Reviewed by Kelvin Leibold, Extension Farm Management Specialist 641-648-4850, kleibold@iastate.edu Originally created by E.G. Stoneberg, former state extension economist, whether the lease should be binding on heirs (if one of the parties to the lease dies) or future owners when the farm is sold. Harvesting How are the costs of combining, drying, transporting and storing crops shared under a shared-share lease? If the corn drying equipment is part of the rental unit, the landlord often provides the dryer and storage facilities. If the corn drying unit is portable, it may be jointly owned, or either party may own it and charge the other party a specified amount for its use. Fuel and electricity costs for drying are usually divided in the same proportion as harvesting. In some cases, the tenant is paid extra to deliver the owner`s share of the farm warehouse crop to a lift or processor. Estate tax assessment Many farm properties may qualify for a “special purpose assessment” when the estate passes, often resulting in an appraisal below the current market value. This can be beneficial for estates large enough to trigger federal discount taxes. However, a prerequisite for the special assessment of use is that the deceased or a family member must have been substantially involved in the business five out of eight years before the death, and an eligible heir must participate materially 10 years after the death of the deceased. In addition to the generalities of the lease (e.B. Name of the parties involved and detailed description of the rented property) below you will find a checklist with discussion points between farmers and tenants for negotiating a rental agreement.

When drawing up a lease agreement, there are several important economic factors to consider. Some of the most important economic issues are: Maintaining fertility Farm owners often worry about whether a tenant will maintain or improve fertility levels on the farm. Regular soil tests can determine if additional nutrients are needed. While tenants should be discouraged from “degrading the soil,” applying additional fertilizers (especially phosphorus and potassium) when levels are already high or very high not only wastes money, but also contributes to nutrient runoff and pollution downstream. A lease is automatically continued from year to year, unless one of the parties terminates a separate written notice of the lease agreement. In Iowa, a notice period for the lease must be properly delivered in writing before September 1 before the end of the rental year. This applies to both rent-in and crop-sharing leases, but not tailor-made farming agreements. In a written lease agreement, a date prior to September 1 may be specified for the delivery of a notice of termination.

The requirement to terminate a farm lease by September 1 does not apply to areas of less than 40 acres (in Iowa) that are primarily used for animal feed. But even an oral lease is automatically extended if it is not properly terminated in time. Under a cash lease, the benefits of the farm program are usually paid to the operator because the person bears the risk. With flexible cash leasing, payment for the merchandise program can be included in the gross sales used each year to determine the rental price. Under a harvest-sharing lease, the owner and tenant generally share the benefits of the program in the same proportion as the harvest. If there are costs to participate in the program, the landlord and tenant should carefully analyze the potential benefits for each party. Government program decisions can affect the rental value of a business for several years. xlsx file Use this decision tool to estimate the performance of a landowner and tenant under various leases, including cash rent, flexible rent, harvest share, or a custom growing agreement.

The distinguishing feature of a crop sharing lease is that the owner receives a share of the harvest and payments from the USDA in exchange for the land resources used. In Iowa, a typical division for corn and soybeans is that the owner receives half the grain. A variant is a lease of 50 to 50 harvest shares with a small cash payment to offset some of the seed technology costs or reduce tillage. In other areas where the value of agricultural land is lower, the owner is only allowed to receive 25 or 30 percent of the crop. The owner`s share in a hay harvest varies depending on the distribution of the cost of planting seedlings. In some cases, the tenant pays cash rent for pasture or hay land. There may be separate rental fees for a good set of buildings or grain stores. Crop insurance policies and some USDA programs require information about historical crop yields before a farm can be registered. Landowners must have this information on an annual basis in order to make future decisions regarding participation in such programs. Many factors influence the terms of a single farm lease. There are some key areas in the development of an agricultural lease that should be looked at very carefully by both parties.

The answers to these questions depend on the intention of the parties in the lease agreement and the negotiating position of each individual. Townships in South Carolina are increasingly trying to maintain or increase tax revenues. They comply with the regulations on the qualification of immovable property for the special rate of tax on agricultural use. The rules generally state that to claim an agricultural property tax rate, the landlord must provide proof of a written lease and the tenant must have a usda Farm Service Agency farm number for that property. The steps to obtain a farm number are listed below. More than half of Iowa`s farmland is leased to tenants. In parts of central and northern Iowa, half to two-thirds of the land is managed by tenants. On the other hand, in south-central and southeastern Iowa, less than half of the land is managed by a tenant. The four most commonly used lease types in Iowa are the fixed bar lease, the flexible bar lease, the separate harvest lease, and the custom cultivation agreement.

The terms and conditions of these rental agreements are described below. Examples of rental forms with provisions for several types of leases are available. See FM 1538 (AgDM C2-12) Iowa Farm Lease Form or FM 1874 (AgDM C2-16) Iowa Cash Rent Farm Lease (short form). Having a written lease Written leases make rental terms more final and leave less risk of disagreement and misunderstanding. People tend to selectively remember only those parts of conversations that reinforce their point of view. It protects not only the original parties, but also the assignees and heirs in the event of the death of one of the parties or sale of the farm. .