Farmland Leases: 10 Things (2023) You Need to Know (2023)

If you are a landowner with a productive farm or ranch that you do not use, consider a farm lease.

Farmland leases can be the solution to all problems.

They allow you to generate an income stream from your property while supporting farm businesses, boosting local economies, and increasing your community's access to local food and produce.

Whether you own land or farm, a farm lease could be your future.

If so, here's what you need to know.

1. What is a farmland lease?

Arentit is the most common form of leasing in agriculture.

This lease may take the form of a cash rental lease or a crop share lease.

Both leases allow the farmer to work the land, but they include different types of farmland leases.

In a cash lease, the lessee pays a fixed price per acre, or rent, for the leased land.

It is advantageous for the lessor (landowner) as he is guaranteed a predictable return regardless of commodity prices.

Therefore, it is risky for the tenant (the farmer) because he has to pay rent no matter what crop he grows.

While the parties can negotiate to limit their exposure to these risks, the terms will often vary from situation to situation.

In a crop sharing lease, the owner receives a share of the crops the lessee produces in exchange for the use of the land.

The amount of participation generally depends on local customs.

In exchange, the owner usually agrees to cover part of the entrance fees.

In this case, the owner is exposed to greater risk, but also benefits from any increase in price or productivity.

2. Does it matter if I have a written or verbal farmland lease?

If it does!

Oral land leases are only valid as long as certain conditions are met.

Unfortunately, many farmland leases are verbal, which can create problems later.

Although oral leases are preferred by many parties, written leases have benefits that should not be overlooked.

First of all, a written rental agreement serves as proof of the rental conditions in case of a later dispute between the parties.

Each state also has afraud law.“

This requires that certain types of contracts be in writing.

These laws can vary from state to state, so we recommend that you do your research before creating a farmland lease.

However, real estate contracts and contracts that cannot be performed within a year are commonly subject to state fraud laws.

Generally speaking, if your oral farm lease can be realized within one year, you will not be subject to the Fraud Act.

However, if it lasts for more than a year, most states require a written form for it to apply.

3. Why should I make my agricultural land available for lease?

There are a number of reasons why non-farm landowners make their land available for lease.

Here's why you might consider it.

Farmland Leases: 10 Things (2023) You Need to Know (1)It is the best use of the property.:

If your land has been used for agriculture in the past, you may recognize this as the best use.

Even if you can't grow it yourself, that doesn't mean you can't strike a deal with an experienced farmer who wants to acquire additional land.

Farmland Leases: 10 Things (2023) You Need to Know (2)It makes sense for tax reasons.:

Depending on your state, farmland may be taxed differently than other types of land.

If your land is used for active agricultural production, you could see a significant reduction in your property taxes.

Who doesn't want that?

Farmland Leases: 10 Things (2023) You Need to Know (3)It is your vision for your property:

Perhaps you have never been interested in agriculture, but now that you have more free time or are retired you would love to make this your project.

You bought the land but you still don't know what to do.

Fortunately, you can lease your land to someone who can help you!

4. What should be considered when leasing agricultural land?

In this section, we will break down the considerations of both landowners and farmers.

You should keep this in mind when entering into a farm lease.

Farmland Leases: 10 Things (2023) You Need to Know (4)For owners:

  1. What is the reason for renting land?
  2. Are you particularly interested in agricultural land?
  3. What type of crop do you think is suitable for your farm?
  4. Do you care what your land is used for, or do you just want it to be taxed as farmland?
  5. What short and long term vision do you have for your property?
  6. Do you plan to rent it for many years?
  7. Are you interested in growing it yourself one day?
  8. Will the farm survive?
  9. Are you planning to sell the property in the future?
  10. How should the property be?
  11. What types of agriculture fit into this vision?
  12. How important are land conservation practices to you?
  13. Does it require tenants (farmers) to earn a certain amount of income from the land?
  14. When do you need to receive rent payments?
  15. Is your main interest in entering into a standard lease agreement with a farmer or would you like to become more involved in running a farm business on your land?
  16. How much do you want to be responsible for on the property?
  17. Is there a service you would like your tenant to provide? For example: maintenance of buildings, fences, dirt roads, field edges, bodies of water, etc.
  18. What infrastructure and improvements does your country have now that would be attractive to a potential farmer?
  19. What could you or a farmer add in the future to meet the needs of the farm?

Farmland Leases: 10 Things (2023) You Need to Know (5)For farmers:

  1. What soil properties are required to produce the crops you intend to grow?
  2. What infrastructure is required for your farm?
  3. Esirrigationnecessary?
  4. Do you need storage areas, livestock fences or game fences?
  5. What else do you need to make your farming operation a success?
  6. How do you want to market your harvest?
  7. Are you planning to sell your crop at an off-site location?
  8. Do you plan to sell the harvest directly on the farm itself?
  9. How far are you willing to travel from the farm to an off-farm market?
  10. Will you have an apartment arrangement that adds a commute?
  11. If direct marketing on the farm is your goal, is the owner open to a position on the farm or marketing on the farm?
  12. What kind of business arrangement are you looking for?
  13. Would you like to rent land for your own farm?
  14. Are you looking for a partnership with an owner in some way? For example: working together on a joint farm or working for a landowner as a farm manager
  15. What types of business opportunities are you ready for?
  16. How much is farmland near you?
  17. How much are you willing to pay in rent for the land you need?
  18. Are you willing to trade services with a landlord for a matched rental rate?
  19. What lease period is ideal for your farm?

5. What must your farmland lease include?

These are the common provisions found in written farmland leases:

Farmland Leases: 10 Things (2023) You Need to Know (6)length of rental period

Farmland Leases: 10 Things (2023) You Need to Know (7)property description

Farmland Leases: 10 Things (2023) You Need to Know (8)Rental clause (indication of rental price and term)

Farmland Leases: 10 Things (2023) You Need to Know (9)completion process

Farmland Leases: 10 Things (2023) You Need to Know (10)Restriction on subletting and assignment

Farmland Leases: 10 Things (2023) You Need to Know (11)Federal and State Compliance Requirementsconservation regulationsand enroll in federal agricultural programs

Farmland Leases: 10 Things (2023) You Need to Know (12)Types of plants to plant.

Farmland Leases: 10 Things (2023) You Need to Know (13)Obligations to control noxious weeds and take out insurance

Farmland Leases: 10 Things (2023) You Need to Know (14)Types of agricultural practices that can be used

Farmland Leases: 10 Things (2023) You Need to Know (15)Responsible for the maintenance and improvement of the property.

Farmland Leases: 10 Things (2023) You Need to Know (16)Purchase option

Farmland Leases: 10 Things (2023) You Need to Know (17)legal fees

6. How should you maintain your lease?

Establishing and maintaining a relationship between the parties (landlord and farmer) requires time and effort.

Communication is at the heart of a good relationship, and you must remember that this communication is more than just an annual review of your rental terms.

Treat your lease discussion like a "good neighbor."

You must actively communicate, find ways to be kind, help where you can, and resolve conflicts when they arise.

That way, when it's time to renew the lease or discuss something pending, you can do it with grace.

A great resource if you have a dispute between the parties is the State Agricultural Development Committee's Agricultural Mediation Program (FREE)..

The program is designed for voluntary mediation.

This means that both parties must be on board before the mediation can take place.

However, if both parties agree, this is a great way to resolve issues with a trained impartial mediator who can facilitate a discussion and look at the issue from a neutral perspective.

7. Where can I see a model rental agreement?

Are you looking for an example?

check it outrental contract templateof California.

Although the rental agreement template is for reference only, it can give you an idea of ​​what you need to move forward.

8. How do I find farmland to lease?

If you are a farmer looking for farmland, there are several steps you can take to prove yourself to the owner.

We have listed some of the best tips below.

Farmland Leases: 10 Things (2023) You Need to Know (18)build your brand

As a farmer, your "brand" is how you are perceived in your community.

Essentially, you want to build your brand and reputation in a way that everyone wants to work with you.

A strong brand name will make it easier to get a great farmland lease with a landlord you enjoy working with.

So how do you brand yourself?

It depends on what interests you and invest.

For some farmers it may be an organic approach.

Maybe you love treating the soil like a living organism and practicing an organic farm management approach.

If you can market yourself to owners who are interested in the same thing, you will undoubtedly be more successful.

Plus, you're more likely to meet someone who's interested in improving your trade long-term (rather than someone who's just looking to make a quick buck).

Other elements that are important to your brand (no matter who you are) are your skills, hard-working attitude, and willingness to improve the farmland you rent.

As Boy Scouts and Guides often say, "Leave a place better than you found it!"

Who wouldn't want to work with someone who leaves the richest farmland (in more ways than one)?

Farmland Leases: 10 Things (2023) You Need to Know (19)cultivate strong relationships

In almost all cases, farming is about relationships.

Cold calling local landlords probably won't get you very far.

Once you decide that farmland is a viable option, start building strong relationships in your community.

Take advantage of family ties you have in the industry or in your local farming community.

Talk to your neighbors.

Contact cooperatives and advisory agencies that can help match farmers with people who want to lease their land.

If you are inexperienced and want to get your foot in the door, apply to be an operator for owners who don't have time to do everything themselves.

This can help you learn as you go, whether you're helping to plant, harvest, or distribute.

Farmland Leases: 10 Things (2023) You Need to Know (20)Visit the USDA website

This may seem like obvious advice, but the USDA (United States Department of Agriculture) has a host of tools that can help farmers starting from scratch, taking over a family farm, or leasing farmland.

They can offer you customer service,conservation programTransition incentives, farm loans, FSA land contract guarantees and more.

VisitHereLearn more!

9. How is a farm lease terminated?

A farm lease can often be terminated at any time if all parties agree to the termination.

Other methods of termination are incorporated into a written lease, including those events where one party may terminate the lease without the consent of the other (breach of contract, etc.).

10. How do I find additional resources?

If you want to know more, you can visit theFarmland Information Center.

You'll have access to assessment tools, land leasing guides, and leasing information from both perspectives.

final thoughts

The agricultural sector is based on the leasing of agricultural land to meet the needs of farmers.

If you are a landowner, you must lease your land to boost agricultural production in your area.

Just be sure to consider all of the questions listed in #4.

This ensures that both you and your tenant are on the same page.

additional resources

If you want to buy cheap landyou can take a look at ourlistedpage of book.And before buying landbe sure to stop byGokce Land Due Diligence Program. If you want to sell land, visit our procedures pagesell your land.

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Farmland Leases: 10 Things (2023) You Need to Know (23)

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Disclaimer: We are not lawyers, auditors or financial advisers and the information in this article is for informational purposes only. This article is based on our own research and experience and we do our best to keep it accurate and up to date, but it may contain errors. Be sure to consult a legal or financial professional before making any investment decisions.

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Erika was a former New York City Director of Affordable Housing and is now a full-time land investor. She used to help New Yorkers find affordable housing, now she helps people find affordable land across the US.

Prior to founding Gokce Capital, Erika received a BA in Architecture from the University of Southern California and a BA in Urban Policy from Columbia University. She worked as an architectural designer and engineer in New York before joining the New York City Department of Housing Preservation and Development.

Erika currently resides in the New York area with her husband, daughter, and cat. Originally from Chicago, she still considers herself Midwestern at heart.

Erika also loves to read, write, and travel (fun fact: she's been to all 50 states and over 30 countries!). Her new book, Land Investing Mistakes: 11 True Stories You Need To Know Before Buying Land, is now available on Amazon.

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