A Brief Introduction of Farmland Rental Agreement
The farm owners usually aren’t well-acquainted to can’t take care of their entire farm on their own and often are unable to understand farming entirely to utilize the farm in a perfect way. So, in such a scenario, the best option for them to rent out their entire land or part of it to the farmers. Farmers use the land for farming and sign a detailed agreement- Farmland Rental Agreement. An agreement signed between the owner and the farmer is known as Farmland Rental Agreement.
Further, there can be two types of these agreements. In one, the owner only takes the monthly payment as rent or lease compensation. The other one in which the owner also takes some percentage of the benefits made through farming by the farmer. The agreement is also used by owners who want to sell their farm, but since that process takes time, they earn some money through renting it temporarily. Some farmers also buy the land by the end of the lease term at a lesser price.
The agreement contains all the details related to the land and lease. It ensures both parties are protected, and they know their responsibilities. Other names for a Farmland Rental Agreement are Farm Rental Agreement, Farm Land Rental Contract, and Farm Land Rental Agreement.
Who Takes the Farmland Rental Agreement?
As mentioned above, the agreement is signed between the owner of the land or landlord or owner and the tenant or farmer. The farmer can be one or more than one. Depending on the size of the land, the owner can decide if he wants to give the property to one person or more. Like any other rental agreement or lease agreement, this one also requires all information to be documented precisely.
Purpose of the Farmland Rental Agreement
One type of Farmland Rental Agreement is Farm Cash Rent Contract. The purpose of a Farm Cash Rent Contract is to ensure that land gets utilized for farming by farmers, and the owner makes some money through monthly rental payments. It should be noted that in a Cash Rent Contract, the owner doesn’t share the percentage of advantages made by the farmer through farming. Here are some more reasons to sign a Farmland Rental Contract –
- It lists down all the terms and condition of a lease
- It protects both parties legally
- It tells each party their responsibilities and obligations
- It ensures that there are no unnecessary fights and arguments between the parties
- It ensures the owner gets the monthly payment
Contents of the Farmland Rental Agreement
Like any other rental or lease agreement, Farmland Rental Agreement will also have basic details of both parties. They include
- Names, addresses, phone numbers, etc.
- The details related to the farmland, such as locality, size, condition, etc.
- Any details about the farm that are essential to its successful management
- Responsibilities of the tenant and his rights to the produce include excesses
- Responsibility splitting in case of any disease or blight on the crop
- Restrictions on the use of land except for specific crops
- Payments in case any additional piece of land would be used to raise any additional crops or for livestock
- Share of the proceeds from the pre-existing crops on the land for the tenant
- Details of handling the crops that are already existing on the property by the tenant
- Further, the agreement must have all the lease terms listed. Lease terms include the details of when the lease begins, when it ends, how it can be terminated, etc.
- It also includes the payment details, how it should be paid, what are the late payment charges, etc.
- The percentage of profits must also be specified in the agreement.
- The obligations and responsibilities of the farmer, i.e under what circumstances the farmer can eventually buy the land; the agreement must provide those details if applicable must be specified.
- Also, it must state other important inclusions are maintenance, services, taxes, insurance, etc.
How to Draft the Farmland Rental Agreement?
To draft the agreement, the farmer must first visit the land and check it himself. Even if the tenant and landlord know each other for some time, the tenant must make sure that he or she visits the land. Further, the tenant must ask the owner if he wants to share the benefits earned from farming. If the owner agrees, then both the parties must decide the percentage of share.
Further, the owner must make the tenant understand the rules regarding
- Details of the land
- Permissions for improvements on the land and the tenure of the contract
- Due dates of the rent, late payments and defaults
- Possession of the land — premature possession or possession on default
- Permissions for assignment and sub-leasing
- Parties and heirs to the contract
- Indemnification and insurance on the land or for the utility of the land
- Permissions for hunting or other commercial activities on the land
- Security provisions that need to be installed on the land
- The farming practices that need to be used
- Services, irrigation, maintenance, electricity, etc.
- Parties must also negotiate on many things such as rent, the term of rent, late payment fee, the share of benefit from farming, etc.
- Both parties must understand the termination clause very clearly because it can save them from a lot of disputes in the future.
All rent agreements have one really crucial aspect called the negotiation strategy. Both parties must understand that negotiations are part of the process. The tenant can negotiate for rent and rent terms while the owner can negotiate for the benefit he is going to get from the profits from farming
Benefits & Drawbacks of the Farmland Rental Agreement
A well-drafted agreement benefits both parties. In comparison to an oral agreement, a written agreement provides security and relief. It allows parties to take legal remedies in case of any conflict.
Here are some benefits of the agreement –
- It ensures both parties are protected by the law
- It ensures both parties know their rights and obligations
- It ensures there are dispute resolution methods in place
- It provides a sense of security to both parties
- It protects both parties
- It gives both the parties some additional revenue
- It removes some responsibilities from the shoulders of the landlord
- It gives the tenant some control over the land for doing activities that give him maximum profit
- It gives the tenant greater commercial possibilities in the land
- The landlord can be ensured that his property will be taken care of because of insurance
- The landlord can take back his property in case the tenant defaults so he can rest easy
- The landlord can restrict what sort of activities are performed on the land
There are absolutely no disadvantages to signing this agreement. This should be drafted with the utmost care and precision so that it works in favor of both parties.
What Happens in Case of Violation?
In case of any violation, parties must refer to the agreement. They must try to mediate(1). In case of a bigger breach, parties are well within their rights to approach the court. Parties can also take the help of an attorney. It is important to understand each clause and condition of the agreement before signing it to avoid any confusion.
Renting a farm is a very important event. Thus, it is important to understand everything that along with it and the responsibilities you need to undertake. Farmland rental rates depend on the state you live in. So ensure you research the rates in your state and don’t get swayed with seemingly good offers.