You may be familiar with commercial property leases, such as a lease agreement for a shop or an office. This is a written agreement where a property owner grants a business owner sole occupation of their leased property for their business activity. The lease agreement will detail, for example, the rental rate of the leased land. However, there are different types of commercial leases. This article will explain three key points about agricultural leases to help you understand agricultural leases.
What is an Agricultural Lease?
An agricultural lease is a legal agreement for letting agricultural land or property for agriculture. It is a contract between the property owner (the landlord) and the commercial entity who uses the property for their commercial activity (the tenant). Like any lease, the lease agreement will detail the rights and obligations of both parties in the agricultural lease.
What Do I Need to Know About Agricultural Leases?
There are three essential points to know about agricultural leases.
1. Types of Agricultural Leases and Licences
There are many different possibilities for an agricultural lease and licences, and these include for:
- an outbuilding on a farm for vehicle storage;
- a vast amount of land for a business to use for their farm;
- land for livestock to graze, which is a grazing agreement;
- land for non-agricultural use, such as a sports field or a campsite; and
- buildings for non-agricultural use, such as a place for mountain bike rental.
There are different types of leases or licences to use when creating an agricultural agreement. A key point regarding this is that you use the correct type of agricultural lease or licence for the scenario. Some, for example, only apply where the use of the property or land is for business use. If the detail in the agreement is incorrect, it can affect what those parties to it can do. For example, it could have legal implications regarding how to end the agricultural lease.
2. Agricultural Property Lease
A key point to understand about agricultural leases is understanding what an agricultural property lease is. Understanding this will allow you to know when it is appropriate to use this type of lease.
An agricultural property lease is for use for both property and land, usually where its commercial use is not for agricultural purposes. Therefore, it is not for an agricultural business as such.
The lease term of a farming property lease must not be longer than seven years and no shorter than six months. A farming property lease is not suitable where the tenant plans to live on the land. The types of business use where an agricultural property lease may be suitable include:
- a centre for clay pigeon shooting;
- a place to store agricultural machinery;
- selling agricultural goods; and
- a place to rent mountain bikes.
3. Farm Business Tenancy Agreement
A key point to know about agriculture leases is what a farm business tenancy agreement is. This is an agricultural lease to use where the landlord allows a commercial entity to use the property for their farm business activity. It is essential to understand that the law requires both parties to sign a notice that shows that the tenancy will be a farm business tenancy. They must do this before the lease begins.
This cheatsheet includes practical tips to understand key clauses and avoid disputes in leasing agreements.
Key Takeaways
Agricultural leases are legal agreements for leasing agricultural land and property. There are different types of agricultural leases and licences depending on the kind of activity which the land or property is in use for. For example, a landlord may allow the use of their land for non-agricultural activity such as a campsite or sports field. Therefore, it is essential to use the correct type of lease agreement for the activity.
If you need help understanding key points about agricultural leases, LegalVision’s experienced leasing lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. So call us today on 0808 196 8584 or visit our membership page.
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