Some pragmatic thoughts about leases

I’ve been working with and thinking about leases this week and, rather than delve into a legal issue, I think it is important to discuss some pragmatic issues.

When entering into a lease, do or think of the following (and note, this list is not inclusive of all issues, just some common items I’ve noted of late):

1.  Read the proposed lease.  Then read it again.  Make sure you understand all the provisions and how all the provisions related to each other.  If you have any concerns, questions, or just niggling doubt about something, discuss it with the other party to the lease and clarify any provisions in the lease as needed.

2.  Speaking of clarifying any provisions in the lease, you do not want any ambiguity in the lease.  Write the lease so there is not any doubt about what each party is/is not obligated to do.  Detail is your friend.  If you want a specific date for when rent is due, write it down.  If you require a certain type of crop rotation, write it down.  Be clear, be concise, and write it down.

3.  With that said, there is no need to get overly complicated.  If you have provisions in your lease that have absolutely no use, there is no need to include them.  For example, why have a section about organic practices if you and the tenant agree to conventional agricultural production?

4.  Sign the lease.  Do not negotiate all the details and then not sign a lease.

5.  Think about the long-term.  If your relationship with the other party goes south, are there provisions about how to terminate the lease?  Is the leased property vital to the continuation of your operation?  Consider your relationship with the other party and how your operation may be impacted should the lease end.

6.  Communication is the key to any successful relationship.  Communicate any problems, issues, or concerns you may have, especially before they become a crisis.

Leases have not only legal implications but also pragmatic implications.  Think through not only the legal implications but also, whether you can afford the rental price or whether the tenant will practice the agricultural practices you require.  Take the time you need to thoroughly negotiate and read the proposed lease terms.  Understand not only the lease but the implications of the lease on your operation.

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