Pasture for rent

Pasture land is becoming a rare and valuable resource in the cattle business. With tough competition for leasing rights, producers often have to look far and wide away from their home turf in order to obtain enough grass to run their cattle through the grazing months.

Before signing the dotted line on a rental agreement, land owners and lessors need to come to a consensus on a number of terms, unique to that particular parcel of land. No longer is a verbal agreement and a firm handshake enough. These days, producers should get everything in writing to protect all parties.

For Shad Sullivan, a cattle feeder from Ordway, Colo., a proven history with the land owner is critical for maintaining an ongoing rental relationship.

“Historical integrity of both parties really helps and having a contingency plan understood by all sides if something were to happen is important,” said Sullivan. “For a contingency plan on my written leases, we literally write in what each of us expects from the other person. I involve my banker and inform him of who everyone is that has connections to the lease. I also have meetings involving both sides with extended families, so everyone is in full understanding. And I always seal the deal with a handshake at every renewal, whether it’s a written agreement or not.”

Doing your homework is key before entering into an agreement, says Sullivan.

“References are very much needed, and I always go to the top,” he said. “I find out who their banker is and talk to them. Then I literally go around town and ask people and businesses about the person’s reputation. It’s tricky because if it’s a good lease the local people are usually first choice, and should be but sometimes a lessor doesn’t want local and that’s why I check things out when I’m renting pasture from far away.”

For ongoing relationships to work, Sullivan said price is not always the driving factor, but how you treat the land that matters most.

“I have found that price really doesn’t matter as long as you’re a consistent renter,” said Sullivan. “Remember, the land owner wants you to treat the land like it’s yours and take care of it. Most often I have found that if a hot shot comes in and offers big money then they usually are short term agreements because one guy isn’t in it for both people. If an individual is going to lease it to a neighbor then that’s what he’s going to do it regardless of price. I always pay market price and give my word and let the chips fall where they may.”

Nancy Hockett Carlson, a cow-calf producer from Hotchkiss, Colo., still trusts in the verbal agreement with written agreements describing backup plans if the family decides to sell the acres of pasture.

“We have verbal agreements on three properties and one written agreement for a lease with dysfunctional family dynamics,” she said. “We write in if they sell the land that we are compensated and/or we get to finish the hay season and take the hay off the property. We make sure to include the basics in our written agreement — start and end dates, amount of rent and when it is paid.”

Nicole Lutz Polsdofer, a rancher from Powersville, Mo., says communication is key for all parties involved, particularly to iron out details of land management and improvements.

“We have both verbal and written agreements for pasture leases,” she said. “The verbal agreement allows for us to make improvements to the property and take the cost off of the rent, as we see fit. Our written leases are all fairly rigid. We have one piece of pasture that we can only use from May through October. I would prefer to have the pasture year round but don’t want to press the issue and lose the acres. For one of our pastures, we took the price of installing new fence and spread it out over three years and took that amount off of the rental price. Now we can have that pasture for three years, and the landlord can have new fence installed without paying out of pocket.”

Polsdofer relies on Iowa State University’s cash rent farm lease to create an outline for all written agreements. This resource can be downloaded in pdf version here:

https://store.extension.iastate.edu/Product/Iowa-Cash-Rent-Farm-Lease-Short-Form

In South Dakota, oral leases are valid for only one year, so if a longer contract is desired, it must be in writing. Written leases include all details of the agreement, which should be unique to each parcel of land being rented. While there are online resources to put together a lease agreement for free, a lawyer can offer advice to make sure all the i’s are dotted and t’s are crossed.

Randy Cullers, attorney at Crites, Shaffer, Connealy, Watson, Patras & Cullers, P.C., L.L.O. in Chadron, Neb., starts with a three-page pasture lease agreement form that he applies to his clients’ land rental agreements. The form lease agreement is then modified to match the client’s situation and agreement.

“Every pasture lease agreement is different, so it’s difficult to apply generalities for what should be included in a written contract,” said Cullers. “There’s so many elements that must be considered. I don’t tell people to consult with legal counsel to be self-serving, but it can certainly help to avoid trouble down the road for both parties to cover all bases.”

For example, Cullers explained that in a drought, the only way to receive drought assistance payments is if you have a written lease to prove your cattle were on that pasture. He also encourages producers to ask questions of “what ifs” and determine who is responsible for what in an agreement.

What happens if there is a shortage of grass — due to drought, hail damage or overgrazing? Who is responsible for fence maintenance or repairs to water wells? Does the livestock owner have liability insurance in case the cattle get out on the road? What are the terms of the lease? How long will it last? When will payments be due? What’s the rate? What are the terms for water shares? How many animal units are allowed on the pasture? Are hunting, fishing or other recreational activities allowed?

To prepare for an appointment with a lawyer who will assist in drawing up a pasture rent agreement, Cullers said preparation can shorten the process and save clients money.

“Bring a legal description of the pasture to the appointment, along with the names of who you are working with,” he advised. “The more you know about the property, the easier it is for a lawyer to draw up the papers. Producers can go to the county assessors Geographic Information System (GIS) online website, which offers an online digital map. By doing that, they can see whose name is on the property and where fences and waterers are located. You can search by name or legal description, and you can bring the printable PDF to your appointment. It’s a simple step that will save time and tell you a lot about the property you plan to rent.”