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Ask
an Extension Specialist … By Wesley Tucker Agriculture Business Specialist University of Missouri Extension Headquartered in Polk County
Q: My mother can no longer take care of the family
farm. However, we do have an opportunity to rent out the pasture to
another farmer. Do you have any recommendations about creating a good
pasture lease agreement? – J.S. A: Creating a good lease is not easy and requires
some careful thought by both parties. In general, a good lease is
one in which both parties agree it is fair and both completely
understand each other’s expectations. The
majority of problems with a pasture lease occur when one or more parties
do not fully understand what the other one expected. Whether a
lease is verbal or in writing, taking the time to discuss these issues
ahead of time will prevent 99 percent of the problems that will arise
later. That
is probably the number one reason to establish a written lease. Writing
out a lease forces you to consider what may seem like minor details now,
but can become explosive issues later. Things such as who is
responsible for fence repair, will the pastures be mowed, who has the
right to enter the property, or can the tenant sublease the property.
VERBAL
LEASE Verbal
leases for more than one year are usually considered invalid and
unenforceable. And, although verbal leases are binding on heirs,
enforcing them can create many other problems. Again, having the lease
written out is probably the best thing to do in most all cases. If
after one year the landlord and tenant agree to extend a verbal lease
for a second year, then the lease becomes what is known as a
year-to-year tenancy. The lease will now automatically be extended
for another year at the anniversary date of the lease, unless one of the
parties provides a termination notice ahead of time. The
notice must be in writing and provided 60 days prior to the anniversary
date of the lease, which is when a landlord and tenant actually made the
agreement, no matter when the tenant actually took possession. The
termination notice must be in writing, even though the lease may be
verbal. WRITTEN
LEASE The
minimum requirements of a written lease are the names of both parties, a
legal description of the property, the duration of the lease, the rental
rate and payment arrangements, and signatures of both parties.
However, there are several other items that should be considered. The
first is landowner entry rights. Unless agreed upon in the lease,
the landowner does not have the right to enter the property. A
common example is when renting an apartment; the landlord does not have
the right to enter the apartment any time they wish. The same goes
for a pasture lease. If a landlord wants to have the right to
enter the property, it needs to be in the lease. Another
item that should be addressed in the lease is subleasing. If the
lease does not state that the tenant is not allowed to sublease the
property, then the tenant can sublease it to anyone he or she chooses
without the landlord’s permission as long as it is for the same
original purpose, like livestock use. Other
special agreements include fence repair and soil fertility.
Agreeing on who is responsible for fences and who pays for materials
ahead of time will ensure that fences are maintained and kept in working
order. Soil
fertility and lime is one of the most critical agreements in the lease.
If pastures are not maintained the productivity will decrease which
hurts both the landlord and tenant. This may be a reason to
establish a multi-year lease because it provides more incentive for the
tenant to invest in the soil fertility. Another option is to
include a special clause in the lease that specifies if the lease is not
extended the fertilizer and lime expenses are to be amortized and the
tenant refunded for the unused portion. Other
special agreements include the use of buildings, how often pastures
should be clipped, noxious weed control, and any special restrictions
either party desires. A
comprehensive fill-in-the-blank pasture lease that can be a guide for a
developing a lease can be obtained from the nearest University of
Missouri Extension office or by going online to http://www.mwps.org/stores/mwps/files/Free/ncr_109.pdf. For
more information, contact Wesley Tucker, an agriculture business
specialist with University of Missouri Extension, at (417) 326-4916.
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