Legal-Ease: Ending a verbal farmland lease


LEGAL-EASE

By Lee R. Schroeder - Guest Columnist



During the next few months, hundreds of farmland landlords and tenants will struggle with when and how to terminate a verbal, year-to-year lease.

Usually, it is landlords who terminate farmland leases because farm tenants seldom give up rented farmland. Because today’s farm tenants often market grain several years in advance and may purchase inputs up to a year in advance of planting, the timing of a landlord’s termination of a lease continues to increase in importance.

Further, the ends of farmland leases are usually especially intense because farm tenants tend to love rented land as much as their own land, and even the chance to rent farmland is considered invaluable to many tenants.

Thus, how soon must a landlord formally “break up” with a farmland tenant under a year-to-year verbal lease? Like many questions, Ohio law is not clear in providing an answer.

However, the law is clear that farmland leases are different from residential (apartment/house) leases. For residential leases, landlords who intend to terminate a verbal or hold-over month-to-month lease must usually give a month’s notice to the tenant to terminate that month-to-month lease.

By reason and logic, people have argued that a landlord must give a one-year notice to terminate a year-to-year farmland lease. But the courts have determined that residential leases and farmland leases are so different that the rules involving termination of those contrasting types of leases should be treated completely differently, too.

The date when any particular farmland landlord must give notice (or simply preclude access, which is not usually practical) in these circumstances is very fact intensive. Answers to the following questions typically provide the basic facts that begin to clarify a legally appropriate date after which the landlord would have to allow the tenant to rent/farm that crop year.

• When is the rent paid each year?

• If rent rates were adjusted in any year in the past, at what time of the year was that adjustment or those adjustments agreed-upon?

• What has the traditional, annual level of communication been between landlord and tenant?

• What has this year’s communication been between landlord and tenant?

• Is the tenant aware of a change in circumstances that might change the annual routine? If so, when did the tenant become aware?

• Is the landlord aware of the tenant’s specific investments in inputs or marketing commitments? If so, when did the landlord become aware?

Anyone who has dealt with this struggle in the past will almost certainly agree that even a basic written lease is worth whatever it takes to avoid this unfortunate situation.

Written farmland leases avoid presumptions and assumptions of the tenant or the landlord’s expectations. New farming methods and practices make the need for written leases even more important. For instance, written leases avoid misunderstandings concerning whether soil fertility levels must be maintained by the tenant during the lease term and whether existing cover crops are to be treated the way that soft red winter wheat is usually treated at the end of a lease term.

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LEGAL-EASE

By Lee R. Schroeder

Guest Columnist

Lee R. Schroeder is an Ohio licensed attorney at Schroeder Law LLC in Putnam County. He limits his practice to business, real estate, estate planning and agriculture issues in northwest Ohio. He can be reached at Lee@LeeSchroeder.com or at 419-659-2058. This article is not intended to serve as legal advice, and specific advice should be sought from the licensed attorney of your choice based upon the specific facts and circumstances that you face.

Lee R. Schroeder is an Ohio licensed attorney at Schroeder Law LLC in Putnam County. He limits his practice to business, real estate, estate planning and agriculture issues in northwest Ohio. He can be reached at Lee@LeeSchroeder.com or at 419-659-2058. This article is not intended to serve as legal advice, and specific advice should be sought from the licensed attorney of your choice based upon the specific facts and circumstances that you face.

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