What to consider in a Lease

Examples of Leases

Hiring a lawyer to draft a lease may be too expensive for landowners, so there are many websites that provide templates to assist landowners in creating one themselves. However, even if you are unable to pay a lawyer to draft a lease from scratch, we advise you hire one to review the document you have created. If you bring an already drafted lease to a lawyer, you will pay for only a few hours of work. 

Visit these websites for template examples:

• • American Farmland Trust’s Farmland Information Center has models of different leases types (short-term, long-term, cash, crop share, etc.)
  • Ag Lease 101 has a helpful document library with lease models and supporting documents. 
  •  Land for Good created a Build-a-Lease Tool meant to help develop and improve a farm lease. 

Determining Rental Rates

University of Vermont Extension put together a guide to help landowners through the process of determining a far cash rental rate for farmland, equipment, infrastructure. This guide is designed specifically for landowners in Vermont, but it gives broad advice that landowners across the country will find helpful. 

A quick guide types of rent payment:

• • Fixed – per acre or head (of livestock)
  • Percent of gross income – For example, rent is 10% of annual gross income of the farm operation. If you choose to charge a percentage for rent, consider adding provisions for a floor (minimum amount of rent charged) and ceiling (maximum amount of rent charged) amount. This will protect you if a farmer has a crop failure. And a farmer won’t be punished for having a very good season. 
  • Barter – For example, if a lessee is growing vegetables for CSA (Community Supported Agriculture) share, rent could be one share for the use of your land. Please remember that items bartered are still considered taxable income to the IRS. 

Other Helpful Resources

As mentioned previously, leases not only provide a steady revenue stream and may have tax advantages, but it can allow your land stewardship goals to be met. Farmers’ Legal Action Group has more information on how to design your lease to meet those stewardship goals. 

Land for Good’s Toolbox for Landowners has a wide variety of resources to assist landowners, including more information about leasing.  

Farmland Access Legal Toolkit has a wonderful library on leasing, including questions to ask before signing a lease, testimonials from those who have leased farmland, and another leasing building tool.