LA CROSSE, Wis. – A good farmland lease helps both landowners and land seekers. Farmland leases also can help launch beginning farmers who don’t have large lines of credit. Best practices for farmland leasing was the subject of a workshop held at the recent Midwest Organic and Sustainable Education Service’s Organic Farming Conference.
Kate Edwards owns a community-supported-agriculture vegetable farm and serves as a farmland-access navigator for Renewing the Countryside. She farms near Iowa City, Iowa, and shared with workshop attendees her own experiences leasing land. Her key message to both landowners and land seekers is to spread the word. Tell friends and neighbors, visit websites that can match landowners and tenants, or contact a farm-management company.
Landowners and land seekers also should list and later discuss with each other what they want from a lease. The initial meeting between the parties can set the tone for the entire agreement. Rental fee and lease length, of course, are primary considerations. But the parties also should anticipate any problems that could arise and address “what-ifs,” Edwards said.
She shared a handout titled “Elements of a Good Farm Lease,” which is available from Land for Good. One of the most important elements of a farm lease is “permitted and prohibited uses.”
“The lease should clearly define the permitted and prohibited uses of the property,” it states. “What kinds of farming will be allowed? What counts as agriculture? Does a cord-wood operation qualify as agriculture? Commercial composting? A corn maze? Aquaculture? Definitions and perceptions of farming evolve so it’s important to be both clear and flexible. Address whether farm-related education or non-agricultural uses such as recreation will be permitted. A landowner may also prohibit certain activities such as removing trees or gravel.
“Landowners may want to specify whether the land is to be limited to certain types of production, for example only pasture or hay land, or to other restrictions or requirements regarding uses appropriate to the soils or topography of the farm. A map indicating where certain practices are allowed or prohibited is useful. It’s recommended to include a process for the tenant to request permission or clarification regarding uses. For example the lease may say that removing trees is prohibited except as approved by the landowner in response to a written request by the tenant.”
While it may seem obvious, a lease should clearly state what it’s for, said Edward Cox, an attorney and a partner of Craver, Grothe & Cox LLP of Centerville, Iowa. Cox specializes in farm and agricultural law.
If a tenant plans to do processing and packaging on the land it should be worded as such in a lease.
“The primary purpose of the lease must be set forward,” he said. “It’s very important as far as what laws will apply to the parties.”
If the landowner or the tenant or both want to focus on building soil health and long-term productivity of a farm, the lease also should state that. The statement of purpose communicates the intent of both parties.
There’s generally a standard of husbandry or community standards in farmland leases. But a landowner may want the tenant to exceed those standards. Again that should be clarified in the lease.
Edwards explained that in one of her leases the landowner required that cover crops be planted. The landowner may specify a certain planting date. That’s a “what if” a tenant should consider – what if the weather isn’t conducive to that planting date. In that case the prospective tenant should include wording in the lease about weather being an extenuating circumstance.
Cox advises parties to also record the lease at a county courthouse. Year-to-year leases might not need to be recorded. But leases for more than a year should be recorded. He gave an example why.
“Say that you have a five-year lease and the landowner sells the property after three years,” he said. “If the lease isn’t recorded and the buyer isn’t aware of the lease the buyer may not have to honor it.”
The parties can choose to record a memorandum of the lease, which includes a legal description and party names. It doesn’t necessarily need to have all the other details in the lease, he said. Some states mandate recording of leases, especially if they are more than one-year terms.
It’s a good idea to have a lawyer review the lease, particularly because a lawyer is familiar with what is and isn’t legal in a given state. Both parties should then re-read the lease and track any changes made. And of course both parties need to sign the lease. That may sound obvious, but there have been cases where one party hasn’t. That can create serious problems.
The Midwest Organic and Sustainable Education Service’s Organic Farming Conference was held Feb. 27-29 in La Crosse.