Leases and Relationships
June is almost over. That leaves us with July and August to provide tenants with written notice of verbal lease termination. Once September 1 rolls around, our time to do anything about a handshake agreement has expired. The year is flying by, folks. Now is an excellent time to consider next year's lease.
The Nebraska Supreme Court has ruled that verbal leases run from March 1 to February 28. "Notice to Quit" must be provided to tenants at least six months before the end of the lease or no later than September 1. If not, we will live with our verbal agreement for another year.
I am not an attorney, and I make no pretense about it. I don't want to be an attorney, and the intent of this column is not to provide legal advice. This column is written to share a common understanding of Nebraska law and how we, as farmland professionals, help our clients navigate challenges.
Consider the following language: "The verbal agreement established between Parties A and B shall not automatically renew, shall officially expire on ABC date, and both parties must sign a written lease before February 28 for the tenancy to continue."
Make your message clear, type it out, sign it, draft a new lease, and you're ready to move forward. Both parties signing documents ensure that they are on the same page. If you are in a particularly complicated situation that may require legal help, I recommend you meet with an attorney.
Written leases remind both parties (and their families) of the agreement. They also protect the heirs and the surviving party if either party dies or wins the lottery. If a written lease isn't for our benefit, it is undoubtedly for the benefit of those around us.
Farmland leases, at a minimum, define the share of grain, expenses, and responsibilities between landlords and tenants. The next evolution of farmland leases will emphasize and strategize farming methods and practices.
Stewardship, conservation, sustainability, regenerative agriculture, and environmental impact - do these ideas have any business in farmland leases?
You can bet the farm they do!
I could write an entire column about how Convective Storms are changing the insurance world and how certain farming practices can help manage weather risk. Another article could discuss the financial loss of soil erosion. We could also explore economic opportunities surrounding certain farming practices.
When specifics about farming practices are stated clearly within a lease, we can position the farm (and ourselves) to mitigate risk, be more efficient, and seek new profits.
Written leases can help us strategize.
Consider the following dynamic: If you own a farm, you own a business. Your farm operator (or tenant) is your business partner. Your lease is your business agreement. As a farm manager, I am like a consultant who helps farmland owners make confident and informed decisions about their business.
I advise anyone with a verbal lease to ensure your business agreements are in writing. Structure them up to create win-win situations. If you have a question about something, ask for help. We learn a lot by talking with others.
I have never regretted being early to something, and I have regretted being late. Deliver your written notice of verbal lease termination before September 1 - Don't delay.
