Few words can cause more anxiety than “negotiating a farmland rental lease.” Some people think little about it, but others may agonize over discussing details.
In a 2014 Census of Agriculture Survey over 2.1 million landowners rented out 353.8 million acres of agricultural land. This works out to be nearly 40 percent of US farmland that is rented or leased. The average age of principal landlords in 2014 was 66.5 years, which is older than principal farm operators (58.3 years in 2012). Nearly 60 percent of principal landlords were 65 years or older in 2014.
Last year OSU Extension Agricultural Law Field Specialist, Peggy Hall, developed a great resource to see if your farmland lease meets Ohio’s legal requirements for a legally enforceable lease. It and many other helpful resources can be found on the OSU Ag Law Website .
Here are some steps that Hall identifies to create a legally enforceable farm lease in Ohio:
- Put the agreement in writing.
- Identify the land parcel by legal description, address and acreage.
- Don’t leave out a spouse or other co-owner of the land; all owners must be included in the lease and listed properly.
- Have all parties sign the lease.
- For businesses, make sure the person signing has legal authority to represent the business.
- For a lease over three years, have a notary or official certify the parties’ signatures.
- Take a shortened “memorandum of lease” to the county recorder’s office for recording.
One of the main conversations about budgets for corn and beans over the past year has been the need to negotiate a fair lease price for rented ground. As commodity prices remain low and input prices are slow to come down, the amount of money paid for land is a critical piece in profitability. However, taxes on land continue to increase as well. So there is much to discuss.
If you are interested in learning more, consider attending a Lady Landlord meeting on February 11 in either Coshocton or Ottawa. You can learn more about it here . This day is designed to give women more confidence in having a meaningful and productive conversation. Topics for the day will include addressing the risks of leasing, verbal versus written leases, nuts and bolts of a lease, communicating with your tenant, negotiation process and skills, factors that affect the rental rate and more.
Today I will leave you with this great quote from John F. Kennedy, “Let us never negotiate out of fear. But let us never fear to negotiate.”
Portions of this first appeared in the Coshocton Tribune on January 14, 2017.