Consider Using a Flex Cash Lease for 2021, or a Modified Fixed Cash Lease

Image of farmland with Sugarloaf Mountain in Maryland. Image by Mike Procario via flickr.com

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            As we move through 2020 and a potentially lower period of crop prices due to issues associated with the global pandemic, many of you might be looking at renewing existing agricultural leases.  While you might be utilizing fixed cash rental rates or crop-share rents, with projected low crop prices, now might be the time to consider using a flex-cash lease.  Flex-cash leases are a rental agreement which work like a hybrid of the cash lease and state that the tenant will pay in proportion to either or both the price and yield level. This form of a lease might be better suited for producers who are working to handle low crop prices in their operations.  At the same time, if you do not want to consider a flex cash lease, you might want to consider adding language to your fixed cash lease which could reduce the rental rate if prices stay low.

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Does One Mare Create An Ag Lease?

 

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Image via flickr.com by Matt Northam

 

This post is not legal advice. 

As we draw closer to summer, I will start reminding many of you that it’s the time to consider terminating a farmland lease to comply with state law. In many states, farmland leases require more than 30 days notice to terminate without a written lease stating a different requirement. For ag leases in Maryland, this means that notice to terminate needs to be given by June 31. But what makes an ag lease and ag lease?  The Iowa Supreme Court has found that one old mare on six acres is not enough to create an agricultural lease that would require longer notice to terminate the lease. Continue reading