Deadline Nearing to Renegotiate Farmland Leases

Tenant farmers who want to renegotiate a farmland lease for 2015 may need to deliver written notification to their landlord before Dec. 1, a Purdue University agricultural law professor advises.

The Indiana notification deadline is three months before the end of the current crop year unless the two sides have agreed on a different date, said Gerald Harrison.

By custom in the Indiana farming community, crop years end on the last day of February. Accordingly, the current crop year ends on Feb. 28, 2015 for the purpose of setting the notification deadline, provided an existing lease has no other rule.

Even if a notification is delivered on time, the landlord is under no legal obligation to change the terms of the lease, Harrison said.

But with many farmers feeling the financial pinch of slumping grain prices, he believes landowners and property managers might be more likely to consider reducing cash rents for next year.

“It depends on what the rent had been for 2014,” Harrison said. “Since land values and rents have been relatively high in recent years, landowners might be more understanding if tenants ask for a reduction in the 2015 cash rent or a modification of other lease terms.”

If no changes are made to the current lease, the terms remain the same for 2015, he said.

The Indiana Court of Appeals ruled in a recent case that a notification to terminate – or change – a farmland lease must be made in writing and properly identify the property. Although tenants are not required to file a copy of the notification with anyone other than the landlord, Harrison suggested providing a duplicate to the local office of the U.S. Department of Agriculture’s Farm Service Agency.

He said effective delivery of a legal notice is as important as the content of the document and the timing of the delivery.

“The help of an attorney may be wise to draft the notification and properly deliver the notice to be sure it is effective,” he said.         

Source: Purdue News

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