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Farm Lease Agreement Image

 

Here is a great excerpt from an article in last month’s issue of Successful Farming:

5 Farmland Leasing Misconceptions

By Jeff Caldwell, News Editor

Whether you’re renting out your farmland or you’re leasing the land to farm yourself, today’s lower grain markets put a premium on reaching a fair agreement in which both sides of the deal will be able to make it work.  Regardless of the agreement (cash rent, flexible rent, crop share), there are a few misconceptions that can sometimes damage what would otherwise be an amicable, fair deal.

The most important thing, one specialist says, is to get everything in writing.  That may seem to be a foregone conclusion, but a lot of land deals are confirmed with a handshake, says University of Nebraska Extension ag law specialist David Aiken.  So, get the deal down on paper and, in doing so, “spell out the rights and responsibilities before issues arise,” he says in a university report.

Here are five misconceptions that Aiken says are common in land lease agreements.  Look out for these – whether you’re the lessee or the lessor.

1.       Landlords can tell their tenants how to farm the land.

“During the period of the lease, the tenant is in charge of how things are done on the farm, not the landlord.  From a legal perspective, the tenant calls the shots unless the parties both agree otherwise,” Aiken says.

2.       Landlords can trespass if they own the land.

If you own the land but are leasing it out, you can be prosecuted for trespassing if you venture out on that ground without the lessor’s permission.  This is one area where a written lease can be a huge asset.

3.       Any lease is terminated when land is sold.

It’s commonly thought that if a parcel of land is sold to a new owner, any previously held leases are ended.  “If the landlord sells rented land, the new buyer is subject to any existing lease.  If the lease has not been legally terminated, the new buyer may be stuck with the tenant for one to two more years,” Aiken says.

4.       Landlords can raise rent at any time.

The new crop year for Aiken’s state of Nebraska is March 1.  The state’s lease establishment deadline is September 1.  After that date, the landlord cannot change rent “without the tenant’s agreement,” he says.

5.       Landlords can hunt on their leased land.

If you own it, don’t assume you can automatically go onto your land to hunt.  “Landlords can’t hunt on rented land unless the tenant agrees to it,” Aiken says.

“While the savvy tenant often will accommodate the landlord’s interests in order to keep the lease, working from a written lease, working from a written lease will benefit both parties,” he says.

family farm

Talking about the farm can be difficult. It means talking about business, money and the future which can be scary. But it’s scarier to not talk about it and not know what the plan is. Owning farm land is special. It’s something that not everyone is blessed with in their life. However, too often we see families with huge rifts in them because of ground that was passed down to them, or if plans were not followed through with after a sudden passing. Land that your family has owned and worked for years or generations needs to be cared for.

What I’m saying is that the holiday season is a great time to start a discussion. I guess in my family it’s one of the few times of years that everyone is together and when it comes to planning everyone needs to be on the same page.

But how you might ask? How do you even begin this conversation about your farm? And isn’t everyone on the same page as I am already? Those are great questions. To start have you ever communicated your ideas to the family before? Do your children know what to expect if you pass away? If the answer is no, we understand. Those kind of things are hard to talk about. But, please take my word for it. Being proactive about planning is MUCH better than being reactive.

So, your family is all going to be hanging around after the holiday and the opportunity presents itself. How do you start the conversation?

Here is some verbiage that might help:

“In 1954 I bought my first farm from my father…  Over the years I’ve seen it grow and it has been the success of our family today. I want to talk about what we are going to do with the farm after I am gone.”

“I’ve been thinking about the farm and I was wondering how you see our farm developing over the next 20 years?”

“I want to share my ideas about the farm with you guys.”

“I was reading this article that Mid-Continent Properties wrote that brought up some good ideas…”

After you have everyone listening,

Discuss what your goals for the future farm are. Sometimes it’s easiest if everyone writes down priorities and then share them as a part of your discussion. If there are generations working together be sure to clarify the family’s expectations. Respect for the business and each other is essential for all generations involved. If you are looking to transfer the farm to different hands we suggest you work with trusted professionals to get the project started.

If you have never discussed the farm with your family this holiday could be a great time to start. And if you need some insight please call us here at Mid-Continent Properties. We would be happy to advise you in your endeavor to keep the family farm in the family.

2014Harvest

Do you have a farm manager? Or need a farm manager, or even know what a farm manager does?

I guess a farm manager is somewhat self-explanatory. He manages the farm. But, what does that mean. What is his day to day like? And does that mean he farms the land? Does he plant or harvest the grain?

This blog series is going to discuss what exactly a farm manager does. When is a good time to find a farm manager, and how to pick one?

In a brief interview with Jeff Post, MPI’s president and part owner we get an inside scoop on farm management.

As I sit down in his office, you can tell that he is a busy guy. His office is filled with pictures of those closest to him and farm publications that he has been reading. We get right down to business.

When and how did you get into farm management?

1997. My Father had a real estate and insurance firm in Lexington, Nebraska where I grew up. It was always a natural path for me, and when the time came for him to retire I bought the firm. We saw the need for farm management with our current customers, and we wanted to offer them the assistance. So, one customer at a time we helped make sure they were getting the best value out of their land. We enhanced their income and their comfort level with being an absent land owner.

What skills do you have that make you a good farm manager?

Both my parent’s family were in agricultural production as I grew up. In 1980 my Dad, Doran Post, made a career change and got into the insurance and real estate industry. I was groomed for years before I carried my own business. I got to see both sides of the job: production agriculture and farm real estate sales and ownership. Being knowledgeable and having experience in both sides of farm management has made me a great farm manager.

What do you do on a day to day basis?

Let’s see, every day I check the Chicago board of trade, watch the markets. I’m researching selling prices and times. I’m communicating with tenants and clients. Really, I just strive to make sure I do the best job every day for my clients and strive to continually get better. And at least once a week, I try to make it to the golf course.

What is stressful about your job?

Making sure we perform to our clients expectations. In marketing, stewardship for the land, communication to our tenants and land lords, and being fiscally responsible to our land owners.

What is your process when it comes to finding tenants?

We start with an interview process with all of our potential tenants. Picking a good tenant is key to our success. We don’t like to dictate what they do, we trust them, their experience and their ability to do the best job possible with being stewards of the land. Then we keep a very open communication line available with them. We have a very low turnover rate when it comes to tenants, and we make every effort to keep it that way.

What is your philosophy with your clients that are land owners?

We handle owner’s property as if it was our own. We strive to provide the greatest quality in assisting them with everything from the purchase of the ground to providing the most return on investment possible.

What does a farm investment look like?

Well, they generally have 4 sides and are made of dirt. No just kidding. We have an average 5% return profit based on their current market value of the ag investment.

Would you suggest people invest in farm land?

Investing in farm ground is a great long term investment for any and all walks of life. If you know nothing about farming we will take care of you and make sure you are informed and are able to make comfortable smart decisions. If you grew up on a farm and know the ins and outs of farming you have to remember that agriculture is changing every day and being on top of it is key to maintaining a successful investment.

What would you say to someone who was looking for a farm manager?

Interview as many agents as you see fit and choose the right fit for you and your future investment goals with your property. Make sure we are included in your interview process.

Any management stories you want to share?

Oh gosh, I guess my biggest accomplishment and best story has been moving to Omaha and buying MPI. Let me set the stage for you, I owned a business in Lexington and was engaged to my beautiful fiancé at the time. She lived in Omaha and I knew something was going to change. I was looking at options in Omaha and wasn’t exactly sure what to do. Then one day, I got a call setting up an interview for the head position at MPI because Jerry Zegers, who had run the company has passed away unexpectedly. After a few years I purchased the company with Roland Penner and we have expanded and been successful ever since.