Land Rent

[dlbuck]

My Father has just passed away. He has 80 acres of farm land he rents to the next door neighbor. As we are going threw his things we have found out he has rented the land to him for about a 1/3 of the going rate for maybe 20 years. This is in south central Minnesota if that matters. We have extended family that farms and have said they rent from people that want less rent and they advise them they will pay the going rate to honest and fair. The neighbors and my parents have lived on the same road for over 70 years. I do NOT want any back pay, I just would like some input on how you feel about this, I could rent this land to the relatives at the going rate with just a phone call in less than a minute. The renters would not miss a Sunday at church but, seem to skip the rest of the week. As I said I do not want any money as my Father made the deal with them, just want some opinions. As they say your neighbors land only goes for sale once in your lifetime, and I would like to make sure he does not get it. Thanks rant over.

 

[used red MN]

Who is the financial supervisor of the property now? Whoever that is be it you or you and your siblings they are in the drivers seat, you can ask whatever you want now. How is the current renter now in terms of caring for the land like trees encroaching a field or that have fallen or mowing/weed control of non-farmed areas? If any of this is lacking then I wouldn’t hesitate a second to pass the opportunity to rent it to the extended family, of course with the expectation that the “extras” will be taken care of. My mom rented her 80 acre farm (63 tillable) in KS to extended family about 10 years ago. About 4 or 5 years ago he increased his rent payment without being asked, because he felt it was falling behind the going rate.

 

[Ray,IN]

That would be a tough call for me too. IMO it boils down to business is business and friendship is not.

 

[Fixingfarmer]

It seems like you know what you want to do. I’ve seen some on both sides too good for the landlord and too good for the renter.

I will say last year for the first time in 15 years I’ve seen the average decrease by about a 1/3 so he’s not off base as far as you think or at least not as far as he was 3 years ago.

usually those leases that end up too good for the renter like that are just set and it’s always been the same 150 bucks since 1998. Neither party wants to change anything.

I’d take a look at your ag colleges rental survey in your state that’s usually a really good source for setting a rent that’s fair. Often it will vary substantially per county. I have some leases set off them and they correct when they need to

I would not trust anyone family (especially) or otherwise on what the fair going rate is. Get the data you need from a source that doesn’t want money from you (or at least wants to justify their tax levy)

 

[V509]

The last two years I have been going through this with our family farm.

The renter was considered a friend of my father’s but the renter would use dad‘s equipment without any consideration borrow tractors and not even replace any fuel.

I insisted the rent come up to a level that is no longer a bargain but maybe the upper range of fair. The renter is known in the area as being very cheap. He squealed like a little girl, but being a big greedy farmer he refuses to give up the land.

Personally I have a good friend that does a really nice job farming in the area and I would rather my friend rent the land but in respect to my father, we have not changed renters

 

[Big massey]

Did they look after you dad and help him out? Did they plow him out after snow storms? Did they help him work on stuff or fix things? Did they stop over just to shoot the bull sometimes? Were they good neighbors? Stuff like that more than makes up for a little difference in overall rent.

 

[jon f mn]

You should talk to the renters, its possible they had some deal with you father that you dont know about. It's also possible that its as said above, they were good to him and so he gave them a deal.

 

[Mark-Ia]

To break a lease here, you need to send a registered letter by Sept. 1st.

 

[dlbuck]

To break a lease here, you need to send a registered letter by Sept. 1st.

No written lease, just a year to year verbal lease.

 

[dlbuck]

Did they look after you dad and help him out? Did they plow him out after snow storms? Did they help him work on stuff or fix things? Did they stop over just to shoot the bull sometimes? Were they good neighbors? Stuff like that more than makes up for a little difference in overall rent.

I live across the field from my Dad and gave him all the help he needed. The neighbors are friendly, no extra help was given or asked for.

 

[cjunrau]

Raise the price with a discussion with the renter. He pays or someone else will. I would not rent to family period. On paper no verbal as verbal somebody gets shafted. Just like me, verbal long term lease and bought out from under me. Was only because we forgot to write up the next 5 years. We thought we had and we couldn’t find the paper work. Costs me $2500 a year more and I was improving the land. $140000 when I started to $800000 12 years later. We had discussed a scale that rent would go up. But it jumped huge last year. Might not rent again as it’s over the BTO will pay now. Guy that bought it knows nothing about farming

 

[paul]

As mentioned, be sure there was not some understanding between your dad and the renters for extra fertility, or property maintenance. Or the renter added tile on his dime and was being repaid with lower rent - a common thing in our area, we must not be too far from each other.

You should get a fair rent.

By October a lot of farmers have seed, chemical, fertilizer, and all such things planned out, perhaps prepaid already. In Minnesota there is no simple rent deadline like Iowa has, but you might get quite a reputation if you simply drop the current renter at this late time, and there are some vague regulations on doing so this late in the year. If it has beans and they are harvested, fertilizer might be spread this week yet, then you have the mess of paying for the fert from him because you didn’t alert him in time….

This is a general comment, not aimed at you: some land owners that aren’t involved in day to day farming don’t understand how different pieces of land can be valued very differently, even if almost next to each other. Poorly drained, tree lined, Sandy or hilly, irregular shaped, clay tops, can all decrease yields by 25-50% and make a field worth that much less. You can often find someone from far away to offer top dollar on such properties, but they learn it’s not worth it and don’t pay or leave in a year and now you have burned bridges in the neighborhood. Just saying, this happens too….

Your best step would be to talk to the current renter (real soon now!), and see if you can arrive at a rent you both find acceptable. This is very common when generational ownership changes, and is the best way to start. A good neighbor/ renter will expect that and understand things are changing some.

If things don’t sort out right, then move on to finding a new renter.

As someone else said, working with family as you suggested doesn’t always work out the best down the road either, lot of us have the battle scars from those arrangements also….

Paul

 

[jhwis]

You already know the answer or you wouldn't be asking.

 

[ss55]

Farm leases are different than most other leases, most farm leases automatically roll over to the next year unless notice is given. There may be a deadline each year for either party to give each other notice of any changes or ending the lease.