Whenever we sell property in Nebraska, if there is a farm lease, questions arise as to the rights of both the landlord and the tenant. If a landowner is contemplating a sale of their property and there is a verbal farm lease, notice to terminate the lease for the ensuing year is September 1. To educate, inform, and protect both parties in a farm lease, the following is the introductory paragraph to an article dated August 2015 written by J. David Aiken, Water & Agricultural Law Specialist with the University of Nebraska-Lincoln.
Many farm leases, especially those between family members, are not written but are verbal “hand-shake” agreements. Because nothing is in writing, the parties may have different recollections of their agreement, making lease disputes more difficult to resolve. The most common legal issue associated with verbal farm leases is how a lease may legally be terminated. For unwritten leases, six months advance notice must be given to legally terminate the lease. In contrast, the termination of a written lease is determined by the terms of the written lease. If nothing is specified, a written lease terminates automatically on the last day of the lease with no automatic renewal.
Rising crop prices lead many landowners to seek higher cash rents; falling crop prices lead tenants to seek lower cash rents. Many Nebraska leases are unwritten, which means that notice of termination must be given at least six months in advance, usually by September 1. If during rising crop prices, the landowner cannot terminate the lease, the landowner cannot require the tenant to accept a higher rent in order to avoid immediate lease termination. However, prudent tenants would renegotiate the lease with the landowner in order to keep the lease longer. If a tenant refuses to renegotiate the rent, the tenant could end up ultimately losing the lease. The opposite dynamic operates during periods of falling crop prices. If the tenant does not terminate the lease by September 1, the tenant is bound to last year’s cash rental rate (which may be more than the tenant wants to pay). Verbal year-to-year leases. Verbal (i.e. unwritten) leases are legally presumed to be year-to-year leases. A year-to-year lease has no fixed time period and is automatically renewed for another year until proper notice has been received by the tenant from the landowner (or vice versa) that the lease is terminated. Many farm leases in Nebraska are unwritten year-to-year leases, and automatically renew for another year unless termination notice has been received by September 1.
NOTICE TO TERMINATE NEBRASKA entire article includes subjects such as Verbal year to year lease termination, Oral Pasture Lease Termination, Written Leases, & Termination Notice. See document below.
Author’s Note: The Need for Personal Legal Advice. Farm leases require a consideration of law and facts unique to each case. The information provided is for educational purposes: It is not a substitute for competent legal advice.
Please see attached document for the Farm Lease Termination Article; J. David Aiken, Water & Agricultural Law Specialist