Landlord/Tenant Cash Lease Workshop
On November 20, 2013 a Landlord/Tenant Cash Lease workshop to help landlords and tenants develop a lease that is right for both parties while maintaining positive farm lease relations will be held at the Community Building in Shickley, NE starting at 9:00 a.m. The Nebraska Soybean Board and North Central Risk Management Agency sponsors this free workshop with lunch provided by the Farmers & Ranchers College and additional presentations continuing until 3:00 p.m. Afternoon presentations include information on programs available for producers, including information on the Beginning Farmer program.
As crop budgets tighten, it is more important than ever to learn the latest information about leasing options and issues. Please call the Fillmore County Extension Office at (402) 759-3712 to preregister.
Relatives and Farm Leasing
Hopefully you plan to attend the program described above, but if you were unable to participate, I’ve included excerpts of a recent CropWatch article written by Allan Vyhnalek, Extension Educator in Platte County. Clearly dealing with relatives can be one of the hardest issues to address as it relates to farm leases. However, with good communications and a written lease agreement, you can set up relationships that are not hard on the family.
First, have all leases in writing. This cannot be stressed enough. The handshake lease made by grandparents and great uncles and aunts does nothing but create suspicion and confusion because when that generation passes on, no one knows exactly what the agreement was.
Next, understand there are ownership costs for that land that the tenant is probably just providing without compensation. Items like: mowing road ditches, spraying weeds, controlling volunteer trees, maintaining terraces, maintaining buildings, grading and rocking driveways, and keeping fences up are just a few of the landowner costs that in many cases are just taken care of by the tenant.
In some cases, landlords think they don’t receive enough cash rent from a relative. When we discuss the land ownership costs and how they are taken care of, the landlord quickly realizes that the tenant is providing the labor and cash investment in those items. If the rent isn’t the going “coffee shop” rate, the landowner is simply recognizing that the tenant is receiving a discounted rent as compensation for their efforts to keep the land and property in good order.
The rent to a relative doesn’t have to be at the ‘”top” of the range, but it should be fair. What one family does will be very different from another family. Tenants need to communicate clearly by sharing information about the farm. Information like actual yields and prices received will go a long way to building good trust for the family to continue the leasing arrangement for another generation.
Vyhnalek summarizes the most compelling reason to have a lower rent for a relative is that they are relatives. Especially if we have younger folks coming to replace our older generation, this provides an opportunity to help that generation establish themselves. Utilizing the land resource properly is a business, and the lease should be fair to both parties. With clear communication and having the lease in writing, most problems with lease terms can be minimized.