Farm Leases Can Span 100+ Years
Since the beginning of land ownership in our country, leasing land for agricultural purposes has been a common practice, and nowhere is the practice more common than here in the Midwest. Many farmer/owner relationships date back to the 1800’s, with some spanning several generations of the same farm families, leasing the same land, from the same family of owners.
One-half of Missouri Leases are Verbal
Verbal (handshake) farm leases are a tradition in Missouri. The Missouri Extension Office indicates oral farm leases continue to make up around one-half of all farm leases. Two parties, a landowner and a tenant, discuss the terms, and shake hands. Missouri law provides that oral farm leases and tenancies at will for agricultural purposes shall not be construed as month to month tenancies, but rather year to year.
Verbal Lease Termination Timeline, 60-days
So what happens when it becomes necessary to terminate a “verbal” farm lease agreement, and what is the notification timeline? The rules vary depending on the state, however, for purposes of this article, we will limit discussion to Missouri. Traditionally, notice of termination is expected prior to January 1st. But why is January 1st a significant date? Year to year farm tenancies in Missouri require written notice of termination, from either party, at least 60 days prior to the end of the lease year, reference Missouri law (Section 441.050 RSMO). The end of the “agricultural year” in Missouri is customarily March 1, which makes the notification deadline the end of December, hence before January 1. However it’s also important to note Missouri law allows for the parties to agree to a different ending date. This is when disagreements can arise over the terms of a verbal lease.
Protect Your Successor/Heir
A written lease agreement has many important benefits including minimizes surprises and outlining responsibilities. However, it’s my experience that the most unforeseen challenges arise when the lessor or lessee passes away. This is my biggest reason for recommending a written lease agreement. Preparing an agreement is mutually beneficial and will save your heirs a tremendous amount of anxiety when faced with managing the farm. In many cases, the land owner’s heir(s) have never talked to the farmer and likewise the farmer’s heir(s) haven’t met the owner. At a minimum, a formal document will provide the lease duration, names and addresses of the parties, property legal description, rental rates, arrangements for payment of rent, and the signatures of each party. So the next time you’re discussing your estate planning, please consider making a farm lease part of the conversation.
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