Pasture rental and lease agreements

Pasture rental and lease arrangements enable livestock producers to affordably start or expand their operations and limit financial risk.

When grain prices are high and there’s growing interest in grass-fed beef and dairy, managed productive pastures offer an alternative, affordable way to feed cattle. Sheep and goats traditionally have been fed a mostly forage diet, but managing their pasture will lead to greater profitability.

For landowners, renting out pastures may allow them to generate income while giving a beginning farmer a chance to get established.

Understanding rentals and pasture leases

Pasture lease and rental agreements are often used interchangeably, but they aren’t the same.

Rental agreements

Rental agreements are month-to-month, with no set period of residence.

Making changes

  • At the end of each 30-day period, both the landowner and the tenant are free to change the rental agreement (subject to rent control laws).

  • Changes may include increased rent for the pasture, changing the terms of the initial agreement or asking the tenant to vacate the property.

  • Most states require both landlord and tenant to give 30 days’ notice before making any changes. If your state doesn't require notice, rental agreement changes can be made at the landlord's discretion.

Renewals

  • Typically, a rental agreement automatically renews after each 30-day period has elapsed.

  • There’s no need to give notice about this automatic renewal, as long as both parties are in agreement.

Pasture leases

A lease has a set term, such as six months or a year, during which the tenant agrees to rent the property.

During that time – also known as the duration of the lease – the tenant and the landlord must adhere to the agreement. For example, tenants agree to make monthly rent payments and follow any code of conduct or other stipulations in the lease.

Making changes

  • Neither party can change any terms of the agreement until the lease expires, unless both parties agree to the change.

Lease violations

  • A tenant cannot vacate the property without breaking the lease.

  • If tenants vacate the property, they can be held liable for the rest of the rent due under the lease or be required to find someone else to take over the lease.

Determining fair rental rates

Deciding the appropriate monthly rental rate to charge or pay depends on several factors. The renter must determine expected gains or profits from using the land.

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Questions to ask

  • What’s the pasture’s forage production potential?

  • Is it composed of diverse and productive grasses and forbs, or weedy Kentucky bluegrass?

  • What’s the ground’s fertility status, and who’ll be responsible for the additional fertilizer needed?

  • What’s the soil type? Is it sandy or rocky with little water-holding capacity?

  • What’s the water supply and quality in the pasture and the location of the water source?

  • Will different fencing plans work with the water available?

  • What happens if the water supply dries up in late summer? Who’s responsible to provide water?

What to include in agreements

Whether it’s a rental agreement or a true lease, put it in writing with the guidance of legal counsel. It should include:

  • Names of the people involved.

  • Legal description of the land involved.

  • Length of the agreement.

  • Pay provisions.

  • All of the other items that have been agreed upon.

It should then be signed and dated.

Jim Stordahl, former Extension educator

Reviewed in 2018

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