Changing or Renewing Indiana Cropland Leases

Tenants and landlords are encouraged to meet by late summer if not earlier to settle on crop lease terms for the next year. Resolving rent agreements before fall or winter allows the tenant to better plan for the coming year. If there is a disagreement over lease terms for a coming year it may be wise to serve a lease termination notice. Termination of an existing lease is essential to void the current year’s lease agreement and to setup a new arrangement. Ample advance notice is a good idea when a lease change is needed or planned — especially from a tenant’s farm management point of view. The tenant may need to replace land if a lease with acceptable terms cannot be renegotiated with a landlord and fall tillage activities for the next year’s crops are part of a good farming routine.

Tenants (and landlords) are entitled to a proper written notice if a lease change is desired. Recently, the Indiana Supreme Court agreed that a tenant is entitled a notice to end a lease even if the tenant knows the ownership of the land is in dispute. Neither sale of the leased land nor death of landlord normally terminates a cropland lease. When sale of leased land or death of a landlord seems imminent, a special farming arrangement may be advised so that new owners of farmland may go forward without what may be perceived as the burden of a prior lease agreement.

Without termination and/or a new lease terms that are agreed to (and best reduced to a signed writing), a current year’s lease terms may apply for the coming year. One exception is when it is clear a term lease is in force and has come to the end of the term. An Indiana law says term leases require no notice to terminate the lease. But, when in doubt and a lease change is desired, the best strategy may be to deliver a proper notice to quit. The form for a notice to quit is spelled-out in the Indiana Code. Effective delivery of a notice is also important.

In Indiana, if no other lease provision applies, a notice to quit may be timely if delivered before the end of November of the current year. This timing is based on a three month advance notice requirement in the Indiana law for year to year leases. End of the crop lease year may be presumed to be the last day of February according to a Midwest custom when the lease terms are not in writing. The end of the crop lease year is not in the Indiana statutes. A specific situation may support a year‑end date that makes a November notice legally tardy.

Therefore, if a notice to quit is necessary, it is wise to deliver the notice at least as early as September. Landowners and tenants are wise to work with their respective lawyers familiar with farming for ending the current lease and setting‑up a new lease arrangement.

More information is in “Legal Aspects of Indiana Farmland Leases and Federal Tax Considerations” online under “Legal Affairs” at: http://www.ces.purdue.edu/extmedia/agecon.htm. Lease forms and other leasing information are also available at this site under “Farm Management”. Gerry Harrison will take questions and send additional information including amendable computer files of lease forms.