March 1 Triggers Several Farm Lease Questions

February 28, 2019 | Kristine A. Tidgren

Another March 1, the first day of most Iowa farm leases, arrives soon. This post addresses two common questions we've been receiving this month.

Nonpayment of Rent

My tenant and I signed a written lease for the 2019 crop year. The lease provides that the rent is due, up front, on March 1. It’s March 6 and my tenant hasn’t paid. I am afraid that he does not have the money. What can I do?

First, it is important to note that requiring rent up front is a good idea for landlords wishing to minimize disputes and problems associated with a tenant’s nonpayment of rent.  Nonetheless, this protective approach does not always guarantee smooth sailing. Sometimes, a landlord will be forced to confront a nonpayment situation early on in the lease term. It remains true that working with an existing tenant and attempting to reach an amicable solution is often the best approach to handling conflicts. Even so, landlords concerned about their tenants’ ability to pay are better off confronting the problem early on, rather than letting the matter simmer and the problems compound.

Iowa Code §562.6 generally provides that a farm lease will automatically renew under the existing terms for another crop year unless the landlord serves the tenant with a written notice for termination on or before September 1. This is true even when the parties have a written lease that specifies a certain time for the lease to expire. Iowa’s laws are very protective of tenants and were written decades ago to ensure that landlords would not oust tenants without giving them adequate time to find new farms to lease.

It is important to note, however, that the written termination notice requirement does not apply where “there is default in the performance of the existing rental agreement.”  Iowa Code § 562.6. Failing to pay rent when it is due is a default in performance that entitles the landlord to initiate termination proceedings, no matter when that default occurs. See generallyRiggs v. Meka, 17 N.W.2d 101 (Iowa 1945). Although many leases provide that nonpayment of rent “terminates” the lease, Iowa courts have ruled that termination in such cases is not automatic, but an option the landlord can exercise. See, e.g., Vincent v. Kaser Construction Co., 125 N.W. 2d 608 (Iowa 1963). The courts have reasoned that without this interpretation, a tenant could take advantage of his own default and unilaterally terminate a lease by refusing to pay rent.

Many written leases contain provisions specifying how a landlord must go about terminating a lease for nonpayment. Landlords should be careful not to breach such provisions. Generally, however, a landlord faced with a tenant whose rent is past due can terminate the lease. The landlord should first issue a notice of default and provide an opportunity to cure. When a tenant doesn't pay, the landlord may initiate  eviction proceedings under Iowa Code chapter 648. This is an action to formally evict the tenant from the premises. The statute requires that the landlord first serve the tenant with a three-day “notice to quit.” Iowa Code § 648.3. If the tenant leaves the property after the notice to quit is served, the landlord is free to rent the premises to another tenant. If the tenant refuses to leave, the landlord may then file the “forcible entry and detainer” petition in court and personally serving the tenant with notice of the action. Once receiving the petition, the court will schedule a timely hearing to provide the parties an opportunity to be heard. Iowa Code § 648.5.

Landlords facing nonpayment situations are encouraged to consult with legal counsel. Landlords who attempt to oust a tenant improperly can be found liable to the tenant for damages for interfering with the tenant’s “quiet use and enjoyment” of the property. See, e.g.Kuiken v. Garrett, 51 N.W.2d 149 (Iowa 1952).  

Crops Still in the Ground from a Prior Lease

I leased a parcel of farmground during the 2018 crop year. I was unable, however, to complete my harvest because of unexpected weather conditions. I still have corn in the ground, but my lease terminated March 1, 2019. What remedies do I have?

Given the crazy weather of 2018-19, this is a common question we've been fielding.

The Iowa Supreme Court has stated that a tenant must be given a reasonable opportunity to take possession of his crop as soon as is reasonably possible after the termination of his lease if he was unable to harvest due to bad weather. Schulz v. Hoffman, 118 N.W.2d 532, 254 Iowa 868 (Iowa, 1962). A Kansas court later relied on this case to find:

We conclude that where a tenant plants a crop which matures before his lease expires and where he had every reason to believe when he planted that some could be harvested at or prior to the termination of his lease, he is entitled to such crop. If such crop in fact matures and is severed before the end of his lease, then such tenant is entitled to the crop and where he is unable to harvest the same before the termination of his lease due to climatic conditions, then he must be afforded reasonable opportunity to take possession of such crop provided he does so as soon as is reasonably possible after the termination of his lease. Horne v. Oller, 5 Kan.App.2d 263, 615 P.2d 791 (Kan. App., 1980).

You should attempt to work with your landlord  and his or her new tenants to remove your holdover crop as quickly as possible. Although you should have a right to remove it, that right is narrow: as soon as is reasonably possible.

If you have additional farm lease legal questions, they may be addressed in this publication: Iowa Farm Leases: A Legal Review