Ins & Outs of Grazing Leases Cattle U ■ Dodge City, KS ■ August 1, 2019 Tiffany Dowell Lashmet Agricultural Law Specialist Texas A&M AgriLife Extension

Disclaimer This presentation is for educational purposes only as well as to give general information and a general understanding of the law, not to provide specific legal advice. This presentation does not create an attorney/client relationship and should not be used as a substitute for the advice of a licensed attorney.

Road Map Why is a written lease necessary? Setting payment rates My father’s favorite section Grazing lease tips Hunting lease tips

Why is a written lease necessary?

1. The law says so…sometimes. Generally, an oral contract is valid. The “Statute of Frauds” says there are certain contracts that must be in writing to be enforceable: CO: “leasing for longer than period of 1 year of any lands or interest in lands…” KS: “leases of lands exceeding one year in duration” NE: “agreements not to be performed in a year” NM: “agreements that cannot be performed within 1 year” OK: “leasing for a longer period than one year” TX: “Lease of real estate lasting one year or more.”

2. The exercise of writing it down is helpful!

3. If you end up in court, you want a written document.

4. Other agencies may require a lease to be produced. FSA will likely require a copy of a lease for their records if any programs or payments are involved. (i.e. ARC/PLC; LIP) NRCS may require copies of lease to register for certain programs (EQIP). CAD may want a copy of a lease for special use valuation confirmation.

5. You never know what might happen.

Calculating Payment

Three Most Common Arrangements Cash lease Crop share lease Flex/Hybrid lease NOTE: Your choice here may impact you other places like the FSA office, with the IRS, and when it comes to your social security check!

How much should I charge? Really depends on the facts. Talk to CEA, landowners, producers in your area. Numbers from the Government 2018 (USDA NASS) US Average: Irrigated Crop: $215; Dry Crop: $125; Pastureland: $12.50 CO: IC: $144 KS: IC: $131; DC: $58; Pastureland: $19.50 NE: IC: $238; DC: $150; Pastureland: $22.50 NM (2017): IC: $140; DC: $18; Pastureland $3.20 OK: IC: $72 ; DC: $32; Pastureland: $13.50 TX: IC: $91; DC: $30; Pastureland: $6.70

How much should I charge? (cont.) 2017 Texas Northern High Plains Region Pastureland: $7.20 Non-irrigated cropland: $31.50 Irrigated cropland: $139.00 2017 Southwest KS Region Pastureland: $9.40 Non-irrigated cropland: $33.50 Irrigated cropland: $96.00 2017 Ford County, KS Pastureland: $12.50 Non-irrigated cropland: $33.5 Irrigated cropland: $131

TX Rural Land Trends Report Texas Chapter of the American Society of Farm Managers and Rural Appraisers

My Father’s Favorite Section Assignment/subleasing Forum clause Dispute resolution clause Attorney Fee provision Liability clause Indemnification clause

Grazing Lease Pointers

1. Set a stocking rate. Limit the number of animals that may be on the property during the term of the lease. Landowner wants this term, tenant may not. Size of animals—consider animal unit measurement. This number may need to change based on drought or wildfire…

2. What may be done on the property? If limitations are not included, they do not exist. State that lease is for grazing cattle only. Are any areas that are off limits to the tenant? Save yourself a tense situation in November….

3. Maintenance of fixed assets. Who will maintain during lease term? Fences—require periodic inspection and immediate repair if damage. Landowner—generally not liable for injuries during lease, but can be liable for failing to make promised repairs or making inadequate repairs.

4. Spell out Termination Requirements Lease should address termination requirements—who can terminate, how much notice must be given, etc. Rules differ by state as far as the length of notice and when notice must be given for oral leases or leases not addressing this issue. Consider providing an incentive for people to timely leave when lease is terminated—i.e. damage of $/day.

Hunting Lease Pointers

1. Require EVERYONE to sign lease and waivers. Cannot terminate lease or sue for breach of contract unless person was a party to the lease itself. Consider a term allowing only lessee to enter and require any other parties be approved in writing by the landowner. Obtain written releases prior to them entering the property. Standard waiver of liability (express & conspicuous) Language from Agritourism Act

2. Hunting Specific Considerations Can they use tree stands? Deer blinds? Feeders? Liquidated damages for injuring/killing livestock. Can ATV’s be used on the property? Designated area for carcass cleaning and disposal? Any requirements regarding photos?

3. Describe leased property & limitations. Consider including a map clearly showing leased land and any important areas. Where should property be entered? Will anyone else have rights? Consider requiring a security deposit in case there is damage.

4. Require lessee to follow all state and federal laws. Why should this be in the lease? If they break the law, they have breached the lease and you can recover damages. If you want the right to automatically terminate the lease, use the magic words “…or the lease shall terminate.”

5. Study up on Statutes Differ greatly by state—worth doing some homework! National Ag Law Center Statutes to look for: Recreational Use Statute (CO, KS, NE, NM, OK, TX) Generally say landowner not liable for negligence if person is on ag land for recreational purpose—may be $ requirements. AgriTourism Act (CO, KS, NE, OK, TX) Generally say landowner not liable if person injured during educational/recreational activity on ag land—may require signs Equine Liability Act (CO, KS*, NE, NM, OK*, TX*) Generally say animal owner not liable for injury caused by inherent risk of animal activity—type of animals and list of exceptions may differ.

Additional Resources Ranchers’ Agricultural Lease Handbook Ag Lease 101 Website (aglease101.org)

http://agrilife.org/texasaglaw

aglaw.libsyn.com

Thank you! Tiffany Dowell Lashmet (806) 677-5681 tdowell@tamu.edu Twitter: @TiffDowell Facebook: Texas Agriculture Law Blog: agrilife.org/texasaglaw Podcast: aglaw.libsyn.com