Many of the terms and phrases used to describe the legal concepts of agricultural leases date back centuries to the English common law. These terms can often be confusing and sometimes used incorrectly. It is important to have an understanding of the proper meaning behind these terms in order to apply the law to specific situations and ensure the interests of both parties and the sustainability of the land are protected.
Some basic lease terminology is provided below. If you’re unable to find the term you’re looking for here, links and descriptions to other glossaries are also provided.
- The National Agricultural Law Center, located at the University of Arkansas School of Law in Fayatteville, AR, provides an extensive glossary of agricultural terms and concepts, including those related to farmland leasing.
Farm Lease Terminology
Acceleration Clause: A lease provision requiring the tenant to pay the rent for the remainder of the term if some condition is not met, such as failing to make a payment.
Acceptance: A display of willingness to be bound to the terms of an offer. Any modification or addition of terms in not acceptance but a counteroffer.
Active Waste: Waste caused by the affirmative acts of the tenant. [Black’s Law Dictionary (8th ed. 2004)] This may also be referred to as affirmative or voluntary waste.
Affirmative Waste: See Active Waste.
Arbitration: A method of dispute resolution involving one or more neutral third parties who are usually agreed to by the disputing parties and whose decision in binding.
Cash Lease: A lease arrangement whereby the tenant pays a set sum for the use of a farm. The tenant receives all the income and often pays all of the expenses except for real property taxes, insurance, repairs directly associated with farm improvement, and depreciation on structures. The tenant has the major management responsibility. [The National Agricultural Law Center, Glossary]
Competent Party: A party having capacity, the ability to understand the nature and effects of one’s acts, to enter a binding contract. This usually means having reached a certain age and being of sound mind.
Consideration: Something of value or a promise to do or to refrain from doing something.
Crop-Share Lease: A lease arrangement whereby the landowner receives a share of the crop in return for contributing land to the farming operation. Typically, the landowner furnishes land and buildings and shares in the cost of certain inputs such as fertilizer, seed, and pesticides. The tenant usually provides labor, machinery, equipment, and fuel. [The National Agricultural Law Center, Glossary]
Custom Farming: An agreement whereby a farm operator agrees to perform all the machine operations on an owner’s land in exchange for a fee or rate. Seed, chemicals, and other inputs are paid by the landowner who retains all of the crop and commodity payments. [Iowa State Extension, Ag Decision Maker, Custom Farming: An Alternative to Leasing, updated September 2009]
Emblements (Doctrine of): Provides a tenant the right to enter property in order to care for and harvest a crop after the lease is terminated. This right is usually granted when the tenant has planted the crop before receiving notice of termination. The tenant will likely have to continue paying rent during this time.
Lease: A contract whereby the owner, or other rightful possessor, of real property conveys the right to use and occupy the property in exchange for consideration, usually rent.[Black’s Law Dictionary (8th ed. 2004)]
Life Estate: An estate held only for the duration of a specified person’s life, usually the possessor’s.[Black’s Law Dictionary (8th ed. 2004)] This may also be referred to as an estate for life or a life tenancy.
Mediation: A method of dispute resolution involving a neutral third party who tries to help the disputing parties reach a mutually agreeable solution.
Offer: A promise to do or refrain from doing something in exchange for something from the other party and made in way that a reasonable person would expect a binding contract to arise from its acceptance.
Option to Purchase: Such a provision in a farm lease gives the tenant the right, though not the obligation, to purchase the property at the end of the lease term.
Permissive Waste: A tenant’s failure to make normal repairs to property so as to protect it from substantial deterioration. [Black’s Law Dictionary (8th ed. 2004)]
Right of First Refusal: The right to match the terms of a proposed contract with another party. In the context of a farm lease a provision in the agreement might state that the tenant has the right to purchase the leased property upon the same terms and conditions offered to a third party.
Statute of Frauds: A statute designed to prevent fraud and perjury by requiring certain contracts to be in writing and signed by the parties bound by the contract. [Cornell Law School, Legal Information Institute]
Tenancy at Will: A tenancy in which the tenant holds possession of the property with the landlord’s consent, but there is no fixed term. At common law these tenancies could be terminated without notice though several states have enacted statutes requiring some form of notice of termination.
Tenancy for a Term: A tenancy created with a definite and known duration, whether in years, months, or days. Farm leases are typically created for a term of years. This may also be referred to as a tenancy for years.
Tenancy for Years: See Tenancy for a term.
Voluntary Waste: See Active Waste.
Waste: Permanent harm to real property committed by a tenant to the prejudice of the heir, the reversioner, or the remainderman.[Black’s Law Dictionary (8th ed. 2004)] In a farm lease situation waste will typically be to the prejudice of the landlord.
Year to Year Tenancy: This tenancy continues on a year to year basis until timely notice of termination is provided. A year to year tenancy can be created expressly or by a tenant holding over with the consent of the landlord after a lease for a term expires. This form of tenancy is also commonly referred to as a periodic tenancy, which is simply a more general term and can be for any set amount of time, such as month to month or year to year.