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Avoiding Misunderstandings with a Lease Agreement

5 October 2012

The leasing of farmland has become increasingly popular over the last few years. There are numerous benefits to a landowner, however there can also be problems if the terms and conditions of the lease are not made clear prior to commencement of the Lease. To minimise possible problems it is important to have an effective agreement between both the Landowner as “Lessor” and the Lessee.

This agreement needs to set out the terms and conditions of the Lease, so as to avoid any misunderstandings or uncertainty between both parties.

Things to think about

In order to have an effective agreement there are a number of considerations to take into account. These are as follows:

  • Term of the Lease: How long will the term of the Lease be and should it include provisions to allow for the right to renew the lease for a further term? What is final date that the lease must expire?
  • Rental: How much should be charged per annum and how often should the rental be reviewed?
  • The Lessor: Do you have the sole authority to lease the land or do you need to consult other parties first?
  • The Lessee: Do they have the necessary expertise to run a farming operation? Will they be able to pay the rent?
  • Use of the Land: Are there any restrictions on the type of farming operation on the Land?
  • Fertiliser: Is there a minimum requirement of fertiliser that needs to be applied?
  • Maintenance/Weed Control: Who is to be responsible for this and who judges as to whether or not the land is being kept to an acceptable level?
  • Inspections: Should there be an inspection of the property and if so how often and who should be responsible for the inspection?
  • Insurance/Rates: Who will hold the insurance and whose responsibility will it be to pay the insurance and the rates?

By considering these matters at the outset it can help establish and maintain a good relationship between the Lessor and Lessee. Early and open communication is the key to a successful lease and working with us to draft a written agreement which sets out all of the terms conditions from the beginning is the best way of meeting both the Lessor and Lessee’s expectations and minimizes any risk of misunderstanding and uncertainty in the future.