Remember, Farm Lease Termination Notices Must be Sent Before September 1

As production costs continue to rise, farmland owners and tenants may be reconsidering the terms of their farm leases. Both tenants and landlords should be aware of Iowa’s farm lease auto-renewal statute. Anyone who does not wish to continue a farm lease into 2023 should know that their 2022 farm lease will automatically renew under the same terms and conditions if neither party provides written notice on or before September 1. This auto-renewal provision applies to both written and oral leases.

Termination of Farm Tenancies

Iowa law provides three options for providing proper termination notice.

• By delivery of the notice, on or before September 1, with acceptance of service to be signed by the party to the lease or a successor of the party.
• By serving the notice, on or before September 1, personally, or if personal service has been tried and cannot be achieved, by publication, on the same conditions, and in the same manner as is provided for the service of original notices, except that when the notice is served by publication no affidavit is required.
• By mailing the notice before September 1 by certified mail to the last known mailing address of the other party to the lease.

Iowa Code § 562.7. The easiest method is the third option: sending a termination notice by certified mail before September 1. The courts have interpreted this statutory requirement very strictly. Notice sent via regular mail will not suffice, even if the recipient acknowledges receiving the letter. Because the procedural requirements are so strict, the sender of the notice must keep the receipt from the certified mailing in case a dispute arises.

There is no special wording required in the termination notice. However, the notice must set the termination date to March 1. Iowa Code § 562.5. Iowa State Extension has provided a lease termination form that may be used to provide notice of a lease termination.

Exceptions to Auto-Renewal

There are limited exceptions to Iowa’s auto-renewal statute. Parties may execute a separate written agreement to terminate the lease on a specific date. This agreement may not be part of the actual lease.

The auto-renewal statute does not apply to farm leases for animal feeding operations on less than 40-acres. An "animal feeding operation" means a lot, yard, corral, building, or other area in which animals are confined and fed and maintained for 45 days or more in any 12-month period, and all structures used for the storage of manure from animals in the operation.” Iowa Code § 562.1A(1).

Lastly, if either party breaches the terms of the lease, the other party may seek to terminate the lease and the auto-renewal would not apply. This provides landlords some relief if a tenant is unable to make rental payments.

Iowa State University Extension and Outreach farm management specialists are leading two virtual Farmland Leasing and Management Workshops on August 26th and 29th. For a more detailed review of Iowa farm lease law, please read our online publication. For a review of new Iowa tax law impacting retired farmers in 2023, read this publication: New Iowa Tax Law Benefits Retired Farmers.