According to the U.S. Department of Agriculture’s Economic Research Service, approximately 39 percent of U.S. farmland in the contiguous 48 states is leased. While leases are used in many different types of property transactions, leases for agricultural purposes may utilize the property in a way that is not typical of housing or commercial leases. For example, a person leasing a residential home or apartment would be unlikely to disc the yard or plow a hillside on the property- actions typical to an agricultural lease that may have long term consequences for the quality and usability of the land. As a result, the tenant and the landowner can have very different, and sometimes opposing, interests in how property should be used and maintained in order to preserve the value of the property beyond the length of the lease. This article will discuss leases in an agricultural context, focusing on the requirement of “good husbandry” that is part of all agricultural leases, either explicitly, through language in the lease, or implicitly, where a court will require the renter to engage in actions without it being specifically agreed-upon
Overview of Leases
A lease is a contract where a property-owner conveys to a renter the right to use and occupy their property in exchange for consideration. Consideration will usually be in the form of monetary payment, but in an agricultural lease, it could be a percentage of the crop produced on the farmland. In a lease agreement, the property-owner is referred to as the landlord, and the renter as the tenant. A lease can be created through a written document, oral communications, or implied through the parties’ actions. A lease will typically include the following elements: 1) the extent and boundary of the property to be leased; 2) a definite term that the lease will run; and 3) a definite rental rate. Along with the lease of land for production, leases are also used in agriculture for the lease of farming equipment, the lease of underground oil or gas minerals, or the use of land for development of wind or solar energy. To learn more about agricultural leases generally, please visit the NACL’s Agricultural Leases Reading Room here.
There is a duty of good husbandry implicitly found in all agricultural leases, but the modern trend in agricultural leasing is to define the specific good husbandry practices a tenant should follow. This trend goes beyond just the inclusion of a good husbandry requirement and will include terms that explicitly describe the practices the tenant is required to follow. By outlining the requirements of good husbandry, this trend reduces confused expectations between the landlord and tenant and diminishes the chance of resulting litigation. Though modern trends have veered away from relying on the implied duty of good husbandry, it is important that landlords and tenants understand it before crafting their own terms.
What is Good Husbandry?
A term that can be found in an agricultural lease is “good husbandry.” However, even when the term is excluded from a lease agreement, there is still a duty of good husbandry implied. The duty of good husbandry can be linked to the common law doctrine of waste. The doctrine of waste is implied in all leases and imposes a duty on tenants to refrain from committing waste. Waste is defined as “unreasonable or improper use, abuse, mismanagement or omission of duty touching real estate by one rightfully in possession which results in a substantial injury.” Meyer v. Hansen, 373 N.W.2d 392, 395 (N.D. 1985) Waste includes actions such as the exploitation of land through the removal of topsoil, demolition of buildings or fences, cutting of timber, or destruction of shrubs or cover crops. 49 Am. Jur. 2d Landlord and Tenant § 414. Inherent within the duty to refrain from committing waste, a farmland tenant in an agricultural lease will also have the duty to practice good husbandry.
Husbandry is considered the “business of a farmer,” and can include ordinary farming practices such as tillage, raising animals, and managing the products of the land. Simons v. Lovell, 54 Tenn. 510, 516 (1872). Good husbandry requires a tenant to cultivate the land with proper farming practices, and refrain from damaging the soil outside of what usually results from cultivation. 52B C.J.S. Landlord & Tenant § 1717. For example, good husbandry practices ordinarily include practices like crop rotation, pre-planting field preparation, rotational grazing in livestock production, insect and weed control, and planting cover crops. There is no specific legal definition of good husbandry, so the interpretation of good husbandry’s meaning has been left up to courts when the agricultural lease agreements are silent. Courts will usually determine that tenants farming in a husband-like manner are those who follow the ordinary farming practices used in the area where the farm is located. To state it simply, good husbandry practices are those that follow the area’s acceptable farming standards and avoid damaging land beyond what usually occurs in cultivation.
Court Interpretation of the Implied Duty of Good Husbandry
Courts have interpreted the implied duty of good husbandry based on a variety of farming practices. In Oregon, the Supreme Court found that the tenant breached the implied duty of good husbandry in his sharecropper’s lease when he began harvesting wheat too late in the year and was unable to provide the agreed upon rent of one-third of the wheat crop. Bussard v. Binder, 277 Or. 21, 558 P.2d 845 (1977). In Pennsylvania, the Supreme Court found the tenant breached the implied duty of good husbandry when he broke from well-established traditions by removing manure made in the ordinary course of farming from the landlord’s property at the time of the lease’s expiration. Lewis v. Jones, 17 Pa. 262, 265 (1851). Conversely, in Indiana, the Supreme Court found that the tenant’s conduct did meet the implied duty of good husbandry and align with the farming practices in the area when weather conditions prevented the completion of harvest and similar weather induced damage occurred to other crops in the neighborhood. Brown v. Owen, 94 Ind. 31, 32 (1884).
Good Husbandry Clauses in Agricultural Leases
Generally, when the lease includes such a term, courts will look at how the lease specifically defines good husbandry practices, but if an ambiguity exists, they determine good husbandry based upon the current farming practices in the area. In Mart v. Mart, an Iowa state court found the tenant violated the lease agreement’s term of good husbandry when he tilled a wetland area without the landlord’s consent. 824 N.W.2d 535, 542–43 (Iowa Ct. App. 2012). The area had not been tilled for over 20 years and was enrolled in USDA’s Swampbuster conservation program. Id. at 535. In Gardiner Farms, LLC v. Advanced Agriculture, Inc., a Louisiana state court used the advice of agricultural experts and fellow sugarcane farmers to determine the lease agreement’s terms “good and farm-like manner” and “approved farming practices” were not breached when the tenant failed to plant a certain variety of sugarcane or use a particular type of crop rotation. 2017-423 (La. App. 3 Cir. 12/13/17), 258 So. 3d 769, 786.
Conclusion
As the number of U.S. farms being leased is continuing to grow, it is imperative that landlords and tenants understand the implied duty of good husbandry found in agricultural leases. Inherent within the doctrine of waste, the duty of good husbandry implied in agricultural leases will be determined based upon current farming practices in the area where a farm is located. While the modern trend in agricultural leasing is to define with explicit terms the specific good husbandry practices a tenant should follow, it is important for both agricultural landlords and tenants to understand how good husbandry is interpreted by courts before including specific terms in their own lease agreements.
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Author: Emily Stone