Farm Tenant/Executor Ordered to Pay Damages to Father’s Estate

March 15, 2010 | Erin Herbold

In this case, a father died owning nearly 400 acres of Iowa farmland. The father’s will bequeathed most of his property to his children (each child inherited a separate parcel) and the “homeplace” went to the grandchildren.  Before he died, the father leased the farmland to his son. The lease specified that upon termination, the tenant would relinquish possession of the farmland. If the tenant failed to relinquish the land, he would owe $150 per day to the landlord as liquidated damages. The lease specified that it terminated upon the father’s death. The son stopped farming the land, but continued to live on the “homeplace.” The son was also the executor of his father’s estate. His siblings and the grandchildren objected to his handling of the estate. They claimed that he had mismanaged the estate’s finances and failed to transfer the property to the rightful beneficiaries in a timely manner. 

Ultimately, a lawsuit was filed. The trial court ordered the son to pay the estate $4000 as rent and $4000 as liquidated damages for the time that he had “held-over” on the homeplace. He appealed and the Iowa Court of Appeals focused specifically on the issue of the hold-over on the homeplace and the entitlements of the grandchildren.  Upon the death of the father, the grandchildren had the right to immediate possession of the homeplace, subject to the executor’s needs in administering the estate. The grandchildren were entitled to rents and profits from the land. 

The appellate court agreed that the executor owed the grandchildren liquidated damages and rent from his hold-over.  However, the appellate court did not follow the same method of calculation used by the trial court. The appellate court held that the proper calculation should be based upon the historical arrangement for the homeplace. Here, “whoever farmed the land also received the home and outbuildings without payment of additional rent.” So, the son argued that he should only owe rent and liquidated damages from the time the lease actually expired. The court agreed, stating that the written lease mentioned no separate payment for residing in the homeplace. Thus, the amount of damages owed to the grandchildren was reduced.  A dissenting judge noted that the the liquidated damages clause was used to prevent a tenant from holding over into the spring, because the economic value of the farmland is diminished if the crop is not planted. Thus, according to the dissent, the tenant should have paid at least $12,440 (a reduced amount based upon the executor’s interest in the farmland).  In re Estate of Anderson, No. 9-991/09-1066, 2010 Iowa App. LEXIS 159 (Iowa Ct. App., Mar. 10, 2010).