Operating costs must be clearly indicated. In the case of a share rental, expenses are usually distributed in the same way as income from crops or livestock. Ideally, it is best to spell them out in order to avoid any misunderstandings and track these expenses. Sometimes an expectation of a party exists in a lease, but is not written. A frequent example would be the tenant who expected the landowner to provide lime on pasture and hay. While this is a common habit for short-term leasing contracts, it is not necessary. At Missouri Land and Farm, we have worked all our lives in agriculture in northern Missouri. We understand agriculture in this area. We have the experience and tools to help you not only find quality tenants, but also get the data needed to help you make the right decisions for your arable land while getting a market rental price. You will have the comfort of knowing that your farmland rental is marketed for your agricultural and land needs. The duration of the rental must be clearly indicated. Is the rental period one year, two years or more? The start and end date, including the year, must also be indicated.
Some lease agreements provide for 30, 60 or 90 days` written notice if either party wishes to terminate the lease by the deadline. This is not necessary, but happens to give each party time to find a new piece of land or tenant. It also helps manage expenses for the tenant, especially prepaid items and operational credits. For the landowner, they can rely heavily on rental income, allowing them to use the time to secure another tenant. In Missouri, unlike our neighbors in Iowa and Illinois, written farm leases can begin and end on any date set by both parties. This is another reason why the duration of the lease should be clearly indicated. Rental prices and arrangements are another essential part of a good lease. Rental prices are often determined by the market price for that area. Before arriving at a price strictly based on the course of the area, look at the history of soil yields. Part of it is determined by the tenant`s entrances, but over time, especially at different tenants, a trend line should emerge.
Knowledge of performance data benefits both the landowner and the tenant, so the income distribution can be included in the lease. If you look at a rental price from the manufacturer`s side, you determine the amount to be paid for the rent based on individual production costs. The Iowa State University Extension has a tool that does this and is under www.extension.iastate.edu/agdm/wholefarm/html/c2-20.html It`s important to keep in mind that state law regulates tenancy agreements and can vary greatly from state to state. This is particularly the case for agricultural leases. MU Extension also employs farm management specialists who can advise you and help you prepare contracts….