Air January 24 - 30, 2006

Is it fair or is it equitable

This is Ag Outlook 2006 on 1420 KJCK, I'm Chuck Otte, Geary County, K-State Research and Extension Ag & Natural Resources Agent. In the ag lease meetings that we've been holding around the area, there were several ongoing themes. One of those was equitability. When landlords and tenants come to see me about their leases, they often tell me they want a fair lease. The problem is that the word fair is very very subjective. What's fair to me, is probably not fair to you. So let's use another word, equitable. Equitable, very simply means each party is treated the same in regards to the amount of harvested crop they receive in proportion to the amount of the inputs that each is putting in. In other words, when we take into account all the components of what the landlord and tenant are contributing to produce that crop, and determine that ratio, then that dictates how much of the crop each will receive. Now the question that always comes up is what expenses should be shared? My response is, it doesn't really matter, as long as the crop shares reflects the input shares. I can work up a lease where the tenant provides all the input costs for crop production that is equitable. But I'll guarantee you that the landlord is going to get less than 1/3 of the crop, in fact they may only get 20 or 25% of the crop, because that's the value of the inputs that they are providing, in this case return to the land. This concept is farm more common than you may imagine and it is called a net share rent, but be careful because there may be repercussions with government payments. While the ag lease statutes have a lot to say about some things, when it comes to management and shared expenses, the law is very very quiet! Leases should not be locked by convention, find what works for you! This has been Ag Outlook 2006 on the Talk of JC, 1420 KJCK, I'm Chuck Otte.

Get it in writing

This is Ag Outlook 2006 on 1420 KJCK, I'm Chuck Otte, Geary County, K-State Research and Extension Ag & Natural Resources Agent. The Kansas Ag lease law has very specific conditions that automatically become effective in the absence of a written lease, or a written lease that is silent on certain issues SUCH AS termination of the lease and hunting rights and improvements to the land and long term leasing. Many landlords and tenants do not like written leases because of their pride - they feel that their word is good enough and a hand shake is worth more than a signature on a line. Well, we need to set all that aside and start getting things in writing. Not because we don't trust each other, but because by getting it in writing, there will be less chance of misunderstanding and both parties become much better protected IF something happens. What happens if one of the parties dies? Who is going to remember what was said? Or what if you and your tenant or landlord have a disagreement on something regarding the lease? With a written lease you can have a lawyer and ultimately a court interpret what was or wasn't stated and rule on that. With an oral lease it's a he said/they said sort of thing and it all comes back then to contract law and the Kansas ag lease law. When the courts get through was a dispute over an oral lease, I'll bet you that no one will be happy! A written lease doesn't have to be complex. It can be drawn up on a piece of notebook paper by the tenant and the landlord. You don't have to have a lawyer write it, but it might be a good idea to have a lawyer review it before you sign it to make sure there's nothing illegal in it. We also have blank forms that you can adjust to fit your needs. A written lease isn't a statement that you don't trust someones word and their handshake. It's simply a way to protect yourself and the other party, just in case.... This has been Ag Outlook 2006 on the Talk of JC, 1420 KJCK, I'm Chuck Otte.

Leasing special issues

This is Ag Outlook 2006 on 1420 KJCK, I'm Chuck Otte, Geary County, K-State Research and Extension Ag & Natural Resources Agent. One of the things that really came out of the ag lease meetings was all special issues or special cases that came up. And before I go any further let me just reiterate that with a well designed written lease will help reduce the questions of special issues and clear up a lot of murky areas. Special cases that come up include, hunting leases, sale of land or death of the landlord or tenant. 20 years ago, hunting leases, at least in most of Kansas, weren't even thought about. But that is changing and what most landlords may not be aware of is that with an oral lease, legally, the hunting rights or the right to sublease out the hunting rights goes to the tenant. In fact, technically speaking, the landlord doesn't even have the right to hunt on their own land without the tenants permission. Surprised? A lot of landlords have been. Get a written lease or put it in writing. How about death of the landlord or tenant? With the exception of a landlord who has a mere life-estate interest in the land, the heirs of the deceased landlord or tenant are bound to uphold the terms of the lease. Keep in mind that by statute a lease is uneforcable if it can not be completed within the terms of the lease. Which is a fancy way to say, if you want a multi-year lease, it HAS to be in writing. Finally, what happens when land sells. A lease, even an oral one, transfers with ownership. The new owners are automatically bound to the terms of the lease and it can not be terminated by the sale, UNLESS there is such a provision in a written lease. The new owners are still bound to the state statutes regarding termination of a lease and need to keep this in mind when they are contemplating a purchase and future use. This has been Ag Outlook 2006 on the Talk of JC, 1420 KJCK, I'm Chuck Otte.

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