Beef producers entering into a lease contract for grazing, use of breeding bulls or other business activities should have a written agreement, according to a Texas A&M agricultural law specialist.
Tiffany Dowell, an assistant professor and agricultural law specialist, says a written agreement provides protection to both parties.
"Some of you may not think you need a written lease, but you will wish you had one if there is ever a problem," she said at a recent A&M beef cattle short course. "Additionally, in order to be legally enforceable, any real estate lease for a year or more has to be in writing."
Dowell said limits on a lease are also important. Property, for example, is one place where its especially necessary to be very clear on what you want.
"If the lease is for grazing and you want to reserve hunting rights, you need to have that spelled out," she said. "If the landowner wants to reserve the right to go in and inspect anything, then the landowner has to specify that in the agreement."
Additionally, a pasture lease should specify which tracts are included in the agreement.
"A legal description is good, but you may want to include additional information as well," she said. "For example, if you want to lease a specific pasture, but not the peach orchard in the back of the property, you need to spell that out."
The lease should also include provisions specifying who is responsible for maintenance items such as pasture shredding, fence repair, barn maintenance and other items that could become issues.
For cattle producers leasing bulls, Dowell advised to include liability issues in the agreement. For example, if a bull is injured during the time that he is being leased, it is a good idea to have provisions in the agreement to handle that situation.
"One term to consider when leasing out a bull is whether it might be prudent to require a monetary deposit from the lessee that will be returned upon the bull's safe return at the end of the lease."
Finally, Dowell said there should be inclusion of penalties and consequences for late payment in the lease agreement.
"There should be a set penalty for late payment," she said. "These provisions can be drafted in a variety of ways. For example, you could have a set late fee of so much for each day, and once the fees add up to a certain amount, the lease will terminate."
And, Dowell said, it's a good idea to have a lawyer review the agreement.
"Prior to taking it to your lawyer, you can do some things that will save you some money," she said. For example, if you go online there are sample leases that will help you draft an agreement. Once you have taken a first crack at it, then take it to a lawyer for review. The lawyer will not have to start from scratch and will likely bill fewer hours to simply review and revise, she notes.
Source: Texas A&M AgriLife Extension