When it comes to farming, most farmers have two options when it comes to the land: own or rent. Often farms are passed down from generation to generation, leaving little farmland up for sale. Many farmers turn to striking a deal and leasing land as a result. Handshakes and verbal agreements might have been the tried-and-true way of doing business in the past, but the nature of farming—and business in general—is a bit more complicated today than in previous years. That’s why it’s important to get a solid lease agreement in writing, protecting your farm and your rights for years to come.
Farm Lease Basics
A good farm lease agreement benefits both the landowner and the tenant. The contract spells out each party’s responsibilities, rights, desires, and needs ahead of the growing season. It may sound like a lot of work upfront, but precisely laying out guidelines from the start can save you time and money—not to mention the stress and tension of a deal gone south.
When drafting a lease agreement, it’s essential to include some necessary information to protect both parties. A strong lease should cover these details as a starting point:
- Length of the lease
- Kind and amount of rent
- Time and places of payment
- Responsibilities of each party
- Accurate description of the land
- Indemnification clause (who pays what in the event of loss due to negligence)
- Any other provisions that have been agreed upon
While the basics of a farm lease agreement define the overall terms, the contract should also take into consideration some other vital issues. We regularly see concerns pop up between farm landlords and tenants about different landowner rights, responsibilities, and privileges. Addressing these in writing within the lease agreement will help your business relationship run more smoothly in the long haul.
Here are some things to think about:
- Does anyone have hunting rights on the land?
- Who is responsible for different kinds of repairs or improvements?
- Who is in control of the farming practices on the land?
- What happens if the landowner decides to sell before the lease is up?
Being thoughtful, proactive, and specific when working up a lease agreement can make all the difference. In the past, some words exchanged, and a handshake may have sufficed for closing the deal. After all, your integrity and your word speak volumes. But the truth is this: a thoroughly written agreement is the best way to safeguard your farm and your interests for future generations. Don’t get yourself tangled in a verbal agreement that’s gone sour. At BB&C, we come alongside farmers just like you, whether you own or lease, to protect you and your legacy. Reach out to Cecelia Neihouser Harper at 765-637-9175 to start a conversation today.
The content of this blog is intended to be general and informational in nature. It is advertising material and is not intended to be, nor is it, legal advice to or for any particular person, case, or circumstance. Each situation is different, and you should consult an attorney if you have any questions about your situation.