Court Says Single Cotenant Could Not Terminate Inherited Farm Lease

On October 11, 2023, the Iowa Court of Appeals affirmed the district court when it ruled that one owner of tenancy-in-common could not terminate a farm lease entered into by a life estate holder without the permission of the other co-owners. The court also affirmed that a co-executor could not terminate a farm lease during probate administration without the unanimous consent of the other co-executors.

Facts

Plaintiff is one of four sisters who own farm land as tenants-in-common. Prior to their ownership, plaintiff’s mother was possessor and owner of the land. Plaintiff’s mother was a life tenant to a 40% interest in the land and fee-simple owner in the remaining 60% interest. In 2015, the mother entered a fifteen (15) year lease with a farm tenant.

The mother died in January 2021. The mother’s 60% interest in the land will go to all four sisters. The plaintiff and her three sisters were the remaindermen of the 40% interest. Plaintiff was named co-executor of the estate along with all of her sisters. Prior to September 2021, plaintiff unilaterally sent a notice of termination to the farm lease tenant. The other sisters did not agree to terminate the farm lease and therefore did not believe the termination was valid.

Plaintiff filed suit asking for a declaratory judgment that the farm lease was “unenforceable, invalid, or terminated.” She argued that Iowa Code § 562.8, which discusses farm leases granted by life tenants, allows her as a successor in interest to the life tenant to unilaterally terminate the lease. She also argued that the farm lease was an unlawful restraint on alienation. Both sides filed motions for summary judgment.

The district court found that the farm lease was not terminated. First, the court found that prior case law establishes that one co-tenant could not terminate a valid farm lease. Second, the court found that Iowa Code § 633.76, which discusses co-executor powers, requires unanimous consent between co-executors agree before acting. Therefore, the termination of the lease of the 60% of the land under probate administration was invalid. Finally, the court found that leases are not restraints on alienation.

Plaintiff appealed arguing that the court errored when it held § 562.8 required all cotenants to agree to terminate the farm lease and when it held that unanimous consent of the co-executors was necessary to terminate the lease during probate administration. 

Court of Appeals Opinion

The court of appeals agreed with the district court on both accounts. The court found that the plaintiff was “a” holder, but not “the” holder of the successor interest of the life estate under § 562.8. Since the legislature chose to use “the” instead of “a” prior to “successor interest,” the successor interest is held by the tenants in common, not by one tenant alone. Therefore, § 562.8 did not allow plaintiff to unilaterally terminate the farm lease as to the 40 percent of the land that had been in the life estate.

On the issue of the portion subject to probate, the court found that Iowa Codes §§ 633.350 and 633.351 establish that land rights passed through probate are subject to the co-executors’ powers during probate administration. Plaintiff could not unilaterally terminate the lease using her powers as an executor since § 633.76 requires unanimous consent among the co‑executors. The court noted that if there is a disagreement, the co-executors could ask for direction from the probate court. However, this action was not brought in probate and therefore the district court did not error.