Leasing Farmland? Use These Tips to Build a Better Relationship with Your Landlord
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As a farmer, you probably already know a lot about leases. Maybe it’s the equipment and implements you rent on a seasonal basis from your local dealership. Or perhaps you’ve expanded your farm’s acreage by leasing farmland from a neighboring landowner. Regardless, you understand that leases are crucial to your operations and, ultimately, your farm’s return on investment.
According to the USDA’s Economic Research Service (ERS), American farmers lease 39% of the 911 million acres of farmland in the lower 48 states, and cropland accounts for 54% of all leased farmland. Given that farmland leasing is so prevalent in today’s agricultural economy, producers know their operations depend on establishing rapport with the landowners from whom they lease.
Here are a few practical ways you can ensure a good working relationship with your landlord to protect that farmland leasing relationship for the long haul. But remember: the best way to make sure you're protected is to have an experienced attorney on your side. Check with your state bar association for legal professionals experienced in farm leasing to get the best advice for your situation.
Document everything
The relationship you have with your landlord is mutually beneficial. Your landlord benefits from rent payments, and you get access to that acreage to grow your farm business. However, any time you make changes to that leased property—whether it’s altering the drainage of a field, planting a new crop, or installing a center pivot—you need to keep your landlord informed before you make those modifications.
According to the USDA’s Economic Research Service (ERS), non-operator landlords own 30% of all American farmland. That means your landlord may not be an expert in commercial agriculture. As a tenant, you want to establish trust with your landlord, particularly if he or she is a non-farming landowner who may not understand all the nuances of specific decision-making relative to planting, fertilizing, or tillage. Getting all your plans and processes in writing for your landlord to both review and sign off on is critical.
As a tenant, you want to establish trust with your landlord, particularly if he or she is a non-farming landowner who may not understand all the nuances of specific decision-making relative to planting, fertilizing, or tillage.
Here are a few farmland-leasing scenarios where you should be sure to maintain written documentation:
- Note the condition of the land at the time you begin your lease. Walk the property with the landowner, if possible, and take time-stamped photos. Record particular areas like drainage, utility poles or gas lines, fencing, and roads so you have hard proof of farm conditions at the outset of the lease should an issue arise later.
- Work with the landowner to document farmland lease terms, payment schedules, obligations of both parties, and overall expectations. You may want to go beyond a standard lease agreement to ensure fairness on both sides. Having a third party, like an attorney well-versed in leasing farmland, review the agreement is also an excellent idea, particularly if you’re dealing with a non-farmer or absentee landowner.
- Let your landlord know of any changes you plan to make on the land before you make them. Let’s say you’d like to move to a no-till strategy and plant cover crops rather than continuing with a conventional tillage program. Giving the landowner a written proposal explaining the yield and environmental benefits of such a change and getting him or her to approve those changes can go a long way toward reducing disputes down the road.
- Get written confirmation of what your landlord will permit on the land—and what they won’t. For instance, can you use that rustic barn on your landlord’s property to hold events that require a permit? Do you plan on having field days for local students on the acreage, therefore requiring you (or possibly the landowner) to hold liability insurance? Who is responsible for repairs and routine maintenance on the land? Are there any land, water, or soil restrictions? An exhaustive list on the front end might seem excessive, but it can help both of you avoid surprises that could damage your working relationship in the future.
Get face-to-face communication
In-person communication may or may not be feasible depending on the location of the landowner. If possible, however, set periodic in-person meetings to keep your landlord apprised of the operations and to nurture the relationship.
- Ask your landlord how often he or she feels comfortable meeting with you. Your landlord may want a quick ride around the property once a year or once a quarter to see what improvements you’ve made on his or her land. You could also use this time to point out any repairs that may need to be made to things like fence lines or outbuildings.
- If a video chat isn’t feasible, offer to send the landowner monthly or quarterly updates and cost-production reports via email, or connect with him or her over the phone to keep them in the loop.
- Address issues in person when possible. While it’s easy to sit behind a keyboard and fire off a stern missive when you and your landlord disagree, it’s better to meet in person and speak with consideration and compassion to diffuse any tension. In-person meetings foster transparency, and it’s easy to misinterpret the tone of an email or text. Face-to-face interaction can help establish trust and ensure each of you better understands the perspectives and business goals of the other.
Establish boundaries when leasing farmland
Part of the trust involved with leasing farmland comes from liking the person with whom you do business. The other side of the coin is putting any personal relationship you may already have with your landlord aside while leasing farmland from him or her. That’s true whether your landlord is the great-uncle you’ve known since birth, the neighbor with whom you attended high school, or your older sibling.
- Always have a lease agreement. Even if your lessor is your parent who simply wants a handshake transaction, make sure you advocate for a written farmland lease that clearly outlines the terms of the rental agreement and cost-sharing roles. This protects your interests as a tenant, no matter the type of relationship you may already have with your landlord. It protects those family relationships, too, by avoiding disputes over possessions, money, and land.
- Establish clear roles and responsibilities. Your high school best friend who leases her late parents’ land to you may operate under the premise that she knows and trusts you. You, as the farmland tenant, still have the responsibility to keep her informed, keep the lines of communication open, and document everything.
- Give your landlord a business plan. When you assume the farmland lease, it’s valuable even for a close friend or family member landlord to fully understand what your plans are for that acreage. If you’ve farmed on a rented field for decades, you’re invested in the outcome of the acreage, and you may tend to look at that property as your own rather than a rented piece of land. Whether you’ve leased the farmland for several months or several decades, it’s never too early—or too late—to write up a business plan and update it as your farm operations shift.
- Take the time to acknowledge your lessor. Send your landlord a thank-you note if he or she offers to proactively repair a waterway issue on the land. Put your landlord on your holiday card list, and take the time to remember his or her birthday each year. These small acknowledgments may not seem like much, but taking an appropriate, personalized approach helps nurture the relationship.
Plan for farmland leasing disputes
Whether your landlord is a family member or someone with whom you simply have a working, lease-based relationship, you’ll want to establish a mutually agreed-upon way to handle any disputes that may arise over leased farmland. If you plan for the worst-case scenario at the outset, you’ll already have a framework for how to handle issues as they arise.
- Work with your landlord to create clear language in the lease agreement that determines a course of action in the event of a disagreement. For instance, your lease may clearly state that if you incur damage to an outbuilding on the land, you’re liable for the cost and repair of the building. By signing the lease, you agree to those terms, so there will be no dispute as to who is financially responsible for repairs.
- Consider a third-party mediator. When hashing out the terms of a lease, make sure you name a mediator. A non-biased mediator’s role is to help the lessee and lessor come to a resolution in the event of disagreement. This third party could be a local attorney who specializes in leasing farmland, a cooperative extension agent or even an established agricultural mediation program. For instance, the Lansing, Michigan-based Agricultural Mediation Program provides free mediation, and agricultural mediation programs exist in most states. To see if you have a USDA-contracted mediation program where you live, contact your local USDA Service Center.
- Know when to walk away. Sometimes a landlord and tenant simply can’t resolve differences. In this case, you and your landlord should work with your attorney to create a clear and concise lease termination clause in case of insurmountable differences.
Even if your lessor is your parent who simply wants a handshake transaction, make sure you advocate for a written farmland lease that clearly outlines the terms of the rental agreement and cost-sharing roles.
There are many factors to consider when leasing farmland. And while a written lease is fundamentally important, the farmer-landlord relationship is as well. Before entering into any agreement, enlist the assistance of your crop insurance agent, real estate attorney, or extension agent to help you—and your landlord—set the foundation for a successful business partnership.
The information provided herein is provided gratis, and solely as reference. The information is not intended to be, nor shall it be a farmer’s sole and exclusive source of information on the subject matter. Corteva Agriscience makes no warranty, or other representation, express or implied, as to the accuracy of any information contained herein, and cannot assume responsibility or liability for reliance on or use of this information by any farmer in making specific decisions on farmland leasing, which in all cases is the responsibility of the farmer.