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| Consider several factors in farmland lease agreements |
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Most farm leases begin March 1st and end the last day of February. Many leases contain a clause that says the lease will be renewed as is unless written notice is given by either the lessor, or the lessee, to renegotiate the agreement. This written notice is given at least 60 days before the end of the lease. If wheat is grown in the rotation, the usual practice is to give written notice by September 1st. That way, the tenant knows the lease may be in jeopardy six months before it ends, but more importantly, before he plants wheat.</p><p>
This is the time of year when many leases are written. We have had, in the last three weeks, a number of calls about leases. The most common question is: What is land renting for using cash leases? My smart answer is: Whatever the tenant is willing to pay and the landlord is willing to accept.</p><p>
Ohio State University Extension has a fact sheet, written by Barry Ward, that is a summary of rental surveys collected in the winter of 2006-2007. The results indicate the prices paid and received throughout the state. There is a section on southwest Ohio which extends as far east as Pickaway County and as far north as Mercer and Auglaize. These include some of the best agriculture counties in the state. When negotiating a lease, one needs to consider factors other than just the average price and the productivity of the land. A farm that offers large acreage in large fields will demand more rent. A tenant can be much more efficient on a 600 acre farm divided into six fields than an 85 acre farm divided into four fields.</p><p> Another factor is when the rent is due. The most common practice is to take half the money up front and the rest after harvest. If the rent is paid in full up front, there is no risk to the landlord so the rent should be less. If the rent is due in full after harvest, the landlord is taking the risk the tenant will not pay, so the risk demands a higher rental rate.</p><p>
You can find the results of the survey, cash rents paid in 2006 by going online at ohioline.osu.edu and searching cropland rental. Other excellent fact sheets also available at this site: Crop Share Leasing in Ohio; Farm Rental Agreement Checklist; Legal and Management Aspects of Ohio Farmland Leases; Tax Issues for Farm Rental Agreements and Managing Landlord – Tenant Relationships.</p><p>
If you do not have access to the internet call 513-887-3722 or 513-424-5351 ext. 3722. |
| 12/12/2007 |
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