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MISCELLANEOUS PUBLICATION NO. 836
U.S. DEPARTMENT OF AGRICULTURE
FARM LEASE PUBLICATIONS
Other publications on farm leases available from the U.S. Department of Agricul-
ture, Washington 25, D.C. are:
Your Farm Renting Problem, Farmers' Bulletin 2161.
Your Farm Lease Contract, Farmers' Bulletin 2164.
Your Farm Rent Determination Problem, Farmers' Bulletin 2162.
Your Crop-Share-Cash Farm Lease, Miscellaneous Publication 838.
Your Livestock-Share Farm Lease, Miscellaneous Publication 837.
Your Farm Lease Checklist, Farmers' Bulletin 2163.
The following farm lease forms may be obtained from your County Agricultural Agent
or from Correspondence and Publications Distribution, Agricultural Research Service,
U.S. Department of Agriculture, Washington 25, D.C. :
Crop-Share-Cash Farm Lease (Form AD 561).
Cash Farm Lease (Form AD 562).
Livestock-Share Farm Lease (Form AD 563).
Annual Supplement to Farm Lease (Form AD 564).
The bulletins supersede Farmers' Bulletin 1969, "Better Farm Leases," and Miscel-
laneous Publication 627, "Your Farm Lease." The lease forms supersede "Standard Farm
Lease" (Form Agri.-l) and "Annual Supplement to Standard Farm Lease" (Form Agri.-3).
Growth Through Agricultural Progress
Method for Estimating Rent 3
Filling Out the Cash Farm Lease 7
A. Property Rights 7
B. Land Use and Livestock Production 8
C. Improving, Conserving, and Maintaining the Farm 8
D. Sharing Costs and Returns 14
E. Term of Lease 15
F. Miscellaneous Provisions 16
CASH farm lease
by Marshall Harris, agricultural economist
Farm Economics Research Division, Agricultural Research Service
Your cash farm lease may well influence your net
income as greatly over a period of years as the pro-
ductivity of the land, the kind and quantity of fer-
tilizer you use, the quality of your livestock, or the
cultural practices you follow in producing your
crops. It should be tailored to fit the farm, the
landlord, and the tenant. It should set forth
clearly the rights, duties, and responsibilities of each
party. Some of its provisions must be rigid and in-
flexible, yet it must provide for change and adapt-
ability to meet the requirements of modern
technology in a dynamic economy.
Your farm lease should go a long way toward
providing for good overall management by outlin-
ing clearly the cropping plan to be followed and
the way the farm will be operated to maximize
net income for the whole farm. It should indicate
in general terms the amount of livestock farming
that will be involved.
Your farm lease should provide for further de-
velopment, improvement, and maintenance of the
land, buildings, fences, and other structures that
are a permanent part of the farm, and for con-
servation of its soil and water resources. The
landlord is in a good position to cash in on all im-
provements that may be made, whether he con-
tinues to rent the farm, operates it himself, or sells
it. The tenant may be in an uncertain position re-
garding added improvements, for unless the lease
otherwise provides he must leave most of the im-
provements he makes on the farm when his lease
terminates. However, the lease can be written to
assure the tenant reasonable reimbursement for in-
vestments that he may leave behind when his
occupancy of the farm ends.
Your farm lease can be most effective in the long
run only if farm expenses are divided between the
two parties on the basis of what each can best con-
tribute to farm production and if income is divided
in the same proportion as expenses of production
are shared. The division of costs and returns is
important on cash-rented farms. In your agree-
ment, try to attain equitable division. The basic
idea is for each party to receive income from the
farm in proportion to what he has contributed to
Your farm lease will fail, at least partly, to
measure up to these requirements unless it pro-
vides a reasonable opportunity for longtime plan-
ning of the farm business. Adequate planning is
possible only if the term or duration of the lease
provides assurance of stable and secure occupancy.
Consider various renewal, cancellation, and termi-
nation provisions in arriving at the one that best
fits the particular farm, landlord, and tenant.
Your farm lease may well contain several mis-
cellaneous provisions designed to make most effec-
tive the contributions of both landlord and tenant
to farm production. Fit these to your particular
situation, but safeguard the interests of both parties.
Provide incentives for maximum contributions to-
ward attaining a highly productive farm.
In view of the many things you want your farm
lease to do, it is advisable to have your lease
written. Make a copy for each party. Be sure
both copies are alike.
METHOD FOR ESTIMATING RENT
Two of your main decisions in developing a good
cash farm lease are those that concern the level
of rent and the division of expenses between land-
lord and tenant. If you use the Table for Esti-
mating Rent, take seven major steps:
• Determine the estimated total value (col. 2) of
each item under fixed investment expenses.
• Decide on the estimated interest rate for each
fixed investment (col. 3).
• Enter the total annual cost (col. 2 multiplied
by col. 3) in column 4.
• Estimate the annual cost of each fixed operat-
ing expense (lines 1 1 to 22), showing the whole
farm's costs in column 4.
• Decide what items of fixed investments and fixed
operating expenses and how much of each will be
furnished by each party and enter each party's
share in columns 5 and 6.
TABLE FOR ESTIMATING REN1
Estimated annual cost
Item of expense
I. Fixed expenses:
A. Fixed investment expenses:
1 . Land
2. Farm buildings
3. Tractor, truck, and automobile
4. Machinery and equipment
5. Breeding stock
6. Operating cash
10. Total section A
B. Fixed operating expenses:
b. Unpaid family
a. Buildings, fences, and others
b. Tractor, truck, and automobile
c. Machinery and equipment
a. Buildings, fences, and others
b. Machinery and equipment
1 4. Taxes *
15. Insurance *
1 6. Limestone
17. Rock phosphate
18. Conservation measures
23. Total section B
24. Total section I
24a. Percent contributed by: Landlord
TABLE FOR ESTIMATING RENT (Continued)
Item of expense
Estimated annual cost
II. Variable expenses:
Hired labor, including board ....
Tractor operating costs
Truck operating costs
Automobile, farm operating costs
Machine work hired
Other crop expenses
Veterinary and sanitation
Other livestock expenses
Electricity for the farm
Telephone for the farm
42. Total section II
43. Grand total: Sections I and II
Income to be divided
Cash rent on farm dwelling:
Estimated value %
Depreciation, insurance, and upkeep (add)
Total dwelling rent
* Include taxes and Insurance only if they have been deducted from (or not included in) annual cost of property in col-
umn 4, section A.
• Determine the total amount of the variable ex-
penses, all of which are paid by the tenant.
• Total all fixed and variable expenses for the
whole farm and for each party in line 43.
Now follow one of two procedures: (1) Estimate
total farm income and divide it in the same pro-
portion that you divide total farm expenses. The
landlord's share would be the amount of cash rent.
Or (2) decide upon an acceptable rate of return
on the landlord's resources and multiply his fixed
expenses by this, as shown in line 24, column 5;
this would be the amount of the cash rent. These
steps are discussed in the following paragraphs.
The values to be placed on the fixed investment
expenses are important because this group of items
makes up a significant part of total farm expenses.
Estimate the value of each of these items on the
basis of current market value, or present usefulness
for agricultural purposes, as of the beginning of
the lease. Visualize the value that a willing buyer
and a willing seller would agree upon. Do not
think in terms of a forced sale. Do not depend
upon what you paid for the items perhaps several
years earlier. Make separate estimates for the
landlord's and for the tenant's property.
You may want to develop a worksheet with sev-
eral of these general categories broken down into
specific items. For example, the real estate may be
more accurately estimated if land, farm buildings,
and the dwelling are treated separately. This
separation will be helpful in calculating deprecia-
tion for farm buildings on line 12a and in making
The estimated interest rate used in calculating
the annual cost may well be the going rate in the
community for investments with similar returns and
risks. If this interest rate is high enough to cover
such costs as taxes, repairs, insurance, and deprecia-
tion, these items should not be included separately
later in the rent table.
For land and buildings, the interest charge might
well vary around that paid on a sound real estate
mortgage. For livestock, machinery, and tractor,
the interest charge might well vary around that
paid on a sound chattel mortgage. Usually, this
is a slightly higher rate than that paid on a real
estate mortgage. Now calculate the interest charge
for each item. Place the landlord's share in column
5 and the tenant's share in column 6. The total
charge goes in column 4. Add the respective col-
umns and place totals on line 10.
In estimating the annual cost of fixed operating
expenses, the value of the tenant's labor might well
be the going rate for a good, full-time, hired man,
living on the farm, line 11a. His management
services are taken care of in line 19. Other labor
should be calculated in terms of man-labor units
at the same rate as the tenant's labor.
Base the annual charge for depreciation on the
estimated life of each item, using information avail-
able from your county agricultural agent or State
college of agriculture. Be realistic in estimating
the costs of repairs. Usually these estimates are
Divide each item in column 4 between landlord
and tenant on the basis of who will furnish it,
placing the results in columns 5 and 6. Total each
column in line 23.
The total annual cost of the fixed investment ex-
penses and of the fixed operating expenses represent
your best estimates of those costs that must be met
regardless of how the resources are used in any 1
year or of the amount of total farm income that will
In estimating variable expenses, be sure to pro-
vide for all variable costs needed to maximize net
returns. Adequate labor is a "must." Do not
skimp on seed, feed, fertilizer, fuel, and electricity.
Be sure to include insecticides and pesticides.
Estimate the quantity of each on the basis of the
farm plan to be followed throughout the year.
Break each item into its separate parts. Show the
quantities of each and use anticipated market
prices. Enter your estimate in column 4. Add
other items if needed. Use information available
from your own farm records and the college of
In general terms, these variable expenses should
be the responsibility of the tenant under cash rent.
He is the one whose income will be affected by
such expenditures. He will want, therefore, to de-
cide how much to spend on each of these items.
The landlord's interest in expenses will be con-
fined largely to those items that will be of value
to the farm after the end of the lease year or when
the tenant leaves the farm. These are largely fixed
operating expenses. He may well share in the ex-
penses for repairs to buildings, fences, and other
structural improvements, by paying for the mate-
rials. He may well share in the expenditures for
limestone, rock phosphate, and conservation meas-
ures. Space is provided for such sharing in the
cash lease form. The agreement regarding these
might well be a part of the provision related to
conservation measures and practices and capital
You need to estimate expenditures by using the
Table for Estimating Rent for these reasons: (1)
To assist in completing the lease form, showing
the expenditures that each party will pay, and (2)
to serve as a basis for determining the amount of
the cash rent.
The landlord or tenant may not want to make
these calculations of fixed and variable expenses
on his own. But making them will give a good
idea as to how much rent is to be paid or received.
f As the dwelling is a consumption and not a pro-
I duction item, we recommend that a cash rent for
the dwelling be calculated separately.
When you have the total estimated annual cost
I for columns 4, 5, and 6, you have all the expense
data necessary to decide upon what the cash rental
j payment will be. But you do not have the esti-
mated income — a second ingredient.
You may arrive at a cash rent figure without
the estimated income data. The amount of cash
1 rent would include —
• The estimated annual cost of the fixed invest-
ments supplied by the landlord.
i • His estimated annual expenditure for fixed oper-
• His estimated annual expenditures for variable
operating expenses, if any.
. • An estimate of any profits due him.
A more accurate estimate of the cash rent could
be determined if an estimate of income were avail-
able. This estimate could be made by dividing
I the estimated total income on the basis of the pro-
portional contributions of each party to production
cost including the risk borne. The cash rent
would be the amount of income assigned to the
landlord. As the rent paid to the landlord is a
fixed amount that must be paid regardless of
changes in production or prices, the landlord does
i not share risk and a cash rent should be less than
i a share rent with the same contribution. The rent
should be reduced by the value of the additional
risk borne by the tenant.
Still another procedure would be to follow cus-
tomary bargaining on the basis of what farms rent
for in the community This method is not
Additional ideas about how to figure cash rent
i are presented under Sharing Costs and Returns,
FILLING OUT THE CASH FARM LEASE
The Cash Farm Lease (Form AD 562) includes
the usual items that are essential for a good farm
lease. This lease form should be used only for cash
A sample copy of the Cash Farm Lease is shown
on pages 9 to 12 of this publication. Copies of the
form may be obtained from your county agricul-
tural agent or from Correspondence and Pub-
lications Distribution, Agricultural Research Serv-
1 Further details of farm rent determination procedures
may be obtained from your county agricultural agent or
from the U.S. Department of Agriculture, Washington 25, D.C.
ice, U.S. Department of Agriculture, Washington
25, D.C. Other good lease forms may be avail-
able from your State agricultural college or State
department of agriculture.
The Cash Farm Lease form is not well adapted
to crop-share, crop-share-cash, or livestock-share
leases. Specific forms are available for these types
of renting. You may want to obtain one of them
to meet your particular needs. It is important
that the provisions of your lease be fully applica-
ble to your farm, and to both landlord and tenant.
In completing the form, fill in each blank space.
Either fill in figures, description or similar mate-
rial, write "none" or "not applicable" in the
space, or draw a line through the space. You
may want also to delete all or a part of some sec-
tions. If so, draw a line through each word to be
deleted. Be sure that all copies are exactly alike.
Each item of the lease form is discussed below.
The date. — Indicate on the first blank space in
the lease the day you enter into the agreement.
This usually is the day on which you sign it.
Designating the parties. — Show the name and ad-
dress of both landlord and tenant. Since either may
be a private individual, an estate, a partnership, a
corporation, or a government agency, give names
and usual business addresses. Make them accu-
rate and complete enough to meet requirements in
case a legal notice must be sent.
A. Property Rights
Specify the real estate included in the agree-
ment. You need not describe it as completely as
you would in a deed but it may be in legal terms.
List the county, the State, and number of acres
in the farm. Give the name by which the farm
is known locally, its location on a particular road,
or the number of miles in a certain direction from
a specified town. If the information can be ob-
tained readily, refer to the real estate described on
a particular page in a certain deed book in the
appropriate county office.
1. Right of Entry
A right-of-entry provision permits the landlord
or his representative to enter upon the farm only
for the purposes and under the conditions specified.
Usually the landlord retains no right to come
upon the farm unless this privilege is provided in
the lease. According to our landlord and tenant
law, the lease usually gives the tenant the right to
exclude any and all parties except law-enforce-
ment officers from entering upon the farm. He
can even exclude the landlord. This is what his
possession means. The right of possession is simi-
lar in scope to the right of exclusive use. Unless
a reservation is made in the lease, this right is
presumed to be held by the tenant.
2. Transfer of Farm
A provision in the lease concerning the tenant's
rights in event of transfer of title to the farm is an
added safeguard for the tenant. The landlord
should agree to offer this protection. The tenant
could safeguard his interests by recording the lease.
But most farm leases are not recorded, and record-
ing is not generally necessary.
3. Heirs and Successors
Certain happenings might mean that the re-
sponsibilities of either or both parties under the
lease would be transferred to another party. If
either landlord or tenant should die, his place in
the lease contract would be taken by the executor
of his will or the administrator of his estate. Both
parties might die in a common accident, such as a
fire or an automobile wreck, and two new parties
would become the landlord and tenant. A debtor
of one party could force the sale of his property.
This provision states explicitly that the lease is
binding upon those who may take the place of
landlord or tenant, or both. They should know
specifically all the provisions in this complex agree-
ment. Therefore, put your agreement in writing.
4. Right to Lease
The landlord should warrant that he has a right
to lease the farm; that is, that he guarantees that the
tenant's possession and other rights under the lease
will not be disturbed. The landlord need not hold
title to the property, but he should have, and
should affirm that he has, the right to lease the
property to the tenant.
5. Additional Agreements
Show here any additional restrictions, explana-
tions, or qualifications as to the property rights
transferred or withheld under the lease. Remem-
ber, the several parts of this section on Property
Rights should convey a complete and accurate
picture of the rights in the farm real estate that
B. Land Use and Livestock Production
1. Land Use and Kind of Livestock
Your farm lease should indicate clearly the use
that is to be made of the land. This may well be
done by designating the crops or uses to which
the land should be put; for example, corn, wheat,
tobacco, meadow, or pasture. Indicate in the
blanks on the lease form the acreage to be de-
voted to each. The "acres" column should add
up to the total number of acres in the farm.
Specify the fields by number or name, if it is feas-
ible to do so.
The kinds and numbers of livestock that the
tenant will keep on the farm should be discussed.
You may want to show the maximum number or
a range in numbers, as the landlord will not par-
ticipate in the livestock enterprises. If livestock
are an important source of income, you may want
to use the livestock-share-lease form.
2. Acres and Numbers
This provision is widely and appropriately used.
It is essential, for acres and numbers are subject
to change within the year and from year to year.
Planned annual changes can be recorded on the
Annual Supplement to Farm Lease (Form AD
C. Improving, Conserving, and Maintaining
1. General Maintenance
This is a typical provision on maintenance. It
is found in many cash leases in most parts of the
2. Good Husbandry
This is a typical provision on caring for crops
and is applicable to most rental situations. It is
particularly important for cash leases.
3. Cropping Practices
These specific items cover six troublesome prac-
tices. They are singled out because of their im-
portance and their general applicability. Rigid
adherence to this provision will encourage greater
landlord participation in improving pastures and
4. Manure and Crop Residue
Any exceptions to this provision should be noted
in specific terms.
5 and 6. Pasturing and Waste
These two general provisions are frequently in-
cluded in lease forms to direct attention to im-
portant, good farming practices.
7. Fire Protection
This is a reasonable fire protection precaution.
But the landlord is responsible for making the
provisions of his insurance policy known to the
8. Replace Losses
This provision is designed to protect the tenant,
so far as is reasonably possible and to assure him
that needed buildings will be replaced immedi-
ately. It makes more meaningful what is ex-
pected of the tenant as outlined in item 7 of this
section. Both sections 7 and 8 indicate the com-
plementary nature of due care on the part of the
tenant and prompt action by the landlord.
AD 562 (Mar 1960)
U.S. DEPT. OF AGRICULTURE
THIS LEASE is entered into this
CASH FARM LEASE
between , landlord, of
and -. , tenant, of
lease is given, of plowing, seeding, fertilizing, and such customary
The landlord hereby leases to the tenant, to occupy and use for
agricultural and related purposes, the following-described property,
hereinafter referred to as the "farm," located in
County, State of , and commonly known
as the farm:
seasonal work, none of which is to interfere with the tenant in
carrying out regular farm operations.
2. Transfer of farm. — If the landlord should sell or otherwise
transfer title to the farm, he will do so subject to the provisions of
3. Heirs and successors. — The terms of this lease shall be binding
upon the heirs, executors, administrators, and successors of both
landlord and tenant in like manner as upon the original parties.
However, in the event the lease is for more than one year, the heirs
or successors of the tenant shall have the option to give written
notice of termination effective at the end of the lease year in which
4. Right to lease. — The landlord warrants that he has the right
to lease the farm, and will defend the tenant's possession against
any and all persons whomsoever.
5. Additional agreements regarding property rights:
and consisting of acres, more or less, together with all
buildings and improvements thereon and all rights thereto except
as specified below.
1. Right of entry. — The landlord reserves the right of himself,
his agents, his employees, or his assigns to enter the farm at any
reasonable time for purposes (a) of consultation with the tenant;
(b) of making repairs, improvements, and inspections; (c) of develop-
ing mineral resources; and (d) after notice of termination of the
B. LAND USE AND LIVESTOCK PRODUCTION
1. Land use and kind of livestock. — Except when mutually
agreed otherwise, the land use and cropping plan shall be as follows
and the numbers of each kind of livestock shall not exceed those
shown in the following table:
B. 1. Land Use and Livestock Production Table.
USE OF LAND
KIND OF LIVESTOCK
2. Acres and numbers. — The acres of crops and the fields on 4. Manure and crop residue. — The tenant will spread the manure
which grown and the numbers of livestock shown above are those straw, or other crop residues on the farm as soon as practicable on
planned for the first year of this lease. They may be adjusted within fields agreed upon by the two parties, except as follows:
the year or from year to year by mutual agreement.
C. IMPROVING, CONSERVING, AND MAINTAINING THE
To improve the farm, conserve its resources, and maintain it in a
high state of cultivation, the two parties agree as follows: _ ______ _ ___
1. General maintenance.— The tenant will maintain the fa™ Pas turing.-The tenant will prevent tramping of fields by
during his tenancy m as good condition as at the beginning normal f . » £ | m fa d
wear and depreciation and damage from causes beyond the tenant s J» J & ' J
control excepted. *>. Waste. — The tenant will not commit waste on, or damage to,
2. Good husbandry.— The tenant will operate the farm in an the farm and will use due care to prevent others from so doing,
efficient and husbandlike way, will do the plowing, seeding, culti- 7. Fire protection. — The tenant will not, without written consent
vating, and harvesting in a manner that will conserve the landlord's of the landlord, house automobiles, motortrucks, or tractors in barns,
property. or otherwise violate restrictions in the landlord's insurance policy
3. Cropping practices. — The tenant will not, without oral consent which restrictions the landlord shall make known to the tenant.
of the landlord, (a) plow permanent pasture or meadowland, (b) 8 . Replace losses.— The landlord will replace or repair as
cut live trees for sale or personal uses, but will take for fuel or use promptly as possible the dwelling or any other building that may be
on the farm only dead or unmarketable timber designated by the destroyed or damaged by fire, flood, or other cause beyond the
landlord, (c) allow livestock other than his own on stalkfields or con trol of the tenant or make rental adjustments in lieu of
stubblefields, (d) burn or remove cornstalks, corncobs, straw, or replacements,
other crop residues grown on the farm, (e) pasture new seedings of
legumes or grasses in the year they are seeded, and (f) plant legumes
on land not known to be thoroughly inoculated without first inocu-
lating the seed.
9. Noxious weeds. — The tenant will use diligence to prevent
noxious weeds from going to seed on the farm and will destroy the
same, and will keep the weeds and grass cut or destroyed on the
fields, farmstead, roadside, and fence rows. Treatment of weed
infestation and cost thereof shall be handled as follows:
12. Purchase of materials. — The tenant may buy, without
further authorization, materials for normal maintenance and repairs
in a total amount not to exceed $ — within each year,
and the landlord will credit or reimburse the tenant for such ex-
penditures as follows:
10. Maintenance of improvements. — The tenant will keep the
buildings, fences, and other improvements on the farm in as good
repair and condition as they are when he takes possession, and in as
good repair and condition as they may be put during the term of the
lease, ordinary wear and tear, loss by fire, or unavoidable depre-
ciation or destruction excepted.
11. Materials and labor. — The landlord will furnish materials
and the tenant will perform labor for normal maintenance and
repairs, except that skilled labor which the tenant himself is unable
to perform satisfactorily will be furnished by the landlord. Addi-
tional agreements regarding materials and labor:
13. Add improvements. — The tenant will not, without written
consent of the landlord, (a) erect or permit to be erected on the farm
any nonremovable structure or building, or (b) incur any expense
to the landlord for such purpose, or (c) add electrical wiring, plumb-
ing, or heating to any buildings, and if consent is given, he will make
such additions meet standards and requirements of power and
14. Conservation practices. — The tenant will control soil erosion
as completely as practicable by stripcropping and contouring, and
by filling in or otherwise controlling small washes or ditches that
15. Conservation structures. — The tenant will keep in good
repair all terraces, open ditches, and inlets and outlets of tile drains,
preserve all established watercourses or ditches including grass
waterways when seed and fertilizer are furnished by the landlord,
and refrain from any operation or practice that will injure them.
16. Compensation for improvements. — The two parties will carry
out new conservation practices and measures and make other im-
provements, and share contributions and costs necessary for com-
pleting such practices and improvements as set forth below. The
tenant will be reimbursed by the landlord when the practice, measure
or improvement is completed, or will be compensated for its un-
exhausted value when the tenant leaves the farm, according to the
16. (Cont'd) Compensation for Improvements Table.
DATE TO BE
PERCENT TO BE FURNISHED BY LANDLORD AND
MEASURE. OR OTHER
agreements relative to conservation and
18. Review of conservation program. — A new schedule covering
conservation practices and improvements will be prepared each year
on an appropriate form, which will become a part of this lease when
signed by the two parties.
19. Preparing or seeding land. — When the tenant leaves the
farm, if the total acreages of prepared or seeded land are greater
than at the beginning of his tenancy, he will be compensated by the
landlord on the basis of the value of such excess acreages. If such
total acreages are less than at the beginning of his tenancy, the tenant
will compensate the landlord on the basis of the value of such de-
ficiency, provided that the deficiency is not due to drought, flood, or
other causes beyond the control of the tenant. The acreages at the
beginning of this tenancy and the basis of payment are as follows:
19. (Cont'd) Preparing or Seeding Land Table.
PREPARED OR SEEDED
RATE PER ACRE
PREPARED OR SEEDED
RATE PER ACRE
20. Removable improvements. — Minor improvements of a tem-
porary or removable nature, not provided for in item 16 of this
section, which do not mar the condition or appearance of the farm
may be made by the tenant at his own expense. The tenant may at
any time this lease is in effect, or within a reasonable time thereafter,
remove such improvements, provided he leaves in good condition
that part of the farm from which they are removed.
21. Compensation for damages. — When the tenant leaves the
farm he will pay the landlord reasonable compensation for any
damages to the farm for which the tenant is responsible, except
ordinary wear and depreciation and damages beyond the tenant's
D. SHARING COSTS AND RETURNS
All costs and returns shall be divided between landlord and tenant as provided below, unless otherwise specifically stated elsewhere in
1. Rental rates. — The tenant agrees
to pay as cash rent the amount as calculated below in
either method 1 or 2 as completed:
METHOD 1-STRAIGHT CASH RENT
METHOD 2-FLEXIBLE CASH RENT
KIND OF LAND
X X X X X X X
X X X X X X X
X X X X X X X
X X X X X X X
FARMSTEAD AND LOTS
X X X X X X
X X X X X X X
X X X X X X
2. Variations for price (for method 2). — The prices to be used in
column 8 will be determined as follows:
and the amount of column 9 will be the product of column 7 multiplied
by column 8.
3. Variations for production conditions. — The total amount of
rent for the entire farm as shown in either column 4 or as calculated
for column 9 shall be adjusted for any year in which the yield of
as reported by the State Crop
Reporting Service is percent above or below the
county average yield for the previous years, as follows:
4. Rental payment. — The annual rental due shall be paid as
follows: $ on and $
on , and the payments shall be made at ._
5. Additional agreements in regard to rental rates:
6. Expenses. — Expenses shall be supplied by the tenant except as included in section C and except as follows:
WEED CONTROL MATERIAL
CUSTOM WORK AND HAULING
FEED PURCHASED OR SUPPLIED
7. Record of expenses. — The tenant will keep a record of expenses
furnished by the landlord, and settlement will be made by mutual
agreement or at the time that final rent payment is due.
8. Additional agreements relative to expenses:
2. Government programs. — The farm will be operated in com-
pliance with Government programs as follows:
E. TERM OF LEASE
1. Term. — The term of this lease shall be year(s)
from , 19 , to , 19 ,
and this lease shall continue in effect from year to year thereafter
until written notice of termination is given by either party to the
other at least months before expiration of this lease or any
2. Continuous occupancy. — The tenant agrees that he or his
agent will possess and occupy the farm continuously during the term
of the lease.
3. Surrender of possession. — The tenant agrees to surrender pos-
session and occupancy of the premises peaceably at the termination
of the lease.
4. Review of lease. — A request for general review of the lease may
be made at least days prior to the final date for giving
notice to terminate this lease. Amendments and alterations to this
lease shall be made in writing.
F. MISCELLANEOUS PROVISIONS
1. No partnership created. — This lease shall not be deemed to
give rise to a partnership relation, and neither party shall have
authority to obligate the other without written consent, except as
specifically provided in this lease.
3. Debts and accidents. — Each party agrees that the other party
shall in no way be responsible for the debts of, or liabilities for
accidents or damages caused by, the other party.
4. Willful neglect. — Willful neglect, failure, or refusal by either
party to carry out any substantial provision of this lease shall give
the other party the benefits of any proceedings provided by law.
5. Arbitration of differences. — Any differences between the parties
as to their several rights or obligations under this lease that are not
settled by mutual agreement after thorough discussion, shall be sub-
mitted for arbitration to a committee of three disinterested persons,
one selected by each party hereto and the third by the two thus
selected; and the committee's decision shall be accepted by both
6. Additional agreements:
IX WITNESS WHEREOF, the parties have signed this lease on the date first above written.
(Acknowledgment in appropriate form to be attached.)
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9. Noxious Weeds
The war against weeds demands special attention
in many areas. If needed, indicate in the lease
the specific treatment to be used and how costs
will be divided. These matters should be agreed
upon when you draw up the lease. Do not wait
until the day or week the treatment should be
10, 11, and 12. Maintenance of Improvements,
Materials and Labor, and Purchase of Materials
The maintenance of all physical structures on
the farm is important to both landlord and tenant.
This is a matter to which daily attention must be
given. Such thinks as a leak in the roof, a broken
window, or a loose door, gate hinge, or latch, de-
mand immediate care. A nail here, a staple there,
or a few shovelfuls of dirt on a terrace or waterway
might save major expense later.
The tenant can be expected, reasonably, to ac-
cept fully the responsibility for carrying out such
maintenance, and the landlord should furnish the
materials. The items to be included in the blank
space in item 1 1 are those known to need special
attention. Agree upon them when you make the
lease. Do not put the matter off for later deci-
sion. If you do, you encourage misunderstanding.
Inclusion of specific maintenance items here does
not imply that other skilled labor will not be fur-
nished by the landlord.
Usually, the landlord will find it good economy
to be liberal on the costs of materials for mainte-
nance (item 12). But the tenant should keep a
complete and accurate account of each expenditure.
13. Add Improvements
With the recent emphasis on modern conven-
iences in the home and labor-saving devices on
the farm, some major improvements have been
undertaken without complete understanding be-
tween landlord and tenant. This provision at-
tempts to safeguard the interests of both parties.
So far as possible, any major needed improve-
ment should be agreed upon when the lease is
made. Outline the agreement in items 12 and 16
of this section, using an additional sheet if neces-
sary. The main point is this: The best time to
reach agreement on such improvements is when
the lease is made. Do not put this off for later
negotiation, unless the situation is unusual.
14 and 1 5. Conservation Practices and Structures
These two provisions are designed to safeguard
conservation structures and to encourage conserva-
tion practices. They should be adhered to strictly.
16. Compensation for Improvements
This provision affords the two parties a ready
means of recording their agreements as to com-
pensation for a variety of improvements and con-
servation measures. Investments may involve
limestone, rock phosphate, commercial fertilizer,
terraces, grass waterways, buildings, fences, tiling,
permanent pastures, meadows, forestation, the water
supply, electric wiring, bathroom, painting, paper-
ing, central heating, and many other improve-
ments. As labor-saving devices are becoming in-
creasingly important, they should be given special
The crucial decisions are:
• What improvements will the tenant make, or
cooperate in making, for which he will receive
compensation for their unexhausted value when he
leaves the farm?
• How will the various expense items be divided
between landlord and tenant?
In most instances, the valuation placed on the
tenant's contribution can be no more than an es-
timate. If the tenant is to be reimbursed when
the work is completed, the last column may be
The various costs can be calculated, and the
percentage to be furnished by each party can be
determined by discussion, but the rate of deprecia-
tion may be difficult to decide.
These arrangements regarding compensation for
improvements should not be included in any way
in the section on Sharing Costs and Returns, nor
is it necessary to divide costs of improvements be-
tween tenant and landlord in the same proportion
as the farm costs and returns are shared.
Your county agricultural agent, soil conservation
supervisor, or college of agriculture might have
available specific data that will fit your situation.
If not, decide upon a depreciation rate that ap-
pears to be reasonable. Much of the success of
your farm lease may well depend upon the agree-
ment about such improvements and conservation
measures. These items are more important than
they were before the conservation movement and
the development of modern technology.
1 7. Additional Agreements Relative to
Conservation and Improvements
Any agreements relative to conservation and im-
provements that cannot be recorded clearly in the
table or elsewhere in the lease should be described
in item 17 immediately below the table.
18. Review of Conservation Program
The soil and water conservation and develop-
ment program for the farm is of such importance
to successful farming that it should be reviewed at
least once each year. Incorporate your specific
plans for the next year in a table similar to that
in item 16. The Annual Supplement to Farm
Lease (Form AD 564) is available for that purpose.
For sale by the Superintendent of Documents. U.S. Government ' 5 rinrincr Ofnrp Wa«hi
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19. Preparing or Seeding Land
A provision that all farmwork is to be done at
the normal time encourages good tenant farming.
This means that the outgoing tenant will do some
seeding, some plowing, and a few other things that
will benefit directly the incoming tenant. The
objective might well be for the outgoing tenant to
complete as many of such operations as had been
completed when he first occupied the farm. As
this is not always possible, the tenant should be
paid for any overage and he should stand the cost
of any deficiency.
Insert in the lease a record of the number of
acres at the beginning of the lease of each type of
seeded or prepared land and the rate per acre
that will be applied to any excess or deficient
acreage when the lease is terminated. Include in
the rate per acre the tenant's labor and machinery
expense and any contribution that he makes to-
ward seed, fertilizer, and similar cash costs.
20. Removable Improvements
Some cash-rented farms do not have enough
temporary buildings, fences, or feeding conven-
iences for good livestock farming. In an instance
of this kind, the tenant may be in position to sup-
ply the needed items at his own expense, provided
he can take them with him when he leaves the
farm. Under the law of the State it may be diffi-
cult to determine what has become attached to
the landlord's property and must be left on the
farm, or the law may provide that some improve-
ments made by the tenant are removable. In either
instance, the tenant should be encouraged to sup-
ply any of these minor items. This can be done
by assuring him that he can take them with him
when he leaves the farm. These items would include
no improvement listed in item 16 of this section.
21. Compensation for Damages
Although in item 6 of this section, the tenant
agrees not to commit waste, he may fail to live up
to this agreement. If he fails, he should pay the
landlord for the damages. Also, this provision for
compensation for damages and the provision that
deals with compensation for improvements (item
16) confer similar privileges and impose similar
responsibilities on both landlord and tenant.
D. Sharing Costs and Returns
Study the Table for Estimating Rent and the
accompanying explanatory material on pages 3 to 7.
Use the table in estimating expenses, in dividing
some of the expenses, and in arriving at the rental rate.
If suggestions are followed in completing the
Table for Estimating Rent, much of the data called
for in the lease form will be readily available and
might well be transferred directly.
If you follow the suggested procedure, you will
be more likely to arrive at an equitable division
of costs and returns than if you make no estimate
of fixed and variable costs.
1. Rental Rates
The cash rent method table in the Cash Farm
Lease (Form AD 562) should be completed in
every detail for either method 1 or method 2. Do
not complete it for both methods. Cross out the
method not used. Show fully what rent is to be
paid, and so far as possible show for what it will
be paid and how it will be calculated.
Method 1 . — Use this part of the table for straight
cash rent. List in column 1 each kind of land
use separately. Base the need on what will be
recorded in the other three columns. If the rate
is to differ for the various land uses, enter each
use on a separate line.
Show in column 2 the number of acres in each
land use. The total should be the same as that
on the first page on the lease. Enter in column 3
the rate per acre for each land use. The amount
in column 4 is the result of multiplying column 2
by column 3.
If the rent is a lump sum for the entire farm,
enter this amount in the last line (col. 4).
Method 2. — Use this part of the table for sliding-
scale or flexible payment cash rent. This method
is an attempt to shift a part of the risk of changes
in production conditions (yield) and prices to the
landlord. When used alone and items 2 or 3 are
not used, it would provide for a fixed amount of
cash rent. This would be comparable in principle
to method 1 — the difference would be in the way
the rent is calculated. So fill out both items 2
2. Variations for Price
Item 2 would be used if you agree that a fixed
quantity of each crop is acceptable, but you want
rent to depend upon what the produce would sell
for when it is ready for market. Write in the blank
space how the prices will be determined; for ex-
ample, the price for a certain day on a certain
market. Use only the major sources of income.
3. Variations for Production Conditions
In general, flexibility in cash rent based on pro-
duction changes is not recommended because (1)
if the flexibility is based on county or other area-
wide changes, there is a possibility of a particular
farm's production changing in the opposite direc-
tion, and (2) if the flexibility is based on the pro-
ductivity of the particular farm, the landlord
would be sharing in changes in production which
are partly under the control of the tenant. The
tenant would thus not have the incentive to make
maximum effort to increase production. Suppose.
for example, that production on the farm is raised
above its average by the tenant's applying more
fertilizer. If the lease provides for an adjustment
upward in the cash rent, the landlord is in effect
participating in a return due solely to the tenant's
labor and expenditures. In most production con-
ditions, it is impossible to separate the effects of
efforts made by the operator and conditions such
as climate over which the operator has no control.
It may be preferable if landlord and tenant wish
to allow for production variation to use a share
However, if the tenant and landlord desire to
allow for such variations on the cash rent basis,
item 3 may be used if it is so agreed that the quan-
tity, column 7, should be varied up or down, ac-
cording to production conditions. Again use only
the major sources of income. Do not be con-
cerned with less than 10 percent variations in yield.
This provision could also be used in another
way, together with method 2 and also with method
1. The total rent for the entire farm, column 4
or column 9, would vary according to production
4. Rental Payment
By using this provision, you will show when the
rent payment or payments are due and where the
payments will be made.
5. Additional Agreements
Any arrangements that cannot be shown clearly
in the rental rate table should be described in
these blank spaces.
Since the cash tenant usually bears most, if not
all, of the variable expenses, it would seem best to
put this general responsibility on him by showing
only what the landlord will furnish. The land-
lord's share of expenses may be recorded in dollar
value, as a fractional part, as a percentage, or as
rates per unit such as per acre, bushel, or bale.
7. Record of Expenses
The tenant's record of operating expenditures
furnished by the landlord should show for what
the expenditure was incurred and should include
appropriate sales statements, receipts, checks, and
8. Additional Agreements (Operating Expenses)
Describe in item 8 any expense that cannot be
recorded clearly in the table.
E. Term of Lease
We have left the term of the lease for consider-
ation last. The length of the term for which the
lease is drawn should be decided in light of the
land use and livestock systems, the steps to be taken
to improve, conserve, and maintain the farm, and
how costs and returns are to be shared. It is only
after these matters have been decided that the two
parties are in position to discuss the length of the
The basic objective is to make the term of the
lease fit the kind of farming that is to be done.
Sound land use, conservation of land and water,
development of good herds and flocks, and maxi-
mization of net income are possible only when
longtime planning is practiced. Yet the two par-
ties may have many impelling reasons for not
wanting to be tied up for a number of years.
A situation in which longtime planning is rea-
sonably possible may be created by a long-term
lease — 3 to 7 years or longer — or by a lease that
continues in effect from year to year until written
notice of termination is given well in advance of
the lease year. The term should fit farm, land-
lord, and tenant. Regardless of whether the lease
is for a term of years or continues automatically
from year to year in the absence of a notice of ter-
mination, the termination process should give both
landlord and tenant the time necessary to make
other arrangements for the coming year. This may
be only a few months, perhaps 4 to 6, or it may
be a year or more.
The period for which the lease is drawn should
be shown in the blank spaces. Show the number
of years and the date on which the tenant's occu-
pancy is to begin and end, using month, day, and
year. If the lease is to continue automatically from
year to year in the absence of termination notice,
indicate when notice of termination is to be given,
showing the number of months before the last date
(the expiration date) entered in the first part of
2. Continuous Occupancy
The tenant or his agent should physically oc-
cupy the farm during the entire lease period,
particularly when farm buildings are included.
This is necessary to protect the landlord's property
and in some instances to make insurance on build-
3. Surrender of Possession
The law usually requires the tenant to surrender
possession at the end of the lease. This is a spe-
cific reminder and covenant to that effect.
4. Review of Lease
The reason for putting your lease agreement in
writing applies equally to putting all amendments
and alterations in writing. A form is provided on
which to record annual adjustments — those that
apply to the next lease year — see Annual Supple-
ment to Farm Lease (Form AD 564).
Record adjustments agreed to during the year
on a separate sheet of paper to be signed by both
parties. Many discussions held and decisions made
during the year do not alter the original lease. Do
not record all of these decisions. Write only those
that change the written provisions of the lease.
In case either party wishes to make major
changes for the next year, he should notify the
other party at least a month, and preferably 2
months, before the time specified for notice of ter-
mination in item 1 of this section.
F. Miscellaneous Provisions
1. No Partnership Created
Most landlords and tenants do not want their
leases to create a partnership relation. They may
have many reasons for this but one is overriding.
They do not want to be responsible for the acts
of the other party, as they would be in a partner-
ship. If you wish a partnership, get a lawyer to
draft a partnership agreement. It differs from a
This provision will be ineffective in its purpose
if the two parties operate as do partners and not as
landlord and tenant. Be sure that the way you
carry out your business transactions will help to
make this provision effective.
2. Government Programs
The landlord and tenant should discuss the vari-
ous Government programs that are applicable to
the farm. Soil conservation, acreage allotment,
marketing agreement, reforestation, farm improve-
ments, production or commodity loan, rural tele-
phone and electrification, small watershed, and
other programs should be considered.
Programs related to water supply command
particular attention in some areas. Write in the
blank space your agreement as to how you will
work together in cooperating with each specific
program. This is the agreement between landlord
and tenant; it need not indicate the details of their
agreement with the Government agency. List the
program and how costs and benefits will be shared,
when applicable. Use a separate sheet if necessary.
Consideration should be given to the way in
which benefits or taxes for social security are af-
fected by the lease. For provisions of the law see
your Social Security representative.
3. Debts and Accidents
This agreement may be effective only as between
the two parties. It may bind only those who sign
the lease and their successors. It is most effective
where the "no partnership provision" is effective.
Ordinarily, it does not apply to third parties, even
if the lease is recorded.
4. Willful Neglect
This provision calls to the attention of both
parties the privilege of enforcing the agreement.
5. Arbitration of Differences
Your lease should be completed in such a way
that the likelihood of misunderstanding will be re-
duced to a minimum. This can be accomplished
best by studying each provision, filling out each
blank, and arriving at an equitable division of re-
ceipts and expenses. But conditions that could
not be anticipated may arise, and good men may
disagree. If this should happen, a practical way
of settling the difference is to leave the decision to
an arbitration committee. This clause is included
in many farm leases used throughout the country.
Its value lies partly in its presence rather than the
number of differences submitted to arbitration.
6. Additional Agreements
This blank space is provided for any special pro-
visions not covered elsewhere in the lease.
7. Signing the Lease
The lease should be signed in duplicate by both
parties. In some States, it should be witnessed by
two disinterested parties. In some instances, the
landlord's wife should sign the lease also. Land-
lord and tenant should each keep a signed copy.
It is seldom necessary to record your lease or file
it in the county office in which documents of this
kind are recorded. Each of you may want to re-
fer to the lease from time to time during the year,
and in case of renewal you will want to use it. If
the lease is terminated, adhere strictly to the notice
Just before the lease is signed, do two things:
(1) Use Farmers' Bulletin 2163, Your Farm Lease
Checklist, to assure yourself that all pertinent items
are covered, and (2) read the lease carefully to
see that its provisions present your agreement
Issued June 1961
For sale by the Superintendent of Documents, U.S. Government Printing Office
Washington 25, D.C. - Price 10 cents
U.S. GOVERNMENT PRINTING OFFICE : 1961 OF — 581109