The land lease agreement template is a contract between the landowner and the lessee. It enables the tenant to use the land owned by a landlord in return for a defined amount of rent. This agreement is identical to the manner standard property leases work. The land lease agreement sometimes also becomes a farm land lease agreement among the owner of a vacant piece of land and an individual who wants to use the land for farming purposes.
Most leases generally don’t have structures. So, the tenants have to establish a temporary structure that he pays for on his own. But, the tenant can build permanent structures under some arrangements agreed upon by both parties.
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When to use a land lease agreement?
A land lease agreement should proceed with the relationship even both parties are in the best of terms. Only the word of mouth or handshakes are not adequate. This agreement binds both parties to the terms of the agreement. A party could answerable in case there is a breach in the terms of the agreement in the future.
The landlord may set his expectations for the tenant by having this agreement in place. When the tenant signs the agreement, he would accept such expectations. The tenant may build structures on the landlord’s property with the latter’s permission as mentioned in the agreement. You may also like Rental Property Expenses Spreadsheet.
Components of a land lease agreements:
You should include the following elements in the land lease agreement;
Details of the land
You have to be as specific as you can while describing the land in the agreement. You should include the total amount of acreage that the landlord owns here. You should also specify the portion if the lessee will use less than that amount.
To eliminate future confusion, it is essential to clearly elaborate the property’s boundaries. This also makes sure that the lessee won’t infringe on the acreage. Also, he isn’t able to use or on adjacent properties owned by other entities that aren’t part of the agreement. It is suggested that you should keep a topographical map as an addendum to indicate the layout of the land.
Use of property
Explain clearly and in detail how the lessee plans to utilize the property in the agreement. The land lease agreement is commonly made for particular purposes. For example, when it is hunting season, allow hunters to use the land.
The agreement should also define who maintain and make improvements on the land along with detailing the use of it. You should also indicate what the expected improvements will be like utility lines, entry roads or the buildings.
There must be an established method where the lessee gets a return of the cost of his investment when the agreement ends and the landowner intents to keep the changes. Furthermore, include in the agreement if the landowner wants the lessee to return the property to its original state.
Duration of the agreement
Any land lease agreement must include certain start and end dates. Also, a provision written into the agreement can enhance the duration for certain periods of time. In case, the property isn’t used as stated in the agreement then also indicate the terms that can terminate the lease.
The lease should provide evidence of liability insurance. In case of injuries to the people or damage to the belongings or property, this supports the activities. As an added precaution, if the lessee fails to give adequate coverage for damage to property and people you may also want to include liability policy where the lessee will pay for any potential damage.
It would be essential for both the landlord and lessee to have their own legal representatives go through the contents of the agreement so that they make sure it complies with contract laws. A contract lawyer can be hired in order to confirm that the conditions and language used in the document.
Different types of farm land lease agreements:
Farm land lease agreement has various modifications. And they usually come in the form of written contracts. However, some of the agreements aren’t done in writing. This is because the parties concerned often know each other personally and have been in business for a long time. The leases can get implemented through the actions of each party or communicated verbally in such cases.
But, the verbal leases are difficult to prove so they can easily get terminated. The farmer can get control and possession of the owner’s land via the payment of rents. This payment can also come in varying forms. The farm land lease agreement may come in the following form;
The lessor gets a regular stream of payments under this type of agreement. The farmer here takes the risk particularly when the prices of commodities fall. However, under the case lease agreement, the farmer could benefit if the prices improve or shoot up. Within the contract, you can include provisions. This way, it helps in addressing such issues and, therefore, reduces the risk.
The landlord provides the land in this type of agreement. On the other hand, he farmer provides the contracts for input costs, equipment, and labor. Landlord gets either a part of the crops to sell or a cash payment rather than fixed rent. This usually depends on the net proceeds from crops’ the sales. In this agreement, the landlord holds up more of the risk. Also, you can gain more on the basis of the harvest output and commodity prices. You should also check Early Lease Termination Letters.
In conclusion, a land lease agreement template is an agreement between the landlord (who owns the land) and the tenant (who will utilize the land). The tenant can either use this agreement for agricultural, commercial, or recreational purposes. You should also ensure that the expectations and responsibilities of both parties are clearly defined in the agreement.