Leasing agricultural land can be an attractive and profitable option for all parties involved.
For the farmer or “tenant”, it offers you a way to expand your enterprises without incurring large capital costs. This is particularly useful during those times when operating funds are short.
Leasing agricultural land is a mutually beneficial arrangement for the farmer or Tenant and landholder or Lessor
For the Landholder or “Lessor”, it means you are able to maintain your agricultural assets and generate a steady income over the term of the lease regardless of the seasonal conditions or production outcomes from the land.
An agricultural or land tenancy agreement provides a leasehold interest in land to the tenant. This means that the tenant will have exclusive possession of the land for the term of the lease. Therefore it is crucial that the written terms of the lease are agreed and fully understood by the parties before the tenant takes possession of the land.
This comprehensive agricultural lease includes a strict code of conduct that imposes a duty of care on the farmer (tenant) to preserve the land being farmed. The obligation to conserve the resource by not overgrazing, introducing disease, or depleting the soil rests firmly at the feet of the farmer, protecting the long term viability of the agricultural assets.
Other important issues covered within the lease include:-
- Identification of the parties to the agreement
- The term of the agreement, including options if available
- The rent amount and how and when it will be paid
- Rent review process
- The landowner’s (lessor’s) obligations – especially for rates, GST, stamp duty, insurance
- The tenant’s (lessee’s) obligations – especially relating to property care and maintenance
- Dispute resolution process
- A process for the ongoing management of the lease agreement
- Special conditions if any that relate to the particular land in question e.g. the maximum number of stock to be run or the maximum area to be
The Sample Agreement Table of Contents shows you all the terms included in the agreement.
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