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The best agricultural lease between a farmer and a landowner is one that is written to accommodate the unique needs, goals, and expectations of the parties involved while creating pathways to solve problems that may arise throughout the relationship. The most successful lease is the one that never needs to be enforced and the most useful lease is the one that is written down, making it easier to reference and enforce. If you haven’t considered these basic functions of an agricultural lease yet, read the Agricultural Lease Agreement Basics guide to get started. If you’ve already considered how a tailored agricultural lease can increase your resilience and you want to prepare to write or update a lease, then you’re in the right place!
This guide provides you with a checklist of 41 key questions to discuss with your landlord or farm tenant when creating an agricultural lease agreement. The question checklist is intended to help you set your priorities and strategize the conversations you need to have. This checklist will not walk you through the process of actually creating a lease. If that is what you’re after, see our Farmers’ Workbook for Creating an Agricultural Lease.
Let’s get started!
Discussions Build a Lease
It’s true, a strong agricultural lease requires communication and customization between the farmer tenant and the landowner. But what about model agreements and attorney services? Model leases can be useful, but they are best used as a framework on which to make modifications. An attorney is also helpful, but an attorney’s strengths are generally in helping the parties memorialize their agreement in concise and accurate language. Many attorneys can help the parties brainstorm solutions to sticky issues, but the farmer and landowner may already have all the solutions they need between themselves. A discussion between the two parties is what ignites the lease creation process.
However, if you are a farmer, it’s important to acknowledge that in some situations you may not feel comfortable approaching the landowner for a discussion about leasing terms. This may be because of past experiences you’ve had with other landowners, stories you’ve heard, or purely because they own the land that you want to farm. Whatever the reason may be, it is important to tune into your instincts and make note of your level of comfortability engaging in discussions and negotiations. Particularly for Black, Indigenous, and People of Color farmers, discrimination is a real risk and if you do not feel safe approaching a landowner for a conversation, listen to your instincts and call on the support of advisors, peers, and other local resources to help you move forward. If upon reflection and/or with the support of local resources, you do feel safe and empowered to discuss leasing terms with the landowner, the checklist of questions below can help guide you.
What Should We Discuss?
The checklist of questions below are designed to get farmers and landowners started down the path of developing their own agricultural lease by discussing each question in order of priority. A complete lease will address most, if not all, of the issues below.
Keep in mind that when starting this process, the parties may not have a solid answer to some of the more difficult questions below and it may take some time to achieve consensus on those points. This is normal! Alternatively, the parties may find that they cannot come to an agreement on some or any of these questions. That might be a disappointing conclusion, accompanied by the strain of emotional labor to work through it all, but it’s much better to figure out that the farmer and the landowner won’t be a good match before investing significant resources in the relationship.
As you work through the checklist, also keep in mind that there isn’t a right or wrong answer for each of these questions. For many, the response may be, “yes, if the parties agree to do so,” or “yes, if the landowner consents to it,” or “yes, but the landlord reserves the right to revoke said permission if the following circumstances exist…” The right answer is the one that works best for the farmer and the landlord in question.
The Checklist of Questions to Discuss
Instructions: Read through the checklist of 41 questions below. As you go, make note of the questions you need to discuss in leasing negotiations and check off the ones you’ve already answered. You can do this with pen and paper, or in a Word document or spreadsheet. This process will render two lists– an A list of priority questions that need to be addressed (A = address) and a B list of existing points of agreement that you can build upon (B = build).
Before you dive in, we want to acknowledge that when faced with a list of questions it can feel daunting and overwhelming to get through it all. If those feelings are arising within you, keep the goal in mind: a written lease that creates resilience for you. Every question you answer is progress towards that goal!
The Basics (7Qs)
- Who are the parties involved? Are they acting in their personal capacity or on behalf of a business, such as a farm LLC? Is everyone who needs to be represented at the table?
- Exactly what land is being leased? Do we have a precise legal description and map of the premises?
- When does the lease begin?
- When does the lease end?
- What is the rental payment, when is it due, and how should it be paid?
- Is there a late payment fee? If so, what is it and when is it assessed?
- Who is responsible for paying property taxes on the premises?
What rights does the lease grant to the farmer? (7Qs)
- Is the farmer allowed to engage in any commercial use of the property?
- Is the lease limited only to agricultural use of the property?
- What are we considering “agriculture?” Are agritourism events allowed? Can the farmer do any processing on the premises?
- Is this also a residential lease? Would the parties prefer to handle the residential lease separate from the commercial agricultural lease?
- Can the farmer sublease all or any portion of the premises to someone else?
- Is the landlord granting an exclusive right to the farmer to use the property, or will the landlord also be using the leased premises? If so, what potential conflicts might arise, and how should we manage them?
- If conflicts do occur, such as damage to property or lost revenue because of the other party’s actions, should the party who loses be compensated?
Production-related issues (5Qs)
- Are there limits on the type of agricultural production allowed? Crops and livestock? Methods such as organic?
- Are there any land stewardship practices the parties would like to require of each other? Do those come with costs, and if so, who pays for those costs?
- If the tenant’s voluntary conservation practices increase the value of the land, should the farmer’s rent be reduced accordingly? If not, is there an alternative way to reward the farmer?
- Are there any production standards for the agricultural use of the premises such as a requirement to follow organic practices?
- Do we have specific standards for weed or disease control for either party?
- Does the farmer have permission to use farm equipment or resources (for example, timber, lumber) that may be on the property? If yes, how will equipment breakdown and maintenance be handled? Who pays for it and when does it need to be performed?
- Does the farmer have access to storage? Are there associated terms on storage use such as types of products stored or timeframe for storage?
- Does the farmer have access to pack shed facilities or refrigerated storage?
- Is water for packing and processing provided in the lease? Where? Are any associated costs included in the rental agreement or are they separate?
- Is water for irrigation provided in the lease? How, and how much? If a “termination” may follow different, less beneficial procedures than a non-renewal unlimited, what is the expected capacity of the well/water supply? If there are volume limits, do we have a way to measure usage?
- Who pays for any utilities to the property such as electric, trash, etc. If irrigation water is provided, who pays for the running of the pump and any repairs that may be necessary?
- Does the lease renew automatically or do specific steps need to be taken by either party?
- If the lease renews automatically, when and how does either side give notice that they don’t want the lease to renew?
- If the tenant decides not to renew, are there any duties he or she must fulfill? For example, planting cover crops.
- If the landlord decides not to renew, is the tenant compensated for any increased land value from improvements (for example, hoop-houses constructed, soil amendments added)? If relevant, does the tenant have the right to remove improvements? If the latter, what conditions exist?
- Can the lease be terminated? This often happens on “default,” which means either party does something specific, which allows the other party to terminate the lease. Are there acts that you would like to designate as triggering a “default?” For example, using certain chemicals or practices.
- Regular communication can help the farmer and landlord avoid problems. Are annual or quarterly meetings appropriate? What things should be discussed at meetings?
- Are there specific issues that the parties agree to communicate to the other? Machinery? Animal health? When specific practices will be undertaken?
Transfer of lease (2Qs)
- If the farmer dies or decides not to continue farming, may the lease be transferred to another individual?
- What happens if the landlord dies? Most farmers will want to make sure the lease still attaches to any future landowners and so the lease should state as much.
Other considerations (7Qs)
- Are we contemplating any “right of first refusal” or “option to purchase” if the landowner decides to sell? Is the lease convertible to a land contract? What are the details of this arrangement: how will the land be valued and what is the procedure for exercising the right or option?
- Who provides insurance? Is the tenant added as an additional insured to the landowner’s policy, or does the farmer need her or his own insurance?
- If the landlord provides insurance, are there any coverage thresholds desired by tenant/landowners? If so the lease should state as much.
- How should we manage potential future conflicts? Would the parties like to create a dispute resolution committee of neutral third parties to hear disputes and help suggest a pathway to resolution?
- Do we have any potential concerns about rezoning of the property or neighboring development? Have we checked the comprehensive plan for the municipality? Is eminent domain a possibility and would the parties like to allocate any potential compensation provided under eminent domain in the future?
- Is the tenant contemplating specific long-term improvements such as building a pack shed or hoop house? Should there be provisions in the lease that create assurance such improvements will be allowed?
- Who is responsible for large-scale capital improvements to the land? For example, who is responsible for maintaining access roads? When and how will it be done? Are costs shared?
You should now have your A list of priority questions that you want to address in discussions with your landlord/tenant and a B list of existing points of agreement that you can build on. If your A list is longer than your B list, segment your A list into short lists of 5-7 questions, grouping by the relevant topic heading. These segmented lists can then be used as your meeting agendas to guide your discussions.
Remember: when in leasing discussions and negotiations it’s important to take notes to keep a record of 1) points of agreement, 2) points of disagreement, and 3) points to return to at a later date. These notes will be the basis for your final lease agreement that you can review and formalize with the support of an attorney.
- Are you ready to discuss your priority list of questions with your landlord/tenant? If so, that’s great news! You’ve identified which issues have been addressed and the remaining questions you need to discuss. Best wishes as you meet with your landlord/tenant to discuss the remaining issues and put your agreements in writing.
- Do you need support that walks you through the stages of discussing, negotiating, and writing down your lease agreement? You may not be ready to discuss things with your landlord/tenant because you wish for more step-by-step support in navigating the leasing process. You can find this support in the Farmers’ Workbook for Creating an Agricultural Lease.
- Are you ready to write down your lease agreement? If so, you’ve done the good work of discussing your needs, goals, and expectations with your landlord/tenant. You can move forward by taking your list of agreements to an attorney for review and memorializing in accordance with your state’s laws. If you’re not quite ready to seek attorney review and instead want to create a draft lease using your list of agreements, you can find this support in the Farmers’ Workbook for Creating an Agricultural Lease.