What is a Lease?
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FORMS OF AGRIC LEASE-1, FORMS OF AGRIC LEASE-1
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| 1. Short-term leases
The majority of agricultural leases are for short — one- to three-year — periods. Many are from year to year and can be renewed or terminated annually. Farmers and landowners often treat leases casually, with an oral or handshake agreement and an informal joint understanding of flexible terms based on the particular situation. As long as a positive personal relationship underlies the business transaction, informal leasing arrangements can serve the mutual interest of both parties. Business is business, however, and every farmer knows at least one story of a lease gone sour. A bad lease or a lease cut short can be expensive. Short-term leases can evolve into longer terms, or into other forms of tenure. A short-term lease is often a good place for both parties to start. Advantages -Some landowners favor short-term leases because they want flexibility in the way their land is used and are unwilling to tie it up for long periods of time. -Some farmers like short-term leases because they provide the opportunity to experiment with new enterprises or locations without requiring a long-term commitment. This flexibility is particularly useful for beginning farmers. - A short-term lease can allow a tenant a trial period to see if his or her farm plans are financially feasible. A short-term lease also allows the tenant to limit his or her financial risk. Finally, a short-term lease allows both parties to get to know each other and decide whether a longer-term arrangement would be beneficial. Disadvantages Short-term leases have disadvantages, too. Financial flexibility can bring financial uncertainty, which can result in difficulty making long-term business plans or personal decisions. They have less financial incentive to rotate crops, invest in perennial crops or permanent structures, and install conservation structures. Download 17.65 Kb. Share with your friends:
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