Rachel RespondsSeptember 22, 2018

I want to make significant improvements on the farmland I'm leasing.


How can I protect my investment if I do this?


Talk with the landowner about the compensation you might need as result of your investment. Come to an agreement with the landowner about how you will be compensated if your investment improves the value of the landowner's property. There are many possible arrangements for paying for improvements. The owner could agree to compensate you for the true, long-term value (also called the undepreciated value) of the improvements. You could agree to pay for the improvements and the owner could agree not to increase your rent. The owner could provide the money for the improvements and you could provide the labor, or vice versa. 

The important thing is for both parties to communicate their needs, so that everyone knows what they are agreeing to before beginning improvements. And again, putting those agreements in writing is the best way to preserve the memory of each sides' expectations and commitments.

FOR MORE INFORMATION: Farm Commons' media presentations, such as the podcast episode "Write it Down!" and the Farmland Leases Built to Last: Content and Legal Context webinar, explain how improvement provisions work. An additional resource is the Lease: Who's Responsible? tipsheet.

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