AgDM newsletter article, October 2005
by James Jensen, Iowa State University Extension Farm & Business Management Specialist, firstname.lastname@example.org
Recent Iowa State University data reveals what we know we have been seeing for years…leasing relationships are changing. Leasing agreements are moving from crop-share arrangements between the tenant and landowner to cash rent agreements. There are many reasons for the change which include both advantages and disadvantages for the tenant and the landowner. The move to cash rents has been gradual over the years but at an increased rate recently. To help accommodate this change, Iowa State University Extension has created a new “short form” cash rent lease form that it hopes will encourage leasing participants to have a written lease. Iowa State University Survey data suggests that only 60% of leases in Iowa are committed to writing and less than that are reviewed every year. Leasing property is a legal relationship that often involves large sums of money changing hands. Written leases that are updated yearly are a good way to make sure that the agreements are business-like and up to date. The agreements should be stored and labeled in such a manor that relatives or business partners can find them if the need develops. The new form is ISU Publication Number FM 1874 and can be obtained at any ISU Extension Office or an interactive form is available on the AgDM web site at http://www.extension.iastate.edu/agdm/wholefarm/pdf/c2-16.pdf.
The following discussion touches on some of the advantages and disadvantages to landowners and tenants when using a cash rent rather than a crop share lease.
Tenant Advantages to cash rent leases:
Tenant Disadvantages to cash rent leases:
Landowner Advantages to cash rent leases:
Landowner Disadvantages to cash rent leases: