provision of payment for land use, transfer of rights to the tenant, possession and control in the tenant, and rights for the landlord. You should also include a number of additional terms such as the time period of the lease, the right to sublease, the transfer of property, and more.
Oral and Written Leases
It is always best to put a lease agreement in writing. A written lease ensures that both parties understand the terms of the contract. While oral leases are common for farmland, they are not necessarily the best option and might not always be legal. Wisconsin law states that a lease for a term of longer than one year must be made in writing and must be signed by both parties in order to be enforceable. If there is no written lease, the tenancy is periodic and lasts from year to year. In an oral lease, when the tenant stays longer than the first year, the lease period is automatically extended for another year.
What to Include in a Farmland Lease
Some issues can arise when the landlord and tenant do not agree regarding the terms of the lease. This is particularly common when no written lease is in place. When you enter into a farmland lease it is best to put everything in writing and address the matters that are critical to both parties. Some critical matters that you should define in a farmland lease include how the tenant may use the land, requirements for the tenant to tend to the land, defining when the landlord can come onto the land, and responsibilities of both the landlord and tenant. It should also provide for liability insurance requirements. If there are buildings on the property, the lease should indicate whether the tenant has use of them and who will maintain them.
Determining Farmland Lease Rates
There are many factors that you should consider if you are a landowner leasing farmland. Some of these factors include the quality of the land, location, accessibility, potential crop returns, ease of farming, previous land use, taxes, demand, and use of facilities, services, and machinery. Ensure that the rental rate corresponds with the current market value of the land and takes these additional criteria into consideration. Some leases also include some return on crop sales. Farmland leases can be complex, but they can protect both parties. It is advisable to seek legal assistance to create a lease that suits your needs and protects your interests. To learn more about farmland leases, contact our skilled legal team at Moen Sheehan Meyer, Ltd. online or by phone at (608) 784-8310.