Time is Running Out to Avoid Auto-Renewal of a 2017 Iowa Farm Lease

August 23, 2017
Kristine A. Tidgren

Time is running out to avoid automatic renewal of a 2017 farm lease in Iowa. Whether you’re a landlord or a tenant, Iowa law requires that you formally notify the other party by September 1 if you don’t wish to continue the current lease under its existing terms for another year.

This rule applies equally to oral leases or written leases and to one-year leases or multi-year leases. Regardless of the length of the term of the original lease, the auto-renewal provision extends an expiring lease for one additional year. Auto-renewal applies to both landlords and tenants. For example, if a tenant does not wish the 2017 lease to automatically renew for the 2018 crop year under the same price and terms, the tenant must send statutory notice to the landlord before September 1. If this notice is not sent, the tenant is obligated to rent the ground for another year at the current price.

The auto-renewal provision applies only to farm tenancies.And there are several exceptions to the auto-renewal of a farm lease.

  • Written Agreement to Terminate. The parties can enter into a written agreement specifying the time that the farm tenancy will end. If such an agreement is executed, the lease will terminate without statutory notice.  It is important to note, however, that such an agreement must be separate and subsequent to the actual lease, not a part of it. A lease providing for a specific termination date, even stating that the parties wish to terminate the lease on the stated date and waive the right to statutory notice, will still be subject to the statutory auto-renewal provisions.
  • Less than 40-Acre Animal Feeding Operation. Auto-renewal also does not apply to a farm tenancy with an acreage of less than 40 acres where an animal feeding operation is the primary use. Before 2013, the exception included all farm tenancies that were less than 40 acres. Under the current law, all farm tenancies less than 40 acres are subject to auto-renewal unless they fall within the narrow animal feeding operation exception. An "animal feeding operation" means a lot, yard, corral, building, or other area in which animals are confined and fed and maintained for 45 days or more in any 12-month period, and all structures used for the storage of manure from animals in the operation.” Under this definition, it would seem that only operations such as feedlots and confinements fall under the statutory exception.
  • Mere Cropper. The auto-renewal statute also excludes from its reach arrangements involving mere croppers, meaning that arrangement involving a cropper may be cancelled without statutory termination notice. A cropper is "one who, having no interest in the land, works it in consideration of receiving a portion of the crop for his labor.” By contrast, a tenant has an estate in the land for a term, and, consequently, has a right of property in the crop.

How to Serve Termination Notice

There are three alternative methods for serving statutory notice. Any are acceptable:

  • Delivery of the notice, on or before September 1, with acceptance of service to be signed by the party to the lease or a successor of the party.
  • Serving the notice, on or before September 1, personally, or if personal service has been tried and cannot be achieved, by publication, on the same conditions, and in the same manner as is provided for the service of process in a lawsuit.
  • Mailing notice before 9/1 by certified mail to the last known mailing address.

The most common—and usually the most efficient—way to serve statutory notice is option three: mailing the notice by certified mail before September 1. Under this method, the service is completed “when the notice is enclosed in a sealed envelope, with the proper postage on the envelope, addressed to the party or a successor of the party at the last known mailing address and deposited in a mail receptacle provided by the United States postal service.” The courts construe the notice statute requirements very strictly. Notice will not be sufficient, for example, if it is sent via regular, instead of certified, mail. It does not matter if the intended recipient actually receives the notice and admits that he or she read it. The notice will be deemed invalid and the lease will auto-renew unless all statutory requirements are followed. It is therefore important that the sender of the notice retain the certified mailing receipt. Without such receipt, he or she will be unable to prove proper service if a dispute arises. A sample termination notice form can be found here

For more detailed information about Iowa farm leases (including statutory citations), read Iowa Farm Leases: A Legal Review.

 

 

CALT does not provide legal advice. Any information provided on this website is not intended to be a substitute for legal services from a competent professional. CALT's work is supported by fee-based seminars and generous private gifts. Any opinions, findings, conclusions or recommendations expressed in the material contained on this website do not necessarily reflect the views of Iowa State University.

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