The ABCs of Land Rental Contracts
A land rental contract is an agreement between a landowner and a party seeking to use the land for specific purposes, typically for agricultural or commercial use. These contracts are vital as they legally bind the rental party to the conditions set forth and provide a clear outline on how the property can be utilized . There are many parties that might need to use land rental contracts including farmers, ranchers for livestock grazing, businesses for operating venues such as venues, food stands, and food trucks, companies looking for utility easements, and homeowners renting out their land for gardens, farms, ranches, and wedding venues.
Essentials of a Land Rental Contract
When beginning to develop your land rental contract sample, it’s crucial to include all of the necessary components. Otherwise, it may not stand up in a court of law, and you could therefore lose your investment in the property.
Your sample should have the following components:
Identifying the parties involved
The most important part of your contract will be the identifying of the parties that are involved in the agreement. Logic would dictate that this will be the landowner and the farmer who wishes to use the land, but there are a number of cases in which a landowner will wish to hire an outside party to oversee the general day-to-day running of their property.
For example, the landowner could agree to allow a nearby landowner with expertise in agriculture to oversee the site, with the final decisions still resting with the original landowner. Whatever the case may be, both parties must be clearly identified in the contract.
A clear description of the land
Alongside identifying the parties involved, you must also ensure that the contract has a clear description of the land being covered within it. If you’re specific about the land parcel in question, then it is easier to settle any potential issues that may arise.
You should also ensure that the contract provides a clear description of the access routes that the tenant is permitted to use while on site. You should break down where these route begin and end and how the tenant will use them.
The length of the lease
The length of lease that will be agreed upon is also crucial. Land rental contract samples vary between farms, but you must be clear as to how long you are leasing your land to an outside party.
Rental agreement
The rental agreement is arguably the most vital component of your land rental contract. The rent that the tenant will be paying for use of your land will be a reflection of its worth, so be sure to not undersell the land you own.
Common Pitfalls in Land Rental Agreements and How to Avoid Them
One of the most common pitfalls when drafting a land rental agreement is failing to define the terms of the lease clearly. Be sure to include the purpose of the land rental contract, the duration of the lease, the amount of rent to be paid, and how often payments will be made. It is also important to specify under what circumstances early termination can occur, such as by mutual consent or failure to pay rent.
Another area where mistakes are often made is in the payment scheduling. For example, if the rent calls for monthly payments but the term of the lease is one year, payments may be due for 13 months. If the rent is $300 per month, then the total rent for the 13-month period will be $3,900. A common error is a failure to properly split the amount of rent due based on each party’s responsibility for the land being leased.
In addition, while not specifically a mistake, a common "miss" is to fail to include the application of general property taxes to a rental fee. Even though many agricultural land rental contracts use crop-share leases where the general property tax assessment will vary with the value of the crop produced, it is important to include a method by which that assessment will be accounted for in the rental fee.
In general, it is important to draft your land rental contract in a way that all parties to the agreement understand the obligations and responsibilities they are taking under the lease. Failing to do so can lead to confusion and potentially, costly legal disputes.
From Start To Finish: Drafting A Sample Contract
Next, include the start date of the agreement along with the length of the contract. Some land rental contracts extend for a period of one year; others extend for a period of ten or more years. The land rental price should be included in this section of the contract. It should be clear whether the price is based on an annual rent or a monthly rent. It’s also important to note how much rent will increase over time. Failure to state how much rent will rise in the future can lead to disputes down the road.
Then, provide a map and an addressed picture of the property that you’re renting out. It’s important that the property is clearly defined so the tenants are unable to claim they’re allowed to rent more land than what is specified in the contract. Provide a short legal description of the property below the picture of the property to further prove it’s the legal land rental contract.
As the next step, have the lessee sign the rental agreement. When they return it with their signature, confirm that the original is properly dated. It’s also a good idea to send one legal copy of the rental contract to the tenant and keep one for yourself. This preserves both parties’ rights, since both of you will be able to present a copy of the contract when necessary. Tenants should also be advised to share a copy of the contract with members of their family.
Land Rental Contracts and the Law
The land rental contract is a legal document, and as such, its creation and implementation must be approached with a certain degree of care and due consideration. Each jurisdiction will have its own laws, and these laws must be adhered to in order to ensure both the legality of the contract and its enforceability.
The local laws may stipulate various requirements for the validity of a lease or rental agreement. For example, the property in question will usually need to be owned by the lessor—while situations may vary, the lessor must be legally entitled to rent the property in order to establish a legal rental contact. That is, the lessor’s name must be registered on the deed. The rental agreement should not be in effect if the property in question has been sold to another person or entity.
In many places, such as the United States, rental contracts must be in writing to be enforceable . Both the lessor and the lessee will need to sign and date the document, which should ideally be notarized to further ensure its legality. A properly assembled rental agreement binds the lessor to his or her legal obligation to rent the property in question, while entitling the lessee to access and make use of the property.
Any contract should specify the rights and responsibilities of both parties, as well as any relevant limitations. For example, a rental contract will typically specify the total area being rented out and the length of time for the lease.
The contract may also stipulate that the rental contract cannot be amended without written consent from both parties. In this way, the contract can be maintained over time without the risk of any legal changes being made that affect the rights of either party.
Making Use of Templates for Land Rental Agreements
When creating land rental contracts, it is not necessary to start from scratch. There are many places where farmers and ranchers can find sample documents that they can copy and customize for their own use. These sample documents are convenient when you are looking for a specific contract or agreement, so you don’t have to recreate the wheel.
The advantage of using these kinds of documents for land rental contracts and agreements is that farmers and ranchers do not need to pay for attorney fees to create their own. Many people can also find a document that closely matches what they need. Then, they can simply modify it slightly to account for their farm or ranch’s specific characteristics. Often, the structure or terms of similar agreements are very similar between operations, even if they are in different locations. It is therefore often more efficient to use a sample land rental contract than to create a document without any prefabricated materials.
Nevertheless, there are some significant drawbacks to using sample land rental contracts and agreements. While many of these sample documents are close representations of what may be needed, it is not likely that they will have the perfect terms or language that your farm or ranch needs. Important provisions may be missing, or an agreement may contain terms that do not match what the parties really intend. Specifically, when you run into a situation that it is not clear whether the document matches what you need or intend, your only option with many of these documents is to guess. You either need to determine what part should be removed or added and fix it by hand. If you add too much or remove too much, you may have a contract that is imperfectly suited to your needs. In the worst case, there may be terms omitted or mistakenly included so that the contract does not accurately represent what you and the other party to the contract actually intended.
The best way to avoid these problems with prefabricated templates is to choose a document that seems to fit well, and before signing it, look at the document carefully to ensure that you understand its terms and that you agree with them. Make any necessary changes that will better match the terms that you need. If you need assistance in changing the document, consult with an attorney licensed in the state where the court will likely be located when a dispute arises about the contract.
Sample land rental contracts and agreements are useful to farmers and ranchers to avoid hiring an attorney and to ensure that they get a document quickly and efficiently. Nevertheless, these documents still need to be carefully evaluated and edited so that they fit your needs.
Answers to Your Frequently Asked Questions on Land Rental Contracts
What is a land rental contract?
A land rental contract defines the terms under which a landlord and tenant (renter) agree to have the renter pay a stable amount for the use of land. In addition to land, these contracts can apply to natural resources or any other utilities.
What do land rental contracts cover?
They typically cover the type of property, its location, specific parcel numbers for a tax ID, any easements or rights of way, and the price to be paid by the renter on a periodic basis.
Why should I care about land rental contracts?
For both the renter and the landowner (either natural person or businesses), the contract provides a generally understood set of rules. This means you don’t have to communicate all details to get the results you expect; the contract governs situations involving everyone involved in the process. Leveraging a land rental contract sample can help you craft a rental agreement that fits your needs.
How do I create a land rental contract?
You can find free land rental contract samples online . Or you can hire a lawyer to help draft one using your guidance about the property and your intentions in working with the renter.
What does a land rental contract include?
These contracts often include:
What should I include to protect my rights in a land rental contract?
Specifically, be very clear about the payments and terms required. If you’re the renter, be equally clear about usage requirements and duration of the contract.
What happens if either party to a land rental contract breaks terms?
The contract itself should define penalties for acceptance of terms. If not followed, each party should have the right to terminate the relationship/contract.
How do I know if my land rental contract is legal?
An attorney can help you craft a legally sufficient contract that covers all the bases relevant to your situation. This might be worth your time and money through pre-agreement analysis of potential issues.
Creating a land rental contract can be easier with a sample plan from CocoaLandlord.com.