The Basics: Everything You Need to Know About Leases

Wait, lease—what exactly is that?

Leasing is an important part of the agricultural sector and a tool that allows farmers to use land that does not belong to them. Leasing farmland can therefore be a smart choice for farmers who do not have enough land to grow their crops or graze their livestock. In concrete terms? A lease is a contractual agreement between the owner (the lessor) and a lessee, whereby the lessor grants the lessee the right to use their land or buildings in exchange for an agreed-upon fee.

And when does power reign?

For a lease to be considered valid, certain conditions must be met. That probably seems obvious to you, but what are the essential elements of a legally sound sales agreement? Let’s make it easy-peasy with this handy rule of four:

• The condition of use: the tenant leases real property. 

• The property is part of a farm. The tenant may engage in these activities either as a primary or secondary occupation.

• The tenant pays a reasonable rent to the landlord. By the way, did you know that the rent doesn’t necessarily have to be paid in cash? For example, the tenant can also pay in kind, such as partly or entirely in agricultural products.

• The lessor agrees to the lease. 

Check, check, check, check? A lease agreement is in place, and the agreement can be carried out.

Do I need to draw up a written agreement?

In principle, a lease agreement can be made verbally, but it is recommended to draw up a written lease agreement to avoid any disputes later on and to prevent potential issues with evidence.

What is the minimum lease term I can sign?

9 years. That may seem like quite a long time, but it gives the tenant the opportunity to build a profitable business.

My land is leased, and I want to sell it. Is that even possible?

Oh yes, absolutely—whether the land is leased or not, you can sell it in either situation. Here’s the catch: the tenant has a right of first refusal. What does this mean? The tenant has the legal right and the option to purchase the land or buildings they lease before any prospective buyer, at the same price and under the same terms. It is the notary’s responsibility to inform the tenant that they have one month to exercise this right.

Good to know | Parties who wish to terminate the lease agreement by mutual consent must formalize this in a notarized deed or through a declaration before a justice of the peace. 

Do you have any pressing questions about leases, or are you unsure about a specific lease agreement? Stop by one of our real estate offices. We’re here to answer all your real estate questions.