What Makes a Good Farmland Lease?
- Craig Kaiser
- Jun 5
- 6 min read
Whether you own farmland and are thinking about leasing it out, or you're a farmer looking for your next operation, the lease agreement sitting between you is one of the most important documents in the deal. A strong farmland lease protects both parties, sets clear expectations, and creates the foundation for a productive long-term relationship. A weak or verbal one can cost you far more than you bargained for.
What Is a Farmland Lease?
A farmland lease is a legal agreement between a landowner (lessor) and a tenant farmer (lessee) that grants the tenant the right to use and farm a piece of land for a defined period in exchange for rent payments.
There are 2 main types of farmland leases:
Cash Rent: Most common type of farmland lease agreement where the rent is paid on a fixed dollar amount per acre, per year basis.
Crop Share: The landowner and the farmer (tenant) share both the costs of operating the farm and the risks of production, with each party receiving an agreed-upon percentage of the harvested crop.
Farmland leases are common across the Midwest, where large tracts of agricultural land are owned by non-farming landowners who rely on tenant farmers to keep the land productive. In states like Nebraska and Colorado, well-structured lease agreements are the backbone of how farmland changes hands operationally, year after year.
A farmland lease is not the same as a purchase agreement. The landowner retains ownership; the tenant gains the right to farm. And while that distinction sounds simple, the details of how that arrangement is structured make all the difference.
What Makes a Good Farmland Lease?
A strong farmland lease does one thing above all else: it removes ambiguity. Every party should be able to read the document and know exactly what is expected of them, when, and under what conditions the arrangement can change.
Here's what makes a good farmland lease:
A clear legal description of the land
Price per acre and payment dates
Clearly defined tenant responsibilities
Termination language
Beneficial for both parties
In this clip from our Farmland Leases 101 webinar, landowner and land broker Shannon Schlachter of National Land Realty brings firsthand experience from both sides of the table and breaks down exactly what terms matter most when structuring a farmland lease.
A Clear Legal Description of the Land
The lease should identify the property with specificity, including the full legal description and the number of acres being leased. This matters for two reasons: it defines exactly what the tenant has the right to farm, and it ensures there's no dispute later about whether a particular field, waterway, or parcel was included in the agreement.
Price Per Acre and Payment Dates
The cash rent rate per acre should be stated clearly, along with the total annual rent and the exact dates payments are due. A good lease doesn't say "rent is due in the fall" - it says "rent of $X per acre for Y acres, totaling $Z, is due on [specific date]." Payment terms are one of the most litigated areas of farmland leases; specificity here protects everyone.
Clearly Defined Tenant Responsibilities
Good farmland leases clearly define tenant responsibilities. What is the tenant responsible for maintaining? Who pays for tile repair, fence maintenance, or chemical applications? A good lease spells out the operational responsibilities of the tenant so there's no gray area about who handles what when something needs attention.
Termination Language
Termination language is another critical component of a strong farmland lease, and it refers to how either party ends the agreement. Good farmland leases define the required notice and process clearly. Many states have statutory requirements around termination notice for farmland leases, so this section should be drafted with local law in mind.
Balance: Beneficial for Both Parties
The best farmland leases are beneficial for both parties. A lease that's too one-sided in favor of the landlord will struggle to attract quality tenants. One that over-protects the tenant can leave the landowner unable to act when circumstances change. A fair, balanced agreement is more likely to hold up, less likely to cause conflict, and more likely to result in a long-term relationship that benefits both parties.
Red Flags in a Farmland Lease Agreement
Not all farmland leases are created equal, and there are red flags that both landowners and farmers should look out for.
A verbal lease is always a bad lease. This is the biggest red flag in a farmland lease. Verbal agreements are nearly impossible to enforce, leave no paper trail, and create serious risk for both parties. If your farmland lease isn't in writing, it isn't a real lease and can fall apart the moment there's a disagreement.
Payment dates are vague or missing. If the lease doesn't specify exact due dates and amounts, disputes are almost inevitable. For example, “rent due at harvest" is not a payment term.
There's no termination language. Without a defined exit process, either party can find themselves stuck. A landowner may want to sell, make changes, or bring in a family member to farm - and without clear termination language, they may not be able to act. Tenants need it too, so they're not left scrambling if their situation changes.
It was drafted without an attorney. A good farmland lease is worth spending money to have an attorney help draft. This is especially true for leases that include more complex provisions, like right of first refusal or auto-renewal clauses. The cost of a few hours of legal time is nothing compared to the cost of resolving a lease dispute in court.
Farmland Lease Considerations for Landowners/ Landlords
If you own farmland and are thinking about leasing it, here are a few specific provisions worth thinking through carefully before you sign. The main considerations include a right of first refusal, auto-renewing leases, and the lease length.
Right of First Refusal
A right of first refusal gives the tenant the option to match any offer on the property before the landowner can accept it. Tenants often push for this, and it can be a reasonable provision in an established, trusting relationship. But landowners should think carefully: rights of first refusal must be resolved before a property can be listed or sold, which can significantly complicate any future transaction. If you include one, make sure the terms around time frames and procedures are very clearly defined.
Auto-Renewing Leases
Auto-renewal clauses are relatively new in farmland leasing, and they work exactly as they sound: the lease automatically renews unless either party takes action to end it. For tenants, this is a major benefit because it provides continuity and certainty. For landowners, it can make sense when you have an established, trusted relationship with your tenant. If you’re leasing your farmland, consider including escalation language so the rental rate adjusts with the county average cash rent - that way you're not locked into a rate that falls behind market over time.
Consider Going Longer Than One Year
One-year leases are common, but they're especially unattractive to good tenant farmers. Here's why: if a farmer is only guaranteed one year on a piece of ground, there's no incentive to invest in it. They won't put effort into long-term soil health, irrigation system and drainage improvements, or other practices that pay off over years rather than seasons. Farmers who know they'll be farming a piece of ground for five years will farm it differently than someone who sees it as a one-year engagement. Longer-term leases also give farmers the certainty they need to plan equipment purchases, financing, and crop rotations. If you want a good steward for your land, give them a reason to act like one.
List Your Farmland for Lease For Free
If you own farmland and are ready to find a quality tenant, list it on LandApp's marketplace at no cost. No fees, no commissions, and no obligation to accept any offers. Just your land, in front of farmers actively looking for their next operation. You can also list your land for lease for energy development, carbon credits, and more.
Find Farmland for Lease or Sale on LandApp
Whether you're a farmer searching for ground to rent or an investor looking to buy, LandApp's marketplace puts the data you need right alongside every listing. Each property is embedded with information like soil types, flood zones, land usage history, crop types, and more so you can make informed decisions before you ever pick up the phone. Find farmland for sale across the country now:
