LLCs for Farm Machinery, Not the Liability Barrier You Might Think.

by: Robert Moore, Attorney, OSU Agricultural & Resource Law Program

A common business strategy for farming operations is to place their machinery in a separate, stand-alone LLC. The idea behind this strategy is that by putting the high-liability machinery in its own LLC the other farm assets are protected. Unfortunately, the liability protection of a machinery LLC is sometimes overstated and may not provide as much protection as intended.

The compromised liability protection of a machinery LLC is not due to a defect in LLCs, but rather it is a result of who is operating the machinery. Typically, the persons operating the machinery are the owners or employees of the farming operation. Many liability incidents involving farm machinery are the result of operator error which pulls the liability back to the farming operation.

Consider the following example. XYZ Farms is a grain operation. To mitigate the liability of having large machinery traveling on roadways, XYZ Farms establishes Machinery LLC and transfers all machinery to the LLC. An employee of XYZ Farms causes an accident while driving machinery on a roadway. Because employers are liable for the actions of employees, XYZ Farms is liable for the accident even though the machinery was held in Machinery LLC.

A machinery LLC does provide some liability protection. If the liability incident is caused solely by an issue with the machine and not the operator, the LLC may prevent liability from transferring to other assets. Again, most accidents are caused by operator error so relying on this liability protection is planning against the odds.

As seen in the example, machinery LLCs do not completely insulate owners and other assets from liability. In fact, no entity used in a farming operation is guaranteed to prevent liability exposure for the owner. Therefore, liability insurance should always be the primary liability management plan for farm operations. Business entities should be used as the backup plan if liability insurance fails to cover liability exposure.

Machinery LLCs do have other beneficial uses. One of the more common uses is to consolidate various machinery ownership among family members. Having one entity own, buy, and sell all machinery is often a simpler plan than multi-ownership. For example:

Mom and Dad, Son, and Daughter each own some machinery. Each time they need to buy a new piece of equipment, it is a challenge to determine how the trade-in is handled and who should be the new owner. Instead, they establish a machinery LLC and put all their machinery in the LLC. They each receive ownership in the LLC in proportion to the ownership in the machinery. For all future purchases, the LLC provides the trade-in and buys the new machine.

The liability protection provided by machinery LLCs may not be as thorough as sometimes expected but they can still be a valuable component of a business structure plan. They do provide some liability protection and are useful in other ways such as consolidating ownership. Before establishing a machinery LLC, be sure to have a thorough discussion with legal counsel to fully understand it’s benefits and limitations.

Save the Dates – Central Ohio Agronomy School

Due to COVID uncertainties the 2022 Central Ohio Agronomy School has been pushed to March. 

Monday March 7 – 6:30 – 9:00p.m.

Monday March 14 – 6:30 – 9:00p.m.

Monday March 21 – 6:30 – 9:00p.m.

Monday March 28 – 6:30 – 9:00p.m.

The School will be at the new Ramser 4-H Activity Center (on the fairgrounds)

700 Perimeter Dr.  Mount Vernon, OH  43050

More details to come

New laws and new resources on wind and solar development in Ohio

BY  | OCTOBER 13, 2021 · 3:47 PM

Large-scale wind and solar energy development has generated both opportunity and conflict across Ohio in recent years.  For several months, we monitored the progress of Senate Bill 52, a proposal intended to address community and landowner concerns about wind and solar facilities.  This past Monday marked the effective date for Senate Bill 52, passed by the Ohio Legislature in June, and we’ve been busy developing new resources to help explain the laws that are now effective.

Continue reading

Poison Hemlock Control

Source: Mark Loux, Curtis Young, OSU Extension

Poison hemlock remains one of the more persistent and prevalent poisonous weeds that we deal with in Ohio.  It’s most typically a biennial plant (sometimes perennial), emerging from seed in year one and developing into a low-growing rosette by late fall.  The rosette overwinters and then resumes growth in the spring of year two.  Stem elongation initiates sooner in spring than many other biennials, and this is followed by continued growth and development into the often very tall plant with substantial overall size.  Flowering and seed production occur in summer.

Failure to control poison hemlock occurs partly because, while it often grows in edges and fencerows around crop fields, no one really pays much attention to it until it does reach this large size when it’s less susceptible to herbicides.  And everyone is busy getting crops planted  in spring anyway so control of hemlock gets low priority.  Stages in the poison hemlock life cycle when it is most susceptible to control with herbicides are:  1) fall, when in the low-growing rosette stage; and 2) early spring before stem elongation occurs.  It’s most easily controlled in fall, but several products can work well in spring.  Herbicide effectiveness ratings for poison hemlock can be found in Table 21 of the current Weed Control Guide for Ohio, Indiana, and Illinois.  Herbicides rated 8 or 9 on poison hemlock include the following:  9 – Crossbow, Remedy Ultra; 8 – Cimarron Max, Curtail, dicamba, glyphosate.  Mixing glyphosate and dicamba can improve control compared with either applied alone.

Several online resources cover poison hemlock more comprehensively than this article does, including this one from the University of Missouri.  Information on toxicity can also be found via an internet search or by contacting OSU Extension if help is needed to resolve a specific concern.

OSU Extension Virtual Programming: Week of March 8

The following virtual programs are available next week.

 

MONDAY, MARCH 8

Farm Bill Webinar: 2021 Corn and Soybean Crop Insurance Considerations

10:00 am to 12:00 pm

2021 Virtual Ohio AgritourismReady Conference

6:30 pm to 8:30 pm

 

TUESDAY, MARCH 9

Virtual Conservation Tillage Conference

8:00 am to 3:00 pm

 

WEDNESDAY, MARCH 10

Virtual Conservation Tillage Conference

8:00 am to 3:00 pm

Southern Ohio Farm Show (Virtual)

10:00 am to 11:00 am

Beef Sire Selection for the Dairy Herd (Virtual)

12:00 pm to 1:00 pm

Farm Office Live

7:00 pm to 8:30 pm

 

THURSDAY, MARCH 11

Virtual Conservation Tillage Conference

8:00 am to 3:00 pm

The Dirt on Soil Health: Investing Below the Surface (Virtual)

8:00 am to 8:30 am

 

Wood Destroying Insect Inspection Training Webinar

8:30 am to 3:30 pm

Midwest Women in Ag Community Education Series

9:00 am to 11:00 am

County Outlook Meeting (Virtual)

10:00 am to 11:30 am

East Ohio Women In Agriculture Program Series

12:00 pm to 1:00 pm

Butler Innovative Farm Forum (Virtual)

7:00 pm to 8:30 pm

 

FRIDAY, MARCH 12

Virtual Conservation Tillage Conference

8:00 am to 3:00 pm

A DAY in the WOODS (Virtual)

10:00 am to 11:30 am

Escape to the Forest Webinar

10:00 am to 12:00 pm

Farm Office Live

 

Considerations of a Flexible Lease Arrangement

Source: Chris Zoller, Barry Ward, Mike Estadt, OSU Extension

Thousands of Ohio crop acres are rented from landowners by farmers.  While the most common is likely a cash agreement, the flexible lease may be worthy of consideration for some farmers.  This article will provide a broad overview of the flexible lease option, including advantages, disadvantages, and strucutre.

The information provided here is only a summary from the Fixed and Flexible Cash Rental Arrangements for Your Farm published by the North Central Extension Farm Management Committee.  Anyone interested in learning more about flexible leasing arrangements is encouraged to read more about this topic at this site: https://aglease101.org/wp-content/uploads/2020/10/NCFMEC-01.pdf.

What is a Flexible Lease?

Because of uncertainties with prices, yields, and input costs, some farmers and landowners are apprehensive about entering into a fixed long-term cash rental arrangement.  From the perspective of the farmer, the concerns include poor yields, commodity price declines, or sharp increases to input prices might impact cash flow if there is a long-term fixed arrangement.  In times like we are experiencing now, landowners want to capitalize on high commodity prices or high yields.

Therefore, the operator and landowner may turn to the use of a flexible cash rent of one kind or another. The idea of a flexible cash rent usually pertains only to the rent charged for cropland.

Advantage of Flexible Leases

  • Flexible cash rent enables the landowner to share in the additional income that results from unexpected increases in the prices of crops considered in the rent-adjustment clause. If the cash rent also is flexed for changes in yields, the landowner will benefit from above-normal yields regardless of the cause.
  • For the operator, risk is reduced. Cash-rent expense is lower if crop prices or yields are less than normal.
  • Calculating flexible cash rent requires more communication from both parties.

Disadvantages of Flexible Leases

Continue reading

What to do about trespassing snowmobilers on the farm?

Source:  Peggy Hall, OSU Extension

Ohio landowners have seen it before:  when the snow flies, so do the snowmobilers.   Landowners are forced to watch snowmobilers crossing their fields and driveways and cutting through woods and homesteads, without permission and apparently without concern for property damage.   Two common questions from landowners arise at this time:  what can I do about them, and will I be liable if there’s an accident?   While the answers aren’t always satisfactory to landowners, several Ohio laws try to address these two questions.

What can you do about snowmobilers on your land?

One possibility for dealing with unwanted snowmobilers is to call local law enforcement.  That might not get the results you’d like, given the difficulty of identifying and catching snowmobilers and limited law enforcement resources in rural areas.  Trail cameras, pictures, or other ways of verifying the sleds and riders might be helpful.  Look for the registration decal on the front of the sled, which allows tracking it to its owner.   Despite these challenges, there are two sections of Ohio law that provide for criminal actions against trespassing snowmobilers if you can apprehend them:

  • Ohio criminal trespass laws make it a fourth degree misdemeanor to knowingly or recklessly be on another’s land without permission or to fail to leave after seeing “no trespass” or similar signs of restricted access or being notified by an owner.  Committing this type of trespass while on a snowmobile doubles the fine to up to $500, and up to 30 days in jail is also possible.  The court could also award damages for harm to the landowner victim of the criminal trespass.   A second offense can result in impoundment of the title to the snowmobile.
  • Ohio motor vehicle laws also address snowmobilers specifically.  The law prohibits a snowmobiler from operating on any private property or in a nursery or planting area without the permission of the landowner or tenant of the property.  The penalty for doing so is a fine of $50 to $500 and potential jail time of three to 30 days. Note that snowmobilers are also not allowed to operate on state highways, railroad tracks and railroad rights of way, and anywhere after sunset without required lighting.  The law does allow snowmobilers to drive on berms and shoulders of roads, across highways if done safely, and on county and township roads if permitted to do so by the county or township.

Another potential legal strategy is to bring a civil action against trespassing snowmobilers.  Again, that requires knowing who they are and proving that they were on your property.  A few laws that could apply are:

  • Ohio’s law on civil trespass is a court made law, and it requires showing that a person intentionally entered another’s land without permission and caused harm to the land.  If a snowmobiler harmed the property while trespassing, this type of claim allows a landowner to seek compensation for that harm.  Examples of harm that might arise include damaged fences, culverts, drives, and crops.
  • If the snowmobiler behaved recklessly and caused damage, another law comes into play.  Ohio law prohibits a person from recklessly destroying or injuring vegetation on another’s land, which includes crops, trees, saplings, vines, and bushes.  “Recklessly” means with heedless indifference to the consequences of an act.    To punish the reckless behavior, the law awards compensation to the landowner for three times the value of the destroyed vegetation.  This law can be particularly helpful when the ground is not frozen and snowmobiling damages the crop beneath the snow.

Other than legal action, a few management practices might be helpful in deterring snowmobilers.  We’ve removed many of the old fences that used to fence in our farms, but fencing is an obvious although costly solution.   If you put up a fence, it should be noticeable and not just a thin wire or two.  Consider flagging the fence with neon markers.  Beyond fences, other actions can help mark property boundaries clearly.  No trespassing signs serve this purpose, but make sure they are easy to see when there’s snow, are visible from a distance, and are placed where snowmobilers might enter the property.  You may have other ways to restrict access to the area where snowmobilers enter, but be aware that you could be liable if you set up a “trap” or dangerous situation that harms a snowmobiler, discussed in the next section.

Will you be liable if there’s a snowmobile accident on your land?

Continue reading