Wednesday, September 28, 2011

Leasing Land

This afternoon I made a mug of hot cider (mmmmmmm.....autumn) and sat down for a webinar on leasing land organized by the American Farmland Trust.  I've taken online classes on leasing land in the past, but found it a helpful refresher as I embark on the prospect of leasing land for next season.

Leasing land works similarly as renting a house does - except with a million exceptions and unique facets depending on who owns the land, what the land will be used for (animals, organic vegetables, etc), and what else is involved in the lease (a house, tractor equipment, utilities, land improvement, etc).  While lots of farmers get by on a hand shake, nearly everyone has advised that a lease should be in writing, with a "notice of lease" recorded with the town clerk (in case of third party involvement, such as the lessor passing away).

Short term leases (less than 5 years), rolling leases (option to renew each year), long term leases (more than five years), and very long term leases (legally up to 99 years in CT, with clauses on inheritance) are all options.  On one hand, a short-term lease gives everyone the opportunity to see if the relationship will work happily, and on the other hand a long-term lease gives the farmer more incentive to invest in the land, through sustainable growing practices, infrastructure, and soil improvements.

It's possible to lease land from private owners, as well as from towns and land trusts (who often are in possession of a good deal of "open space" land and farm land).  Land is most often leased by the acre, though can also be leased by the parcel depending on crops and soil quality.  The 2010 Real Estate Value for land in CT was $11,500 an acre (national average was around $4,000), but this doesn't necessarily translate well into leasing farmland.  As with all real estate, location is of highest concern.  Followed by what the land is used for.  Land for vegetables (a high-value crop), for example, would most likely be more expensive than land for hay (a low-value crop).  Depending on the agreement, leasing farmland in CT can cost anywhere from $1/acre (the cost for many non-profits) to $1,000/acre.

Like any legal document, it is important that a written lease is as thorough as possible.  It's also important, when entering such a complex relationship like leasing a farm, that all parties understand their responsibilities.  Below are the 18 aspects of a good lease:

1. Identification of all parties (including board of directors, if applicable)
2. Description of property (maps, address, and specific parcels)
3. Durational terms of lease (start, end, option for renewal)
4. Rent or payment method (amount, due dates)
5. Taxes (if applicable)
6. Utilities (water, electricity, internet, etc)
7. Uses of the property (goals, growing practices, recreation)
8. Entry (how much notice is required for the lessor to enter the property)
9. Maintenance and Repairs (who is responsible for what)
10. Alternations and Improvements (what is allowed, who pays for them)
11. Stewardship Guidelines (mandates for sustainable growing practices, soil improvement, pesticide use)
12. Additional Limits (restrictions on farm practices)
13. Subletting (is it allowed)
14. Default Provisions
15. Security Deposit
16. Monitoring and Reporting (problems, concerns, requests for improvement)
17. Insurance and Liability (likely to be held by both parties)
18. Condemnation and Casualty Loss

Phewf!  It seems like a lot (and it is!), but it also feels really important to understand all of the logistics of leasing before embarking into such a complicated agreement with a landowner.  Thankfully, there are lots of successful examples of land leasing in CT to feel encouraged by (if, ultimately, I find the right piece of land to lease).  After all, 38% of farmers in CT lease all or part of their farmland!

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