What is in this article?:
- Communication, precise language important in lease agreements
- Communication needs vary
There is often something of “a gentleman’s agreement,” among farmers, a certain respect and code of conduct which implies that they don’t try to pull leases from their neighbors. Recently, that security a farmer could count on to continue leasing property—if it isn’t developed and if he produces good crops and treats the land well—has become less certain.
Communication needs vary
He says landlords may need different means of communication, depending on where they are and on the past relationship. He has one he considers a close friend and “is easy to work with.” He has one landowner in Chicago with whom he works through a real estate agent in Colorado. He has relatively new leases and one piece of property with which his family has been involved since his grandfather worked as the farm manager. “Our relationship with that farm goes back to the 1920s,” he says.
Some farmers lease from foreign owners and their communication needs may be even more difficult. The key, he says, is to stay in touch.
Long-term leases are becoming less common. “Many landlords do not want to tie up property for more than a year,” Scholz says. That’s also a factor of urban sprawl. “Corporations typically want nothing longer than a one-year lease. They want to remain flexible with what they can do with the property.”
When possible, he prefers a long lease and says landlords should be at least a little cautious about leasing to entities from outside the area that may be in it for the short-term.
“I’ve been through a lot of cycles in more than 40 years, and there have been times I didn’t know if I could stay on the farm and feed a young family. The last two or three crop cycles have been beneficial for the region because of timely rains, and we have made some exceptional yields.” That, along with favorable commodity prices, makes the area attractive for other farmers.
“But commodities are on the way down, and we have to consider the rising cost of inputs and the decreasing price of commodities. We have to look long term.” He says farmers can’t count on the weather either.
Higher rental rates may not fit in a long-term equation.
Legally, farmers are at the mercy of the market when they lease land, just as they are when selling commodities. But preparation in each instance may give them an edge. Developing relationships with landlords, whether by a personal visit or through email or letter, may be a factor in keeping good land.
“There are benefits for landlords to lease to someone they know will do a good job taking care of their property,” says Tiffany Dowell, assistant professor and agricultural law specialist with AgriLife Extension in College Station.
“I think there could be additional benefits that are somewhat similar—if a dispute arises, a landlord might be better able to reach a resolution with someone they know and can relate to, for example.”
She says larger leasing companies that come in and use form leases could be a consideration “if they are requiring form leases that are drafted by corporate attorneys in the leasing company’s favor. All in all, probably the most straight-forward argument to be made is simply that if a landlord wants to be sure to take care of the land and the area, leasing to people who have a vested interest in those things, versus someone who is an outsider, would probably be more likely to meet that objective.”
She does concede that some large leasing companies would be good to work with as well.
She affirms Scholz’s contention that a handshake is no longer sufficient. “The key is to get a lease in writing and each party should include important facets, including right of entry, reimbursement for crop loss if property is developed while a crop is on it, etc.”
Scholz wants to continue doing what he’s done for more than 40 years, even amidst the ever-increasing urban encroachment—“produce good crop yields in Northeast Texas.”