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Leasing land? Know what your rights are

A farmer steps out his truck on his leased farmland only to find a group of hunters he does not know. His first instinct is to call the local authorities. But, Joe Koenen says, don’t start dialing just yet.

Leasing land? Know what your rights are

A farmer steps out his truck on his leased farmland only to find a group of hunters he does not know. His first instinct is to call the local authorities. But, Joe Koenen says, don’t start dialing just yet.

“Your tenant has the right to sublease, even hunting rights, if you don’t have it stated otherwise in writing,” the University of Missouri Extension ag business specialist says. Even property owners do not have the right to hunt on their leased land unless stated in an agreement.

Key Points

• More than one-third of Missouri land is farmed under lease agreements.

• Soil-saving measures grow in importance to landlords.

• More tenants request longer lease agreements.

In his 32 years of experience in the field of ag business, Koenen has served as a mediator on many landowner and tenant disputes. He says that often landowners do not have the same goals as tenants.

“Today there are a lot of landowners who are generations removed from agriculture,” he says. “They do not understand the current agriculture practices.”

Common ground

One of the biggest concerns of landowners is how tenants care for the land.

“I often hear, ‘I don’t want my tenant to mine my ground,’ ” Koenen says. “While it is a valid concern, it’s very tough to do in practice and put in a lease.”

To require a tenant to maintain certain soil fertility levels, landowners need a baseline fertility profile. However, just where that base starts can be a matter of contention. “Is that 10 years ago, right when the tenant takes possession?” Koenen asks. “It is hard to gauge initial soil fertility.”

He recommends tenants communicate with the landlord what fertility practices they are using on the land. Often just verbal communication can ease a landowner’s mind.

While maintaining fertility may be hard to put down in writing, one area landowners can document is conservation practices.

Koenen hears from those who say they are afraid their tenant will let the soil just erode away. “But tenants do need to be caretakers of the soil if they are to make a profit.”

He advises both landlord and tenant to agree on which conservation methods will be used on the farm. Then, practices like crop rotation, terraces and waterways should be written in the lease.

Contractual concerns

With rising cash rents across the state, tenants are opting for longer lease contracts.

“Now more than ever, I see tenants wanting at least a three-year lease,” Koenen explains. “But there are advantages and disadvantages for landowners in signing a longer agreement.”

Longer leases give the landlord a long-term tenant, set income for several years and typically ensure better communication with the tenant. The biggest disadvantage is that the landlord is stuck with the renter — good or bad. “You can’t easily change renters with this type of lease,” he adds.

Koenen finds himself remediating disputes of landowners who enter an agreement and then want out. “If you have a three-year contract, you have no legal right to kick a tenant off midlease,” he says. Landowners have tried this tactic in court and have come up short. “In Missouri, if it is not it writing, it is an oral lease and the tenant still has rights,” he says.

Too often lawyers who lack agriculture knowledge inform property owners that they can call tenants and have them removed in 30 days. “That is not true,” Koenen says. “That is the rent law for the state, but not the ag lease law. With farmland, you are working under a different set of state statutes. The two laws are not the same.”

Control conditions

With nearly one-third of Missouri ag land farmed under lease agreements, understanding land leases is important for both landlord and tenant.

Ultimately, a workable lease for both parties is one that is in writing.

Liability issues with leases

Before renting out an acre, landowners need to know the liability issues that surround lease agreements.

Joe Koenen, University of Missouri Extension ag business specialist, outlines some key areas that should be discussed with tenants:

• Repairs and replacement. Normal wear and tear is the landowner’s responsibility. However, if something major happens, like running a tractor into the landowner’s grain bin, then the tenant should have some responsibility for repairs. Koenen says these issues should be addressed in the agreement.

• Unused fertilizer. Many renters are willing to invest in fertilizer with longer lease arrangements. “If a renter only has a one-year agreement, puts on lime and then you terminate, you got some free lime,” he says. Most agreements use a percentage basis in dealing with unused fertilizer. For example, in the first year, a renter is reimbursed for 80% of the cost if terminated.

• Insurance. Both parties need insurance. If the renter is new, landlords should ask for a copy of the insurance. “It is not a matter of trust,” Koenen adds. “It is a matter of good business practice.”

• Hunter’s liability. In Missouri, if there is no charge for hunting, fishing or other recreational activity on the ground, then there is no need for additional insurance. However, he says there is a higher liability associated when minors are involved. If minors are going to be on the property operating an all-terrain vehicle (ATV), hunting or fishing, there needs to be some type of insurance to protect whichever party is responsible,
be it landlord or tenant.

• Subleasing. Koenen recommends that landowners should put in writing that tenants are not allowed to sublease land or hunting rights without landlord approval.

• Land hazards. With so many abandoned wells on farms across the state, Koenen says this can create a big liability issue for landowners. “If a child or someone falls in, that is when you see lawsuits, especially when a minor is involved.” Landowners need to protect themselves from this liability by either gaining insurance or sealing abandoned wells.

Get it in writing

Make sure to get the following minimum requirements written into any lease agreement:

• Duration of lease

• Name and address of all parties

• Property’s legal description

• Rental rate

• Rental payment arrangements

• Signatures of all parties


LEARNING more about LEASES: Hertha Wooten (left) of Excello discusses renting out her farmland with Joe Koenen during a recent Women’s Landowner Workshop in Moberly.

This article published in the November, 2012 edition of MISSOURI RURALIST.

All rights reserved. Copyright Farm Progress Cos. 2012.

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