Types of Land Leases
Whether you’re renting out your farmland or paying rent, it’s important to know your leasing options. A variety of lease types exist, and based on your relationship with your landlord and/or tenant, both parties can opt for the one that suits them the best.
With the fluctuating land values and commodity prices that have characterized the past several years, lease agreements may have been changed, or may be due for one. The most important advice any land manager would give when it comes to lease agreements is for the agreement to be written down. As it stands, many lease agreements are between family members, or have been established for a number of years. While these handshake agreements do demonstrate good faith, when an issue does arise, it’s not uncommon for each party to hold differing recollections of how the lease was to work. Land managers are well-versed in helping you get that lease down on paper, as well as helping you sort through the necessary particulars prior to it.
That said, should you have an unwritten lease, it’s important to know the dates by which they must be legally renegotiated or terminated. These leases are automatically renewed for another year until proper notice has been received, either by the tenant or landowner. This termination notice must be given by September 1st, and the lease year legally begins on March 1st. Also, with unwritten leases, six months’ advance notice must be given in order to terminate the lease.
In the case of a written lease, the terms should already be included within the lease—usually one year, five years, or more. However, if it contains no renewal clause, a written lease terminates automatically on the last day of the lease period. For written leases, no notice is required from the landlord to the tenant that the lease will not be renewed unless the lease specifically states that notice of termination is required.
Another leasing option for farmers is the flexible rent lease. Fluctuating land values and crop yields can make it more difficult to come to a fair rental price agreement, and as a result, more farmers and landowners in Nebraska are turning to flexible rent leases. This type of lease reduces risk and optimizes profit potential for both parties by basing the final rent upon the actual prices and yields attained that crop year, rather than by a set rate prior to it.
No matter which type of lease agreement you choose, remember to work out as much of the particular details as possible. These include such considerations as who pays for grain bin storage and power, how irrigation costs are to be handled, etc. The most important thing is that both parties come to an agreement so there is no confusion if/when an issue arises.
UFARM land managers have years’ worth of experience in helping Nebraska farmers and landowners sort through their leasing options. If you have a leasing question, don’t hesitate to give us a call, and we can discuss what options are available to you and your farming operation.
UFARM offers a full range of Nebraska land management services, including real estate sales, rural property appraisals, consultations and crop insurance. UFARM has operated in Nebraska since the early 1930’s. Contact us today!
