2026 Newsletter 1: Special Issue on Succession

Understanding Farmland Leases: Building Strong Agreements and Relationships

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by Jenna Nees

Leasing farmland is a common practice in agriculture, but it can come with its share of stress—especially when it comes to setting rental rates and negotiating terms. One of the best ways to reduce uncertainty and protect both parties is to put the lease in writing. A written lease helps clarify expectations, provides a reference point in case of disputes, and serves as legal documentation of the agreement. It also ensures that in the event of a tragedy, heirs have a clear understanding of how to handle crops already in the field. Ideally, the lease should be signed in the presence of the landlord, tenant, and a notary or witness.

A strong landlord-tenant relationship is key to successful lease negotiations. Tenants should maintain open communication with their landlords throughout the year. Sharing updates about crop yields, soil test results, and conservation practices helps build trust and transparency. When both parties feel informed and respected, it becomes easier to discuss lease terms and adjust as needed.

Farmland leases typically cover five main areas:

  1. General Terms

This section outlines the length of the lease, rental amounts or share contributions, payment methods, and termination procedures. It’s also important to clarify that the lease is an agreement—not a partnership—to avoid legal complications.

  1. Land Use and Cropping Program

Here, the lease should specify the number of acres involved, any restrictions on crop types, and provisions related to government programs. This section helps ensure that both parties agree on how the land will be used and what practices will be followed (e.g., conservation tillage).

  1. Landlord’s Rights

This portion addresses the landlord’s role in management decisions, responsibilities for building repairs or replacements, and who pays property taxes. Clear definitions of these responsibilities help prevent misunderstandings and ensure smooth operation.  This includes outlining roles with land clearing and field tile installation/maintenance.  An agreement on which party is responsible for utility costs, such as electricity for irrigation and grain drying is also necessary.

  1. Tenant’s Rights

Tenants are typically responsible for maintaining the farm’s appearance, including fences, buildings, and weed control. This section may also include guidelines for storing and using pesticides or other chemicals, ensuring compliance with safety and environmental standards. Tenant’s rights to store grain in facilities located on the farm property may be addressed, as well.

  1. Enforcement and Arbitration

This section deals with liability for damages, legal procedures in case of disputes, and what happens to the lease if a tragedy occurs. For example, can the lease be inherited, or is it terminated? It should also include procedures for amending the lease and resolving disagreements. If the tenant is responsible for applying lime, the lease should specify how residual lime payments will be handled if the lease ends before the full benefit is realized.

By addressing these key areas, a farmland lease becomes a valuable tool for protecting both the landowner and the tenant. It promotes transparency, reduces conflict, and ensures that farmland is managed responsibly and sustainably.

Ultimately, a well-crafted lease and a strong working relationship between landlord and tenant are essential for long-term success. Taking the time to communicate, document agreements, and plan for the future, helps ensure that farmland continues to be a productive and valuable resource for generations to come.

 

Suggested citation: Nees, J. (2026, January). Understanding Farmland Leases: Building Strong Agreements and Relationships. Purdue Institute for Family Business 2026 Newsletter, (1).

 

 

Published: February 2026