The start of a new calendar year typically finds farmers planning for the next production year and preparing for tax time. One common oversight to the planning process, however, is updating or making lease arrangements.
Gordon Carriker, University of Missouri Extension agriculture business specialist, advises anyone who is party to a lease for pasture, cropland, livestock or machinery resolve to review those lease arrangements during the first part of this new year.
"From calls I receive, I suspect most folks leasing land only have a verbal agreement. Many are surprised to learn that a verbal lease for longer than one year is invalid," Carriker says. "If you don't have a lease in writing, resolve to sit down with the other person and write one up that you both agree on."
A written lease can be referred to if necessary and it can cover more than one year. A verbal lease leaves more room for misinterpretation which and can lead to costly court time, loss of production time and the loss of a friendly business relationship.
A written lease should at least include the names of the parties and description of the property, the term (length) of the lease, rental rates and arrangements, a right of entry statement and signatures from all parties. Other sections that might be included are sharing of operating expenses, contributions to conservation and improved practices, improvements and repairs, record keeping, no partnership created statement, arbitration procedures and additional agreements and modifications.
The best written leases are short, to the point, and written with both parties at the table over a cup of coffee or hot cocoa. If the lease is more complicated, Carriker suggests you have it reviewed by an attorney.
For further information on lease agreements and sample leases, contact your local MU Extension Center for a copy of MU Guide G426.