Wesley Tucker told producers at the recent Lawrence County Soils and Crops Conference that communication is the key to successful, long-term lease agreements.

Renting or leasing agricultural acreage, whether for pasture or for crop use, is one of the most viable options for producers today due to the ever increasing cost of land.

According to Wesley Tucker, University of Missouri agriculture business specialist, it takes a lot of things to develop a successful lease agreement.

However, he told producers at the recent Lawrence County Soils and Crops Conference in Mt. Vernon, Missouri, that the most important aspect of a successful lease agreement is communication.

“Little things can turn into big problems without good communication,” he explained.

Tucker said the first rule of land leases is that there are no rules.

“There are some state statutes and some laws but most land leases are based on customs,” he noted.

In most cases, Tucker believes a good lease is one where both parties think it is fair.

“The majority of problems with a lease occur when one or more parties do not fully understand what the other one expected,” he explained. “Whether a lease is verbal or in writing, taking the time to discuss these issues ahead of time will prevent 99 percent of the problems that will arise later.”

Once again, with no rules, it is hard to pin down all the options necessary in a verbal lease.

“Verbal leases for more than one year are usually considered invalid and unenforceable,” Tucker said.

In addition to that, he said verbal leases are binding on heirs and enforcing them can create many other problems.

“If after one year the landlord and tenant agree to extend a verbal lease for a second year, then the lease becomes what is known as a year-to-year tenancy,” he explained.

This, according to Tucker, means the lease will now automatically be extended for another year at the anniversary date of the lease, unless one of the parties provides a termination notice ahead of time.

“The termination notice must be in writing and provided 60 days prior to the anniversary date of the lease, which is when a landlord and tenant actually made the agreement, no matter when the tenant actually took possession,” he said.

Although a number of leases are done verbally Tucker recommends a written lease.

“Writing out a lease forces you to consider what may seem like minor details now, but can become big issues later,” he explained.

He told producers that the minimum requirements of a written lease are the names of both parties, a legal description of the property, the duration of the lease, the rental rate and payment arrangements and signatures of both parties.

“These are just what is customarily included in a written lease. There are, however, a number of other items that could be considered,” Tucker said.

One very important item includes landowner entry rights.

“Unless agreed upon in the lease, the landowner does not have the right to enter the property,” he said.

He used the example of renting an apartment.

“When renting an apartment the landlord does not have the right to enter any time they wish,” he said.

According to him, if the landowner wants to have the right to enter the property it needs to be stated in the lease.

Another item commonly questioned is subleasing.

“If the lease does not state that the tenant is not allowed to sublease the property, then the tenant can sublease it to anyone he or she chooses without the landlord’s permission,” Tucker said.

The only stipulation is that the tenant can only sublease the property as long as it is for the same original purpose.

Some other special arrangements that Tucker reminded producers to consider included fence repair and soil fertility.

“Agreeing on who is responsible for fences and who pays for materials ahead of time will ensure that fences are maintained and kept in working order,” Tucker explained.

One of the most critical agreements in a lease according to Tucker is soil fertility and lime.

“If pastures or crop land are not maintained the productivity will decrease which hurts both the landlord and the tenant,” he said.

With the rising cost of fertilizer, Tucker recommended a multi-year lease to provide more incentive for the tenant to invest in the soil fertility.

“Another option is to include a special clause in the lease that specifies if the lease is not extended the fertilizer and lime expenses are to be amortized and the tenant refunded for the unused portion,” Tucker explained.

Other considerations in a lease include the use of buildings, repairs, maintenance and mowing.

“The best thing in any lease is always going to be communication. Talk about it up-front,” Tucker concluded.

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