Leases

There are numerous concepts associated with creating an effective lease for a farming operation.  A good lease can be a useful tool, but a lease that is inadequate can cause uncertainty and create problems.  Also, income tax, social security tax, estate and business planning as well as other economic issues are associated with farm leases.

More leasing information, including forms, can be found on Ag Decision Maker (Iowa State Extension): http://www.extension.iastate.edu/agdm/wdleasing.html

Publications on Leases

Leases FAQ

Who owns the aboveground plant after harvest?

Iowa Code § 562.5A specifies that if a lease is silent, the aboveground plant belongs to the tenant until the lease is terminated.

What is an indemnification clause?

This is typically a clause that requires that the tenant will compensate the landlord for any loss to the landlord caused by the tenant’s negligence (and vice versa). In addition, the contract should make clear who will be liable for any accidents that occur on the land and who is responsible for maintaining liability insurance coverage and in what amount.

What is a good husbandry clause?

Good husbandry is usually defined ad proper fertilization, tilling, weed maintenance, control erosion, manure application, and generally protecting the natural resources of the land from unnecessary harm. A good husbandry clause should be specific as to the farming practices the tenant should utilize. If these practices are not followed and harm may result, the landlord may be entitled under this type of clause to enter the property to properly care for the land or crops.

What are some of the basic things that should be included in a lease?

Some necessary components of a lease are: an accurate description of the land; the parties involved and their signatures; the length of the lease; time and place for rent payment and the kind of payment to be made; allocation of responsibility for building maintenance; an indemnification clause; and what happens to any personal property remaining on the premises.

My tenant and I agree the lease terminates and are negotiating a new lease agreement for the upcoming year, do I still need to provide a written notice of termination?

Provide the statutory notice by September 1 even if you and the tenant agree the lease terminates. This prevents any issue that may arise and protects you in the event negotiations fail or if for some reason you no longer agree that the previous lease terminated.

My lease with my tenant states that it terminates at the end of February, so why do I have to send a termination notice?

Iowa Code § 562. requires that a written notice of termination of the farm lease be provided to the tenant by September 1 for termination of the lease on March 1. Failure to provide the written termination means the lease will automatically continue for another year under the same terms as the previous year. This applies to all farm tenancies including pasture land and leases for less than 40 acres. The only exceptions are for mere croppers or for leases involving less than 40 acres on which an animal feeding operation is the primary use.

My landlord sold the property to another person this summer, do I have to get off the land?

No. The purchase of the property was subject to the terms of the lease you had with your landlord, so you are entitled to remain on the property under the same terms and conditions of your lease with the previous owner.

My landlord and I have an understanding that has worked just fine for years, why would we need a written lease?

A written lease makes sure the agreement is documented for both parties to know and understand all the terms and conditions agreed upon. Memories can fade over time, which can lead to misunderstandings about the duties and expectations of both parties. Putting the agreement in writing helps to solidify the agreement. It also helps both parties see what is being agreed to, which provides an opportunity to discuss the terms and conditions. Written agreements are also much easier to enforce for both parties if any disagreement arises.

I have a written lease for five years, do I need to record this?

Yes, Iowa law requires that all leases for five or more years be recorded. Failure to record the lease or a memorandum of the lease within 180 days can result in a fine of $100 per day.

How long is an oral lease valid?

Oral leases are only valid for one year. Any lease for a longer period must be in writing.

Are there examples of leases I can review?

Yes. Iowa State University Extension and Outreach’s Ag Decision Maker website has some sample leases. These can be found here: http://www.extension.iastate.edu/agdm/wdleasing.html. Your circumstances and agreement may require additional terms or changes to these sample forms. It is always best to have an attorney review a lease to ensure it complies with the agreement and the law.

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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