Long-Time Family Feud Leads to Breached Farm Lease

June 30, 2016 | Kristine A. Tidgren

When a court orders a farm lease to continue in light of a contentious relationship, additional litigation is likely to ensue. And that's just what happened in a case decided by the Iowa Court of Appeals yesterday.

The case involved a tenant who had farmed his mother’s ground before she died. After her death, the land was passed to a family trust, of which the tenant was a co-trustee. Disagreements arose amongst the three co-trustees, and lawsuits were filed. The trial court ultimately ruled in 2012 that the trust could sell the property, but that the tenant could continue to farm the ground pursuant to the current lease, through March of 2015.

The trust sold the ground in 2012, and the 50-50 crop-share lease required the tenant to plant crops “as directed by” the new owners. It also required the tenant to receive written authorization from the owners before incurring input costs.The relationship did not go well.

At the end of May, 2013, the owners asked a trial court to declare that the tenant was in material breach of the lease. They sought an immediate injunction to bar the tenant from the property. They asserted in their filings that the tenant had not prepared the ground for planting and had incurred costs without permission from the owners. The trial court, finding that immediate intervention was required to allow for a crop to be planted, issued an injunction two weeks later. The trial court barred the tenant from accessing the property, pending final resolution of the case.

One year later, the matter came for trial, and the trial court found that the tenant had materially breached the lease by failing to prepare for planting, refusing to communicate with the owners, and failing to seek authorization for expenses. The court terminated the lease and ordered that the tenant was not entitled to any portion of the crops harvested in 2013 or 2014. The tenant was also ordered to pay $1,000 in attorney fees to each of two owners.

On appeal, the tenant argued that the owners had waived their rights to have him comply with the terms of the lease. He asserted that there were still issues regarding the ownership of the property and that the trial court erred in finding a breach.

The Iowa Court of Appeals rejected the tenant’s arguments, finding that most of them had not been preserved.

As to the breach, the court affirmed the trial court’s finding of a material breach. As a result of the tenant’s inaction, the owners were required to plant the field themselves and they received a reduced yield because of the later planting. This was sufficient, the court ruled, to establish a breach.

Although not shining new light on any Iowa lease law, this case does well illustrate the costs and difficulties that can flow from contentious landlord-tenant relationships. Many of these relationships, unfortunately, involve family members. Landowners should consider these dreaded contingencies when drawing up their estate plans. Careful planning can often save future family relationships…and, if not that, at least many dollars.

The case is Hope K. Farms, LLC. v. Gumm, No. 14-1371 (Iowa Ct. App. June 29, 2016).