Leasing farmland is one of the best options for both farm owners and renters. Farm owners who have extra land can make money rather than allowing the land to go unused. Renters can use land to suit their needs without having to make a large financial commitment. While leasing farmland can be a good situation for both parties, it is critical to follow some basic guidelines to ensure that the relationship is a good fit for everyone.
Determine Fair Rental Rates
One of the essential parts of any lease agreement is the rental price of the farmland. There are many factors that will help to determine the fair rental price of farmland. Some of the most important factors are the location, the condition of the property, the intended use of the land, and the current market value. Farmland values fluctuate, so it is best to find the latest data. You can find details through the National Agriculture Statistics Survey (NASS), part of the U.S.D.A. Be sure to calculate your return on investment when setting and agreeing to lease pricing.
Create a Plan
Both parties should have a plan in place for how they envision farmland use. Put a plan in writing and make certain it translates into the lease contract. Both parties need to know their own and each other’s expectations. Include as many details as possible to minimize confusion later. For instance, if you need access to the land during the lease, include these rights as part of the lease. Both parties must know their own responsibilities and obligations. For example, if the tenant will have use of equipment, what is their responsibility for maintaining or repairing it?
Communication is the key to any good relationship. Both parties should continue communications not only during the lease process, but during the term of the lease. The ability to talk to each other will reduce the risk of problems and can lessen the chance that there will be any misunderstandings. When you make any changes to the agreement, be sure to put them in writing. Discuss any upcoming contract dates well in advance so you do not have any sudden surprises. Evaluate the lease before any renewal period so you will have plenty of time to act on your options. Keep all the communications between you throughout the process.
Put the Lease in Writing
A lease is a legally binding contract. Although an oral rental agreement may be possible, it is always best to put the lease in writing. There are many issues that can be complicated and require ironing out before you agree to the lease. Both parties must be able to rely on the details of the agreement. Include the way to resolve disputes so that you have a clear way to handle disputes if they arise. Both parties should have the opportunity to review the lease and make any adjustments to it before completing the deal.
Seek Legal Help
The best thing you can do to protect your interests is to seek professional legal help throughout the contract process and beyond. Your attorney will guide you through the process and assist you with all the details of the transaction. Your lawyer will advise you of the options available and look out for your best interests. An attorney will answer your questions and help you with the details of the transaction. To learn more about farmland leases and to get legal guidance, contact Moen Sheehan Meyer, Ltd. online or call for a consultation at (608) 784-8310.