Your Farm Lease - Should it be in Writing and What Should it Say?
YES, farm leases should be in writing.
While oral leases are enforceable, there are much too many details involved with agriculture and farming for both the landowner and grower to remember. The risk of failed memory is multiplied many times over for the grower dealing with many different farms and landowners with each of whom there very well will be a point or two or three that is different from one to the other.
To complicate matters more, the landowner might die suddenly and his or her spouse was not a part of the discussions when the oral lease was first established, and there is no one else who knew much less will recall the terms of the oral lease that could have started ten or more years previous. This risk associated with untimely death applies to the grower, too, and his spouse as well as his children who might want or need to continue the growing operations.
As emphatically as possible — yes, farm leases definitely should be in writing. If not, there can be extreme difficulty with proof should the landowner or the grower develop a need to enforce the lease in court because one incorrectly remembers a critical condition of an oral lease to the detriment of the other. In the words of the Louisiana Supreme Court, “… a party who signs a written lease is presumed to know its contents, and cannot avoid its obligations by contending that he did not read it, that he did not understand it, or that the other party failed to explain it to him.”
What should the lease provide?
Before your written lease agreement addresses conditions and details unique to sugarcane farming operations or to your or a particular farm, the lease document must first address the mandatory core principles of Louisiana law required for leases of all kinds generally.
This begins with a clear and thorough description of the thing leased. In the case of farmland, among other things this means stating the number of acres leased. Once doing so in writing there can be no dispute after years go by as to, for example, the number of acres that may or must be fallow, the number that must be in plant cane for each year’s harvest, or the acreage of plant cane that may be withheld from the mill for use as seed cane, all of which can have consequential results for both landowner and grower.
A lease must state exactly who the parties are. For example, a grower may have incorporated his business to protect his personal assets, but neglects in an oral lease to specifically tell the landowner he is entering into a lease with a corporate entity that has limited liability. A court will hold a party to a lease personally liable for harm that occurs if the other party is not expressly made aware he is dealing with an entity that has limited liability, and a written lease signed by both parties can prevent one from claiming he did not know.
The reasons for putting a lease agreement in writing and what it should provide are many, only a few of which can be discussed in an article of this nature and limited space. There is no doubt that a written lease creates a more stable, trusted and long lasting relationship, and one that is financially beneficial to both landowner and grower.
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Disclaimer: This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact an attorney directly.