Lease agreements are only as good as those who negotiate them. Provisions can be added to leases at the discretion of the landlord and tenant. Here are a few miscellaneous considerations that you may not have thought about, based on a recent landlord and tenant program in Norfolk presented by University of Nebraska Extension educators, Allan Vyhnalek and Tim Lemmons.
- If the tenant becomes ill, is there a sublease provision so they could sublet the land out to another tenant? Can the tenant sublease the field to a higher-paying tenant? Does the extra rent automatically go to the landlord? Lease provisions should be developed addressing this situation.
- What happens if a drought hits? What if pasture wells are impacted or cattle need to be pulled from pastures because there is no forage? Especially on dry land crop ground, flexible leases that allow rental rates to flex according to yield, or market prices, or both, could be considered to address years when crops are poor or when crop yields excel.
- What about grain bins or irrigation systems? Who owns them and are they included in the rent? What is the condition of the facilities or the pivot? If the landlord owns the pivot or grain bins, rent should be established by calculating ownership costs like depreciation, interest, repairs, taxes and insurance.
- How are hunting lease rights handled? While these rights belong to the tenant unless they are negotiated otherwise, liability insurance is highly recommended for situations where exclusive hunting rights are sold.
- If there is haying, what is a fair payment for the landlord? Typically haying is done on shares and the landlord is paid one-third to one-half, priced at local hay prices.
- If cornstalks are grazed, the lease rights usually go to the tenant, but how much of the stalks should be removed? Is haying of the stalks going to be allowed and who gets the income?
- On pasture rent, is payment going to be made per acre that is grazed or per cow/calf pair? Is payment considered on a monthly or daily basis? Who takes care of labor and materials if fences need repair? Fencing is normally the responsibility of the landlord, so if the tenant takes care of repairs, is there a rental adjustment that is needed?
- Is there a phosphorus or lime provision in the lease? Liming and phosphorus applications are costly, but they are generally good for a few years. In many neighborhoods, liming is at the landlord's expense because it can be spread out over 10 to 15 years. If a tenant pays for a phosphorus treatment and doesn't receive a lease for that land the following year, a provision in the lease could offer a pro-rated payback from the landlord to the tenant to cover the three or four years the treatment lasts.
You can learn more about lease agreements and landlord and tenant considerations in a future print article in Nebraska Farmer. You can contact Vyhnalek at [email protected].