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Contents

  • Contract Law
  • Landlord-Tenant Law
  • External Legal Considerations
  • Incorporation of Laws and Regulations in the Lease Agreement

Legal citations are provided in this chapter to assist in further understanding the legal obligations of the parties.  However, as stated in the disclaimer at the beginning of the book, the law is subject to change, and this information should not be considered a substitute for consultation with a legal professional.

It is not the purpose of this chapter to provide a complete discussion of all landlord-tenant laws and regulations. Rather, it is to provide a brief overview of matters necessary for lease formation and examine some of the most relevant legal matters impacting sustainable lease arrangements.  A more general analysis of Iowa farm lease law is available in “Iowa Farm Leases – Legal, Economic, and Tax Considerations.”

The law impacts the landlord-tenant relationship in several ways. These impacts occur through (1) contract law (2) laws directly aimed at influencing the landlord-tenant relationship, (3) laws that provide different treatment of the parties based on the terms of the arrangement, and (4) lease provisions that incorporate laws into the agreement. It is important to understand how the terms of a lease arrangement interact with the law in order to develop terms that are legally enforceable and take external considerations, such as tax and estate planning issues, into account while promoting the sustainability of the farm operation.

Contract Law

A lease is a type of contract.  As such, it must meet certain legal requirements to be enforceable in a court of law.  It is important to understand both how a contract is formed and how the courts will interpret that contract.

Elements of a Contract

In order to have a valid contract it must include certain elements.  These elements are typically not difficult to demonstrate in a farm lease arrangement.

  • Competent parties:  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.  Landowners and farm operators are not usually minors or mentally incapacitated, but this does emphasize the importance of setting up a power of attorney and a will or trust.
  • A legal subject matter:  The purpose of the contract must be legal.  The subject matter of a farm lease is agricultural production, which is, perhaps with a couple of exceptions, a legal enterprise.
  • An 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.  The offer can be made by the landowner or the tenant.
  • 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.  Offer and acceptance, particularly where the parties have signed a written agreement, is expressed in the lease agreement.
  • Consideration:  Something of value or a promise to do or to refrain from doing something.  The innate nature of the lease arrangement, exchanging the use of one’s property for the payment of rent, provides consideration by both parties.

The Statute of Frauds

The requirements of the statute of frauds has been discussed previously in the section on “Farm Lease Basics,” but it is worth mentioning again here.  The typical statute of frauds renders contracts involving real estate unenforceable if not put in writing.[1]  However, many states, including Iowa, have made exceptions to this rule for leases of a year or less.  This means that any lease for over a year must be in writing and it must contain the signatures of the parties.

Additional Contract Considerations

In his book, “A Farmer’s Guide to Production Contracts,” Professor Neil Hamilton sets out twelve rules that should be considered when entering a contract.  This list is provided below, though modified to address the farm lease arrangement.

1.  Remember the first rule of contracts – whoever wrote the contract took care of himself. This can give the party that presents the lease a substantial amount of control.  It is important to remember that a sustainable lease takes the interests of both parties into account to create a lasting relationship.  There are many times that farm tenants present their own lease forms, particularly if they lease from several landowners.  If this is the case it is particularly important to ask questions about provisions, and you shouldn’t feel uncomfortable by asking to have an attorney look over and explain the contract.

2.  Read and understand any contract before signing it. Because the words in the contract will be enforceable in the future, you need to understand what you are promising to do and what you can and cannot hold the other party responsbile for.  This holds true whether the tenant provides the lease or you use a form lease from a university extension or state bar association.  It is important, particularly when promoting sustainable practices, not to assume a lease provides adequate protection without fully understanding its terms.  If the lease is relatively large or complex you should consider having your attorney go through the contract with you to make sure you understand all of the provisions.

3.  Know that complying with contract terms is required before you have performed under the contract. If you are not able to perform the promises you make in the contract the tenant may have the option of terminating the lease and may bring a suit for breach of contract.  This is particularly important in creative leasing arrangements that require more participation from the landowner, such as completing the necessary paperwork for organic certification.  Because of this, you will want to make sure you are able to live up to the promises you make in the contract or be willing to pay the consequences.

4.  Never assume your failure to perform a contract will be excused. If the tenant is damaged by your failure to perform under the contract, assume you will have to make amends.  If you think you will not be able to fully meet your obligations under the lease, it is usually best to let the tenant know so both of you can deal with the situation.  You may be able to negotiate a substitute arrangement.

5. Know the other party’s financial situation and performance history. This is important in any lease, but particularly so in long-term agreements.  Some tenants may provide resumes or references for you to check.  A beginning farmer may lack capital and any history of performance.  Through recognition of such problems an arrangement can be reached that minimizes your risk while allowing you to enter a lease with a new farmer.

6.  Weigh the advantages of the contract against any increased costs or risks. Developing a sustainable lease may require alternative approaches to the farm lease arrangement.  Before signing the lease you should make sure the lease arrangement will continue to meet your financial needs.

7. Remember proposed contracts are always subject to negotiations. Many agricultural leases use fixed “boilerplate” language.  But all contracts are negotiable before signing; nothing forces you to sign the contract until you are satisfied with the deal.  It is particularly important when developing a sustainable lease from a typical agricultural form lease to recognize that the terms provided in the lease can be modified.  But, careful attention should also be paid to how modifications affect the rest of the lease.

8.  Make sure any changes to the contract are made in writing. Although it can be difficult to change a contract after it is signed, shifting conditions can persuade both parties it is in their best interest.  To ensure the changes are enforceable, the new terms need to be in writing and signed or initialed by both parties.

9.  Do not rely on oral communications made by the other party, either before the contract is signed or during the contract performance. If your lease ever has to be interpreted in court, the court will most likely rely only on the written language of the contract itself.  Court usually refuse to accept evidence of oral agreements that goes against the contract language, and most form leases include a similar restriction.  Because of this, you will wnat to get in writing any agreements important you you.  If you are unable to do this, then make sure to keep copies of any documents, such as letters, payment sheets, and checks you can use to show what was agreed to.

10.  Keep good records of your performance. You never know when you will need to prove you have lived up to your end of the bargain.  Keeping good records is the only way to do this.  This is especially true when a crucial part of the lease requires you to make a certain contribution.  Whether it is contributing to the costs of production, providing specialized equipment or labor, or taking care of legal work, if you have records indicating you have done what you promised, you can avoid headaches in the future.

11.  Do not hesitate to ask questions when you do not understand what is happening. The best time to ask questions about what you are promising to do is before you promise to do it.  This is especially important for landowners that do not have farming backgrounds or are unfamiliar with farm lease arrangements.  To make sure you understand the terms of the contract, you can ask questions of a potential tenant and your advisors.  The Introduction to this guide provides a description of places where you can obtain additional assistance.

12.  Stay in touch with the other party to the contract. Regular communication with the buyer will help prevent misunderstandings about the lease or about what is required to satisfy the lease requirements.  Open lines of communication will help parties make sure that each is doing what the other party understood they would do.  Increased communication also boosts tenant confidence in the stability of their tenure, a critical element to a sustainable lease agreement.

Landlord-Tenant Law

State legislatures have seen fit to prescribe certain rights and responsibilities for landlords and tenants in a farm lease agreement.  It is important to understand how and when these laws apply.

There are some mandatory rules that apply to a lease arrangement regardless of the provisions in the agreement or the intention of the parties.  This means the parties are not bound by lease provisions that contradict the requirements established by these laws.  An example of such a law is Iowa’s notice of termination statute.[2] Iowa courts will not recognize an agreement within a lease to do away with the requirement to provide notice of termination.[3] Entering a lease without recognizing such laws can result in confusion, disappointment, and damage to the sustainability of the operation.

Other laws are discretionary or only applied where a lease agreement is silent.  In such cases the parties are free to agree to terms that do not coincide with the rights and duties established by the law.  This is the case with most of the notice of termination statutes outside of Iowa.  While many states have established that notice be given prior to a set period before the termination date, such as 60 days, the parties are free to agree to different notice requirements.[4] Therefore, these laws are considered merely default provisions if the parties don’t address the issue in the lease.

As can be seen in the examples above, there is a good deal of variation in the laws from one state to the next.  It is especially important to keep this in mind if you decide to rely on any type of sample lease or other lease guide.  State specific legal information can be found through your State Extension Office or, of course, by visiting with your attorney.  The SALT website, at www.sustainablefarmlease.org, also provides an examination of select farm lease laws and links to related organizations and publications.

Below is a discussion of legal issues with particular relevance to sustainable operations on leased farmland.

Right of Possession

In a lease arrangement the landlord conveys the right of possession to the property and the buildings on that property to the tenant. The tenant has the exclusive right to use the property.[5] However, there may be limits on this use, either through the express terms of the lease or implied by law.[6] The sustainability of your land can, therefore, potentially be improved both by establishing specific limits on the use and possession of the property in the lease term and by expressly authorizing uses not recognized as rights given in an agricultural lease.  Examples are provided below.

Including Limits on the Tenants Right of Possession

Any limits on this right, including the landowner’s ability to enter the land, should be stated in the lease agreement.  There are several possible limitations, or reservations, that can affect the promotion of an operation’s sustainability.  These include:

  • The right to enter to inspect the property, make necessary repairs and improvements, care for the land, and prepare the land for the following year in the last year of the lease.
  • The right to grant easements, especially conservation and agricultural easements or easements to develop renewable energy sources.
  • The right to enter the property or allow others to do so for recreational purposes, such as hunting and fishing.

It is enough for our purposes here to recognize the tenant’s right to possession and the need for landowner reservations in order to help address different sustainable issues.  More details on the specifics of farm lease provisions to address some of these issues are examined in the final chapter, “A Few Additional Considerations.” Land use restrictions are addressed in the next chapter under “Conservation Provisions.”

Including Land Uses for Activities Beyond Agriculture

As mentioned above, there are some limitations on the tenant’s use of property under a farm lease that are established by law.  The Iowa Supreme Court has held that while tenants have the exclusive right to use the land for lawful purposes, the use can be limited to uses for which the premises are specially designated or constructed.[7]  This could limit uses considered outside the realm of agriculture. In such cases, if a prohibited, or even potentially prohibited, use could be used to promote the sustainability of the operation, a provision expressly allowing the use should be included in the lease agreement.  Such uses could include:

  • On-farm sales of farm products.
  • Recreational use of the property such as agri-tourism activities.

Additional considerations that will need to be addressed if the land use rights of the tenant are expanded include liability and insurance, compliance with zoning and other land use laws, as well as food safety regulations and licenses.  These considerations need to be addressed, but should not discourage you from allowing additional uses.  Agri-tourism and on-farm marketing can play an important role in diversifying the local economy, providing enjoyable rural amenities, and improving the overall sustainability of the operation and community.

Notice of Termination

Many states, as mentioned previously, have adopted statutes specifically addressing notice of termination procedures for agricultural tenancies.  The purpose of these statutes is to assist in stabilizing agricultural land tenure in order to protect the economic interests of the parties, the social structure of rural communities, and the sustainability of the land.[8]

Farm operations depend to a large degree on long-term planning.  It is important for tenants to know whether they need to find new land to farm or perhaps a new place to live during the next year.  Further, both tenants and the land benefit when tenants are assured they will be able to reap the benefits of investments in the land several months or even years later.  The ability to do so, therefore, affects the economic and social structure of the farm family and farming community, as well as the sustainability of the land.

Professor Neil Hamilton explains the Constitutional basis for statutory farm lease termination procedures in Iowa.

In Iowa, the landlord must provide notice of termination on or before September 1, and the notice must set the date of termination as March 1.[9] Failure to provide notice will result in a continuation of the tenancy from year to year on the same terms and conditions as the original lease, until proper notice is given.[10] These procedures do not apply to farms of 40 acres or less or to share-cropper arrangements.[11] As mentioned above, in Iowa, an agreement by the parties set forth within the lease agreement to dismiss termination requirements will not be recognized.[12] However, anytime after formation, the parties are free to agree to an early termination, which renders notice of termination unnecessary.[13]

The effect of the various state laws may be debated, but it is critical for both landowners and tenants to understand the termination procedures required in their state and for their particular circumstances. A knowledge of the law can help ensure protection of the rights established by such statutes are not infringed upon, to know the limits of these rights, and to protect the land from continued degradation should the need arise.

Termination for Default

Knowing the procedures for terminating a lease at the end of a lease term is important.  However, to ensure adherence to sustainable practices and other lease provisions, it is also valuable to understand when and how you can seek early termination for a breach of your lease.

In general, failing to abide by the terms of a lease or committing waste on the property, a matter discussed further in the next section, is a forfeiture of the tenant’s rights in the property and an action of forcible entry and detainer is appropriate.[14] However, due to the nature of agricultural tenancies early termination may be limited, even where lease provisions provide for early termination in the event of default.[15] For instance, the Iowa Supreme Court has held early termination of a farm lease in the middle of a crop year creates particular hardships and difficulties that should be avoided.[16] However, where a tenant violates the terms of a lease for a period of years, the landlord may be able to terminate the lease after the current crop year.[17] In such a situation, it is still important the landlord understand and follow the statutory provisions for termination discussed above.

In a case with particularly egregious violations, a landowner may be able to terminate a lease without statutory notice or, perhaps, even during the crop year.  The circumstances that allow for such actions are not clearly established and consultation with a licensed attorney is recommended before any actions are taken.  A violation of your tenant’s rights in the property can have serious consequences, including court-ordered damages, repayment of farm program awards, and ineligibility for future farm program payments.[18] One clear area, established by Iowa’s courts, where you can terminate without statutory notice is when your tenant fails to pay rent.[19]

Implied Covenant of Good Husbandry

Many states apply an implied covenant of good husbandry to agricultural leases.  Iowa has not explicitly adopted an implied covenant of good husbandry, though the common law does require all tenants to use leased property in a “proper and tenant-like manner” and not to commit waste.[20] Further, the Iowa Supreme Court has established a duty of stewardship regarding the state’s soil resources.[21] In light of these rulings, such an implied covenant is likely to exist. This covenant can also be expressly included in the terms of a lease agreement, which is discussed further in the Conservation Provisions section of the next chapter.

The covenant is typically based on the common practices used in the community.[22]  However, a covenant of good husbandry, while able to provide some protection against harmful exploitation of a farm’s resources,[23] does not necessarily guarantee the adoption of sustainable practices, nor does it completely guard against harmful practices.

Farmers are often referred to as stewards of the land and the first environmentalists.  It seems to reason, therefore, that good husbandry certainly should provide for the stewardship of the land.  In fact, good husbandry does descend from the doctrine of waste and in many cases does prevent, or at least hold tenants accountable for, farm practices that deplete the property’s long-term productivity.[24]  As stated, however, the covenant’s usefulness for promoting conservation is limited to the common practices used in the community.  This may result in the allowance of farming methods that are not sustainable but are commonly used.

In addition, what is considered to be common in the community may be a minority of the members of that community.[25]  This means that unsustainable practices might be tolerated if the practice is shown to be followed by even a minority of the members.  Based on the wide-spread use of conventional agricultural methods to maximize productivity through heavy reliance on fertilizer and chemical inputs, with limited crop rotation, protection based on the community standard may be insufficient to ensure sustainable farm practices.

While good husbandry does address stewardship, if even in a limited manner, it also is meant to ensure the productivity of the farm and may be interpreted by some as limiting sustainable practices on the land.[26]  For instance, the presence of weeds on a farm has commonly been seen as a tell-tale sign of poor husbandry.  Tenants are very thorough about eradicating weeds, not only as a method of increasing productivity, but also to present an orderly appearance to the farm and to promote the perception of an industrious operation to the landlord and others.  This can lead to the use of additional chemicals to eradicate any sign of weeds.  Such a focus on presenting an outward appearance of good husbandry based on conventional attitudes can, therefore, actually be detrimental to the adoption of sustainable practices.  This provides another reason, as discussed in “Talking to the Tenant,” to ensure both parties understand the priorities and expectations of the other party.

It should be noted that the inclusion of a good husbandry provision does provide some measure of protection and perhaps has a place as a catch-all should other provisions fail.  The parties to the agreement are also free to adopt a good husbandry provision with a higher standard than that of the community.  The possible content and effect of such provisions are discussed further in the Conservation Provisions section of the next chapter.

Crop Residue

Crop residue–the part of a plant typically left on the field after harvest, such as corn cobs and stover–plays an important role in the replenishment of soil nutrients, the conservation of the soil, and water retention.  However, due to the increasing value of crop residue as a source for the production of biofuels the off-farm value of residue has increased.

The impact of crop residue on long-term productivity and soil conservation affect the landowner and tenant in distinct ways depending on the duration and type of lease arrangement.  The tenant, if under a year to year lease arrangement, has little incentive to leave the residue on the farm, and may instead prefer using increased inputs to boost short-term production. This not only decreases long-term productivity, but also has the potential to pollute surface and ground water resources.

It is in the interest of the landlord to ensure at least part of the residue is not removed from the property. The necessity of including a provision to this effect depends on state law.  Most states address this issue solely through the common law.  While the common law does typically grant the tenant the right to remove residue,[27] this right may be limited if the removal can be shown to violate a covenant of good husbandry, discussed above.[28]

The Iowa legislature has enacted a statute specifically addressing the issue of crop residue.[29]

Farm tenancy – right to take part of a harvested crop’s aboveground plant.  Unless otherwise agreed to in writing by a lessor and farm tenant, a farm tenant may take any part of the aboveground part of a plant associated with a crop, at the time of harvest or after the harvest, until the farm tenancy terminates as provided in this chapter. — Iowa Code Section 562.5A (2010).

Therefore, Iowa tenants have the statutory right to remove any crop residue from the leased property.  However, the landowner can provide a written provision within the lease agreement to prevent the removal of crop residue.[30]  The language used in such a provision should be careful to include all crop residue.  Other terms, such as stover and stubble, have been determined by an Iowa court to define only part of the residue left after harvest.[31]

In short, any landlord, in any state, wishing to ensure  crop residue remains on the property should consider a provision specifically limiting the removal of residue.

External Legal Considerations

It is important to take all of the legal consequences of a lease into consideration in order to develop a lease arrangement that promotes sustainability while protecting the interests of both parties.  The type of lease arrangement and specific provisions can have a significant impact on how the parties are treated under various laws.  Consideration should be given to participation in government farm programs, tax liability, social security benefits, and estate planning.

Government Farm Programs

DCP and ACRE Payments

The type of lease agreement can impact the distribution of payments from the Direct and Counter-cyclical Program (DCP) and the Average Crop Revenue Election (ACRE) program.  There has been some confusion regarding the sharing of program payments.  A landlord cannot receive a share of the payments unless the landowner is “actively engaged in farming;” their contribution to the operation must be significant and at risk.[32]  Therefore, a cash lease does not qualify a landlord for a share of DCP or ACRE payments, while a crop share lease does.[33]

Confusion has developed in regard to payment sharing under flexible, or adjustable, cash leases.  Basically, for purposes of DCP payments, to constitute a share lease the amount of rent must be tied to the production or revenue of the specific farm.  This means that if the landowner receives a cash amount based on the price at a specific market or a county yield average the lease is most likely a cash lease, and the landowner is not due any payment.

In addition, leases that establish a guaranteed amount of cash or a specified amount of the crop and are then adjusted by factors such as yield or price are considered cash rent leases.  Similarly, leases that use bonuses for unexpectedly high yield or revenue are considered cash agreements.

In order to ensure the parties intentions regarding DCP and ACRE payments are fulfilled, it is recommended a written lease with the signatures of both parties indicate the nature of the lease and the desired division of payments.  The parties should also visit their local FSA office with a copy of their lease and explain their intentions.  The type of lease can have similar effects on payments from other programs, such as the Crop Disaster Program and Loan Deficiency Payments.

Determination of DCP and ACRE payments based on the type of lease entered is governed by Title 7, Section 1412.54 of the U.S. Code of Regulations.

Examples:

The FSA Handbook guiding the DCP and ACRE programs provides examples of farm leases and the outcome of their determination as cash or crop-share arrangements.

Example 1

In this example, the lease agreement specifies that the rent is based on a share of the gross revenue of the crop proceeds. The rental amount is equal to $142.80 per acre based on the following variables:

  • rent equal to 40 percent of the gross crop value
  • guaranteed minimum yield of 170 bushels per acre
  • actual price of $2.10 per bushel.

While the landowner does not actually receive 40 percent of the crop produced, this lease shall be considered a cash lease because other rental amount is based on a guaranteed sum or minimum amount.

Example 2

In this example, the lease agreement specifies that there is a base, or minimum, cash rent amount that must be paid, but the landowner receives a share of the gross revenue in excess of the base value. The rental amount is based on the following variables:

  • base, or minimum, cash rent is $100 per acre
  • additional rent is 50 percent of the gross revenue in excess of $250 per acre
  • yield of 52 bushels per acre
  • price of $6.50 per bushel.

While the landowner does not actually receive 50 percent of the crop produced, this lease shall be considered a “combination” lease or cash lease because the lease agreement includes a guaranteed amount and an additional amount based on a share of the crop proceeds.

Example 3

In this example, the lease agreement specifies that the cash rent is based on a fixed number of bushels; however, the price is based on the value that will be set on a future date, but it is not based on the actual price received by the producer. The rental amount is based on the following variables:

  • fixed number of bushels is 55 bushels per acre
  • actual price is the price at the local elevator on December 1.

This lease shall be considered a cash lease.

Conservation Programs

The are a wide variety of USDA and state programs designed to assist landowners in promoting conservation on their property.  Whether on owner-operated land or leased farmland these programs should not be overlooked when establishing a sustainable farm operation.  Assistance can come in the form of cost-sharing for conservation improvements, payments for providing environmental benefits, technical assistance, low-interest loans, rental payments, and purchases of conservation easements.  The eligibility requirements and incentives available vary from program to program.

This USDA video describes the purpose and benefits of the Conservation Reserve Program, one of the conservation programs available through the Natural Resources Conservation Service (NRCS)

Conservation programs present a variety of considerations to be addressed when entering a farm lease.  These considerations are particularly relevant when promoting sustainability in a farm lease situation due to the intrinsic nature of these programs.  Important matters to consider include:

  • Who can enroll or participate? This question is easily answered for some conservation programs.  For instance, a tenant can never enroll land in a permanent conservation easement, such as the Wetlands Reserve Program (WRP).  The eligibility for enrollment in other programs depends on the type of program and the terms of the lease.  If a program requires a contract for a period of years, the person enrolling in the program must be in control of the property for the entire term of the contract.[34]  This means a tenant will only be eligible for enrollment if a long-term lease is entered or the landowner agrees to participate.  Lease provisions can give authority for enrollment to one party or the other as well as require landowner participation at the election of the tenant.  Conservation programs that do not require such extended contracts may be available for participation by year to year tenants without participation by the landowner.
  • Who is responsible for compliance? The responsibilities of each party relating to government programs can be set forth in the lease agreement.  This can include refraining from certain practices on portions of the property or it can require specific acts.
  • How are payments distributed? The distribution of any payments from the program should also be addressed in the agreement.  Some programs have requirements for the distribution of payments while others may be determined by agreement between the landlord and tenant.  The tenant may have certain rights regarding program benefits even though the tenant might not have been farming the land at the time of enrollment.[35]
  • Are there programs in place at the commencement of the lease? A farm lease should address any existing contracts affecting the use of the property.  It is important the tenant understand the contract in order to ensure continued compliance.  The lease should reflect both the positive and negative effects that existing farm programs might have on the tenant’s operation.

Examples:

Conservation Stewardship Program (CSP)
Purpose:  Natural resource and energy conservation through financial and technical assistance in developing conservation systems and through payments for the environmental benefits of existing systems.
Enrollment:  Tenants may enter into a CSP contract but must have control of the property for the entire term or participation by the landowner.
Contract Term:  The minimum contract term for CSP is five years.
Additional Information and Resources:  USDA checklist for determining if CSP is right for you.

Environmental Quality Incentives Program (EQIP)
Purpose:  Provide financial and technical assistance to aid producers in installing or implementing conservation practices.
Enrollment:  Requires control of the property for the term of the contract and can be either a tenant or an owner.
Contract Term:  Ranges from one year after the implementation of the last scheduled practice to a maximum term of ten years.
Additional Information and Resources:  NRCS EQIP description.

For more information on specific programs visit the Natural Resources Conservation Service (NRCS) website or contact your local USDA Service Center.  The Center for Absentee Landowners website also provides a conservation program quick reference page as well as a “Conservation Decision Guide” to assist landowners in finding appropriate conservation programs for their land and circumstances.  State and joint state-federal programs in Iowa are explained in the Department of Agriculture and Land Stewardship’s State Program pamphlet.

Incorporation of Laws and Regulations In the Lease Agreement

Conservation Districts were one of the first tools used to combat soil erosion and were often given authority to regulate soil loss, but where this authority still exists, enforcement mechanisms, funding, and the will to enforce regulations is often lacking. Photo by USDA NRCS.

Lease agreements often address specific laws in the agreement.  This is usually done to ensure the farm operation is in compliance with statutory and regulatory requirements and to protect the landowner from liability.  It is important to understand that the presence of these provisions do not by themselves ensure the sustainability of the farm operation.

There are two significant reasons for concern.  First, the legal requirements may not go far enough to effectively promote sustainability.  Second, as mentioned previously, state laws vary, and a sample lease provision that is based on the law of one jurisdiction might not have the same effect in another.

Farm Program Compliance Laws

A common compliance provision requires that soil loss limits meet requirements of local, state, and federal law.  It is important to understand that these requirements do not guarantee sustainable levels of soil loss.  For instance, federal compliance laws relating to soil loss only apply to land classified as Highly Erodible (HEL).[36]  This means federal soil loss limits might not apply to your land at all.

This however, does not mean there isn’t a place for incorporating external requirements.  For instance, including a conservation plan can be an effective tool to relay important information on how the farm is to be operated.  As discussed in the previous section, conservation plans developed by NRCS staff are legally required for some land in order to be eligible for farm program payments.[37]  However, plans may be developed for any farm operation and incorporated in the lease agreement.  For more information on conservation plans see the discussion on Conservation Provisions in the “Key Considerations for a Sustainable Lease” chapter.

Local Soil Loss Limits

In addition, Soil and Water Conservation Districts (SWCD) in some states, such as Iowa, have regulations requiring farm operators to limit the soil loss to certain levels.[38] However, the mechanisms for enforcement as well as the will to enforce these rules is often limited.  Again, while there are perhaps more effective means of protecting your land, such provisions do have a place in farm lease agreements.  It may be beneficial to seek out your local SWCD commissioners, inquire about soil loss limits, and learn more about enforcing such limits on your property.  In Iowa, complaints regarding soil loss limits can be brought by adversely affected neighbors or local officials.[39] Landowners are not included in the language of the statute.

Environmental Regulations

In addition, many environmental regulations do not apply to agriculture or require voluntary participation.[40]  Again, the inclusion of provisions requiring compliance with these laws does have an important role to play in protecting the landowner from liability, but may not necessarily meet the landowner’s expectations regarding environmental protections.  It is, therefore, important to pay particular attention to the Conservation Provision section of the next chapter if there are specific sustainability issues you wish to address.

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1 Iowa Code § 622.32(3) (2010).

2 Iowa Code §§ 562.5-8 (2010).

3 Benschoter v. Hakes, 8 N.W.2d 481 (Iowa 1943).

4 See for example, Mo. Rev. Stat. §§ 441.050, 060(3), 070 (2010).

5 Chamberlain v. Brown, 120 N.W.334, 337 (Iowa 1909).

6 Id.

7 Verlinden v. Godberson, 25 N.W.2d 347, 349 (1946).

8 Benschoter, 8 N.W.2d at 485-487.

9 Iowa Code §§ 562.5-7 (2010).

10 Iowa Code §§ 562.6 (2010).

11 Id.

12 Benschoter, 8 N.W.2d at 484.

13 Crittenden v. Jensen, 1 N.W.2d 669, 670 (Iowa 1942).

14 Verlinden, 25 N.W.2d at 349-50.

15 McElwee v. DeVault, 120 N.W.2d 451, 454 (Iowa 1963) (holding the landlord was able to cancel a three year lease after the first year due to violations of the provisions of the lease regarding the manner in which the property was to be farmed, but the landlord did provide notice of the violations in June and notice of termination in August.  The court noted it would have been inequitable for the landlord “to oust the tenant in the middle of the crop year.”).

16 Id.

17 Id.

18 7 C.F.R. 1412.55 (2010).

19 Riggs v. Meka, 17 N.W.2d 101, 104 (Iowa 1945).

20 Verlinden, 25 N.W.2d at 349-50.

21 Benschoter, 8 N.W.2d at 487.

22 Green v. Kubik, 239 N.W. 589, 592 (Iowa 1931).

23 Landas Fertilizer Co. v. Hargrave, 206 N.W.2d 675, 678 (Iowa 1973).

24 Id.

25 Moser v. Thorp Sales Corp., 312 N.W.2d 881, 904-905 (Iowa 1981) (Reynoldson, J., dissenting).

26 Thompson v. Mattox, 695 N.W.2d 505 (Iowa Ct. App. 2007).

27 Munier v. Zachary, 114 N.W. 525, 527 (Iowa 1908).

28 Id.

29 Iowa Code § 562.5A (2010).

30 Id.

31 Stamp v. Western Iowa Mut. Ins. Ass’n, 739 N.W.2d 503, 503 (Iowa App. 2007).

32 7 C.F.R. § 1400.201 (2010).

33 7 C.F.R. § 1412.54 (2010).

34 See for example, 7 C.F.R. 1410.5 (2010)

35 See for example, 7 C.F.R. 1410.56 (2010)

36 16 U.S.C. § 3811(a) (2010).

37 16 U.S.C. § 3812(a) (2010).

38 Iowa Code § 161A.43 (2010).

39 Iowa Code § 161A.61 (2010).

40 33 U.S.C. § 1362(14) (2010).