Having a written lease Written rental agreements make the rental terms more final and leave less chance of disagreement and misunderstanding. People tend to selectively remember only those parts of conversations that reinforce their point of view. It protects not only the original parties, but also the beneficiaries of the transfer and the heirs in the event of the death of one of the parties or the sale of the farm. Happy Friday! Last week, I stumbled upon Rusty Rumley`s PowerPoint presentation on the theme „Agricultural Contracts and the Country.” Rusty does a great job of giving insight into the building blocks. He is an excellent teacher – he was one of my trainers in this agricultural law course last year – and I offer to watch his presentation with other useful information from the National Agriculture Law Center. In his presentation, Rusty lays out the basics of agricultural leases by discussing contracting, basic vocabulary, and types of leases, including cash leases, harvest leases, and hybrid leases. Q: How do I determine the amount of cash rent for my property? In a cash lease, the landowner leaves the agriculture to the farmer, allowing him to make the calls, sell the product and take care of everything else. It also means that the owner of the land is not considered part of agriculture and therefore cannot use programmes to help farmers. This can be avoided if the landowner enters into a „joint venture” with the tenant, which involves both costs and shares the risk. The harvest share is considered a flexible lease for arable land, under which the landowner and tenant distribute the income from crops grown on the farm in a predetermined ratio or percentage.
A joint agreement on the shares would be 25% for the landowner and 75% for the tenant of the harvested grain crop if the landowner did not share the production costs. In some cases, a 1/3 is used for the landowner and 2/3 for the lease, but in this case, the landowner is supposed to pay 1/3 of the costs of seeds, fertilizers and chemicals for the production of the plants. Due to the increase in entry and overhead costs over the past ten years, tenants can no longer afford the historical shares, 1/3 since 1/3 goes to the landowner, 2/3 since 2/3 goes to the tenant at no cost.