Improving Your Farm Lease Contract

FM 1564 Reviewed July 2024

Ag Decision Maker

extension.iastate.edu/agdm

File C2-01

Improving Your

Farm Lease Contract

Importance of Leasing

Approximately half of Iowa’s farmland is rented to

tenant operators. In parts of central and northern

Iowa, half to two-thirds of the land is tenant-

operated. On the other hand, in parts of northeast

and southern Iowa, less than one-half of the land is

farmed by a tenant.

The trend over the past several decades has been

for more of Iowa’s farmland to be leased rather

than operated by its owners. In many cases, retired

farmers or their heirs wish to continue to own farms,

but do not want to operate them. Farmers with

limited capital also find that they can more easily

reach an efficient scale of operation by renting rather

than owning.

Leasing farmland involves a business agreement

between the owner and the operator. A farm lease

is a legal instrument that describes that agreement.

The lease provides the basis for combining the

landlord’s and the tenant’s resources of land, labor,

capital, and management to efficiently produce farm

commodities.

Variations in leasing arrangements occur because

of the differences in the productive capacity of the

land and improvements, the contributions made by

each party, and the personal goals of the tenant and

owner. Rental terms need to be revised periodically

to keep them up to date. The lease agreement also

protects the legal rights of all parties involved.

Reasons for Farm Leases

Land is an expensive resource. A large capital

investment is required to purchase enough land to

provide the farm family an opportunity to earn a

satisfactory living. A typical full-time farmer in Iowa

today operates more than 800 acres. The average

value of Iowa farmland is over $10,000 per acre.

Therefore, the land investment for a commercial

farm today can easily near $8 million.

Many farm families cannot afford to purchase

farmland because they do not have enough capital

for a down payment, or the income will not be

sufficient to meet the financing payments. Young

families often have labor, some operating capital,

machinery and management ability that they wish to

use in a farm business to produce income for living

expenses and future investment or debt reduction.

If they are not in a position to purchase land,

they can rent land and build equity for a potential

future purchase. A common method is to operate a

combination of owned and rented land. This allows

the operator to have a home base with machinery

and grain storage while leasing additional acres.

Many individuals or institutions that own land

are looking for someone to farm it to provide a

return on their investment as well as maintain its

productivity. Land ownership can also provide a

hedge against inflation through appreciation in land

values over time. Many landowners are former farm

operators who have retired and who wish to retain

their investment in the land for security, retirement

income, income tax deferral, and sentimental reasons.

Common Types of Leases

The four most common types of leases used in Iowa

are the fixed cash lease, the flexible cash lease, the

crop share lease, and the custom farming contract.

The common terms of these leases are described

below.

Fixed Cash Lease

Under a fixed cash lease the tenant pays a given

amount of cash rent per acre per year for the use

of the farm resources. The landlord may put some

restrictions on what crops can be grown, or what

tillage, conservation, and pest control practices can

be used. Other than this, the tenant has control in

planning the crop and livestock production program

on the farm unit, and receives all the crop and any

associated USDA commodity program payments.

A guide to help you better understand the business of farmland leases.

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Improving Your Farm Lease Contract

Flexible Cash Lease

A variation of the fixed cash lease is a flexible lease,

in which the actual rent to be paid depends on

the actual yields attained and/or the selling prices

available during the lease period. This ensures that

the rent paid is in line with the profitability of the

crops grown that year. Sometimes government

payments and crop insurance benefits are also

included in calculating the gross revenue. The

landowner shares some of the risk of low yields

or declining prices, but also shares in the extra

profits when prices and/or production exceed

expectations. Some flexible leases also take into

account crop input costs when determining the

final rent or bonus. Iowa State University Extension

and Outreach publication FM1724, AgDM C2-21:

Flexible Farm Lease Agreements, store.extension.

iastate.edu/Product/1794, has more details.

Crop Share Lease

The distinguishing characteristic of a crop share

lease is that the owner receives a share of the

crop and USDA payments as a return for the land

resources used. In Iowa, a typical division for corn

and soybeans is for the landlord to receive one-half

of the grain. A variation is a 50-50 crop share lease

with a small cash payment to offset some of the seed

technology fees or reduced tillage. In other regions

where farmland values are lower, the owner may

receive only 25-30% of the crop. The owner’s share

of a hay crop varies, depending on how the costs

for establishing the seeding were shared. In some

cases, the tenant pays a cash rent for land in pasture

or hay. There may be a separate rental charge for a

good set of buildings or grain storage facilities.

The owner normally furnishes land and buildings

and pays half of the costs of inputs such as fertilizer,

seed, and pesticides when the crop is divided 50-

50. Owners are usually responsible for drying,

storing, and marketing their share of the crop, as

well. The tenant usually furnishes all the labor,

fuel, equipment, and the other half of the shared

expenses. Many variations on sharing of expenses

exist, however. Publications FM1811, AgDM

C2-15: Survey of Iowa Farm Leasing Practices,

store.extension.iastate.edu/Product/1819, and

AgDM C2-30: Crop Share Leasing Provisions,

www.extension.iastate.edu/agdm/wholefarm/pdf/

c2-30.pdf, provide more details about the sharing

of expenses under a crop share lease. AgDM

Decision Tool C2-30: Crop Share Lease Analysis,

www.extension.iastate.edu/agdm/wholefarm/

xls/c2-30cropshareleaseanalysis.xlsx, calculates

input contributions from an owner and tenant to

determine how profits can be split equitably.

Custom Farming Contract

Under a custom farming contract the operator

supplies all the labor and equipment needed to

perform tillage, planting, pest control, harvesting,

and moving crops to storage. The landowner pays

all other expenses, and receives all the crop and any

USDA payments. The custom operator receives a

fixed payment per acre from the owner, or a fixed

payment for each operation performed.

Some agreements pay the custom operator a

bonus for meeting certain planting date or yield

goals. Others provide for the operator to receive a

percentage of the crop instead of a cash payment,

generally from 20-25%. This is sometimes referred

to as a “net share lease.” If the custom operator

takes responsibility for purchasing and delivering

crop inputs, the cash payment or share of the crop

is generally higher. Publication FM1823, AgDM

A3-15: Custom Farming: an Alternative to Leasing,

store.extension.iastate.edu/Product/1826, has more

details.

Advantages and Disadvantages of

Different Types of Leases

All types of leases have advantages and disadvantages

to each party. The tenant and owner should consider

this before choosing the type of lease and the terms

that should be incorporated into it.

Fixed Cash Lease

Advantages of a fixed cash lease:

• The lease is simple with relatively few chances for

misunderstanding.

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Improving Your Farm Lease Contract

• The owner is relieved of making day-to-day

operating decisions.

• The owner has very little financial risk.

• The tenant has maximum freedom in planning

and developing the cropping and livestock

programs.

• The tenant has fewer records to keep when

multiple landlords are involved.

Disadvantages and potential problems of the fixed

cash lease:

• A fair cash rental rate may have to be renegotiated

each year.

• Cash rents are likely to be too low in times of

rising prices and increasing yields, and too high

in times of low prices or low yields.

• Selling prices and production costs may be higher

or lower than anticipated when the rental rate is

set.

• Tenants are required to supply more operating

capital.

• Tenants bear all the risk of production shortfalls.

Flexible Cash Lease

Advantages of a flexible cash lease:

• The amount of rent to pay increases or decreases

automatically from year-to-year as prices and

yields change.

• The need for the owner and tenant to renegotiate

the rental rate each year is significantly reduced.

Disadvantages and potential problems of the flexible

cash lease:

• Both parties must agree on a formula for setting

the cash rent each year or every few years.

• Both parties must agree on how to determine the

prices and yields to include in the formula.

• There is uncertainty about how much the tenant

will pay and the owner will receive each year.

Crop Share Lease

Advantages of a crop share lease:

• Risks associated with price and yield variations

are shared.

• The owner is more involved in making decisions

and marketing the grain during the year.

• Both parties share the benefits from adoption of

yield-increasing technology, or unexpected high

yields or prices.

• The owner receives more information about yields

and inputs used each year.

• A second USDA payment limit is created.

Disadvantages or potential problem areas of a crop

share lease:

• The landlord and tenant must agree on how

production expenses will be shared.

• Adjustments for sharing costs for storage and

drying facilities, herbicides that reduce field work,

or fertilizer and pesticide application may have to

be made.

• The cropping plan to be followed and whether the

farm participates in government programs must

be agreed on.

• Added cash rent for the use of buildings and

storage facilities may have to be negotiated.

• If the owner’s and tenant’s grain is stored in the

same bin, marketing decisions have to be made

jointly.

• The landowner may be considered a material

participant, and farm income may be subject to

self-employment taxation.

Custom Farming Contract

Advantages of a custom farming contract:

• There is very little financial risk for the operator.

• The owner benefits from any unexpected high

prices, yields, or government program payments.

• Only one party is responsible for marketing grain

and making production decisions.

• Agreements are usually fairly simple to negotiate.

Disadvantages and potential problems of custom

farming contracts:

• The owner bears all the risk of low yields or

prices, or high input costs.

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Improving Your Farm Lease Contract

• The number and timing of field operations to

be done each year may have to be modified,

depending on weather conditions.

• The operator has to set priorities among the

custom farmed land and other rented or owned

land.

• The owner must communicate to the custom

operator the cropping system, fertility program,

and type of pest control to be used.

• Crop inputs such as seed, fertilizer, and pesticides

must be purchased and delivered in a timely

manner.

• The landowner may be considered a material

participant, and farm income could be subject to

self-employment taxation.

AgDM Decision Tool C2-01, Estimated Returns by

Farm Lease Arrangement, www.extension.iastate.

edu/agdm/wholefarm/xls/c2-01leasecomparison.xlsx,

can be used to estimate returns to a landowner and

tenant under different rental agreements, including

cash rent, flexible rent, crop share, or a custom

farming agreement. Figure 1 depicts the share of risk

for tenants and landowners depending on the type of

lease arrangement.

Figure 1. Share of risk and reward by type of

lease arrangement.

Key Areas of Decision Making

There are certain key areas in developing a farm

lease that should be given very careful consideration

by both parties. The answers to these questions will

depend on the intent of the parties in the leasing

arrangement and the bargaining position of each.

Sharing Costs

A question that frequently comes up is the landlord’s

responsibility in sharing herbicide costs for weed

control that may be a partial or complete substitute

for cultivation or other tillage methods. Most

landlords agree to furnish half of the cost of these

materials under a crop share lease. Some feel that

where no-till or minimum tillage practices are used

they should not have to pay a full 50% of the cost

of herbicides. See publication FM1811, AgDM

C2-15: Survey of Iowa Farm Leasing Practices,

store.extension.iastate.edu/Product/1819, for more

information.

There are many variations in how the costs for

custom application of fertilizer and pesticides are

divided. Therefore, it is advisable to discuss these

items in advance and state in the lease whether the

landlord will share in any of these costs.

Harvesting

How will costs associated with combining, drying,

transporting, and storing crops be shared under a

share lease? When the corn drying facilities are part

of the rental unit, the landlord often furnishes the

dryer and storage facilities. If the corn drying unit

is portable it may be jointly owned, or either party

may own it and charge the other party an established

amount for its use. The fuel and power costs for

drying are normally shared in the same proportion as

the crop is divided. In some cases, the tenant is paid

extra for delivering the owner’s share of the crop

from farm storage to an elevator or processor.

Removing Corn Stover

Under Iowa law a farm tenant has the right to

remove stover (stalks, leaves, cobs) left in a field

after harvesting unless the lease states otherwise.

Stover can be used as feed or bedding, or sold off the

farm. Tenants and landowners can specify a different

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Improving Your Farm Lease Contract

arrangement in a written lease, or limit the amount

of stover removed. See publication PM3053A,

Issues with Stover Removal on Rented Land, store.

extension.iastate.edu/product/14059, for more

information.

Maintaining Fertility

Farm owners often worry about whether a tenant

will maintain or improve the level of fertility on

the farm. Regular soil testing can establish whether

additional nutrients are needed. While tenants

should be discouraged from “mining the soil,”

applying additional fertilizer (especially phosphorus

and potassium) when levels are already testing

high or very high, not only wastes money, but it

also contributes to nutrient runoff and downstream

pollution.

Applying lime to soils contributes to the productivity

by adjusting the acidity of the soil. Lime applications

usually last for several years. If the current tenant

has operated the farm for several years, and they

have contributed to the need for lime, they should

pay for bringing the pH back up to a normal range.

If it is a new tenant then the landlord and the tenant

need to come to an agreement. The landlord might

pay for the lime or the landlord and tenant might

agree to prorate the cost of the lime over a three- to

five-year period. If the tenant pays for the lime and

does not rent the land for the useful life of the lime,

they get a percentage of the lime expense refunded

back to them. Some long-term crop share tenants

may divide the cost of lime.

Controlling Weeds and Maintaining Buildings

Weed control in crops has improved considerably

in recent years with the introduction of herbicide-

resistant seeds, though if needed, a plan against weed

resistance should be discussed. Many landowners

also place a high value on controlling weeds along

fence rows, in ditches, and around building sites.

Indeed, cutting or spraying weeds classified as

noxious is required by law. Iowa Code Section

314.17 (amended 2010) prohibits mowing ditches

before July 15, except within 200 yards of dwellings

and in certain other situations.

Maintaining the appearance and functionality of

farm buildings and fences is often a high priority for

landowners, as well. Even if some buildings provide

no substantial benefits to the tenant, they may be

able to provide labor and machinery for carrying

out repairs at a considerable savings to the landlord.

Owners should generally pay for materials and

supplies, especially if the tenant is providing labor.

While such practices may have little economic

payoff for a tenant, they can contribute to a longer

and more harmonious leasing agreement, and often

require a minimal amount of time and cost. Any

additional expectations by either party should be

discussed and agreed upon in writing early in the

leasing negotiations.

Financing Improvements

There are three ways to handle the costs of making

permanent improvements to a farm property such

as buildings, storage structures, conservation

structures, fences, waterways, and drainage tile.

1. The landlord provides the improvement as part

of the rental agreement with an understanding

that the rental rate will be increased as a result.

2. The cost of the improvements is shared by

the landlord and tenant in some form. If the

improvement is constructed on the farm, the

tenant may furnish labor and machinery for the

job, and the owner may pay for materials. It is

useful to negotiate a provision in the lease for

the tenant to be reimbursed by the landlord for

the undepreciated value of the improvements

if the lease period ends before the useful life of

the improvement is over.

3. The entire cost of the improvements is paid

by the tenant. As in Option 2, a provision for

reimbursing the tenant for the undepreciated

value of the investment is important.

For more information:

FM1780, AgDM C2-07: Lease Supplement for

Investing in Improvements on a Rented Farm,

store.extension.iastate.edu/Product/1803

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FM1814, AgDM C2-08: Lease Supplement for

Obtaining Conservation Practices and Controlling

Soil Loss, store.extension.iastate.edu/Product/1820

AgDM C2-29: Lease Supplement for Drainage,

www.extension.iastate.edu/agdm/wholefarm/pdf/c2-

29.pdf

Participating in Government Programs

Most crop producers in Iowa participate in some of

the commodity programs offered by the USDA. They

are usually designed to reduce price or production

risk for major grain crops. Every few years new farm

legislation is passed which requires landowners

and tenants to make decisions about program

participation.

Under a cash rent lease, the farm program benefits

usually are paid to the operator, because that is the

person bearing the risk. With a flexible cash lease,

the commodity program payment can be included in

the gross revenue used to determine the rental rate

each year. Under a crop share lease, the owner and

tenant usually share in the program benefits in the

same proportion as they share the crop. If there is

a cost to participate in the program, the owner and

tenant must carefully analyze the potential benefits

to each party. Government program decisions can

affect the rental value of a farm for several years.

Conservation programs may offer short-term

payments for following certain practices, as well as

long-term benefits in the form of reduced erosion,

increased fertility, and cleaner water. If the incentive

payments do not completely offset any extra costs

or reduced income to the tenant for following the

conservation practices, he or she may be reluctant

to participate. If the lease has only a short duration,

such as one year, the long-term benefits of the

practices do not offer much incentive to the tenant.

The landowner may have to reduce the cash rent to

offset the tenant’s short-term loss of net income.

Setting the Length of Lease

Many farm leases are in effect for only one year at

a time. In fact, in Iowa oral leases cannot be valid

for more than one year. However, an Iowa State

University survey showed that 41% of cash rent

leases and 50% of crop share agreements had been

in effect between the same parties for more than 10

years. The maximum fixed term for a lease contract

in Iowa is 20 years, but leases can be routinely

renewed if both parties agree.

Multi-year leases provide owners and operators with

an incentive to invest in long-term improvements to

the land and maintain soil fertility and conservation

structures. They also avoid the uncertainty of

building new relationships frequently.

In determining whether a lease is fair and equitable

to both parties, it is necessary to consider the lease

in total rather than looking only at individual

provisions or sections of the lease. One provision

in the lease may be favorable to one party, while

another provision may be more favorable to the

other party, and the two factors may balance out.

Factors that Influence Leasing Terms

Many factors influence the terms of an individual

farm lease.

• The productivity of the land as measured by

historical yields, its corn suitability rating (CSR2)

index, satellite photos, drainage maps, and soil

type.

• The value of the contributions made by each party

in the leasing arrangement, such as labor, land,

crop inputs, machinery, or management.

• The bargaining position and bargaining ability of

each party, and the competition for rented land in

the immediate area.

• What has been customary in the community in

the past.

• Family considerations that cause lease terms to

vary for a relative when compared with other

leases, because the owners have different income

goals, want to help a child get started, or desire to

keep the farm in the family.

• Improvements and facilities on the farm, and the

condition and usefulness.

• Location relative to paved roads, grain processing

plants, and grain buyers.

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• The USDA farm program crop acreage bases and

proven yields assigned to a particular farm. These

will affect the size of some commodity program

payments that are paid to the operator and

owner. Incentive payments for following certain

conservation practices may also be attached to the

land unit.

• Contracts for producing seed or other specialty

crops, or to receive livestock nutrients. Access

to such contracts can enhance the value of a

particular property.

Economic Considerations

There are several important economic factors to

consider when developing a farm lease agreement.

Some of the key economic questions are:

• Does the lease provide a business framework for

the most profitable long-term operation of the

farm?

• Does the agreement encourage the use of the most

profitable levels of capital, labor, and management

in the farm business, as well as adoption of new

technology?

• Are the returns shared between the landlord

and tenant in an equitable manner when the

value of the contributions made by each party is

considered?

• Is the level of cash rent to be paid consistent with

the current land market and the productivity of

this particular tract of land?

• Is the farming unit large enough to achieve

an efficient level of operation and provide a

satisfactory return to both landlord and tenant?

A larger tract of land may be more attractive to

potential renters than a small tract.

Communication

Good communication between tenants and

landowners is essential for building a successful

leasing relationship. Landowners are concerned

about the use and care of their farm. Nonresident

owners cannot observe conditions firsthand. Some

spouses or children, who have not been heavily

involved in the management of the property, may

feel unsure about how to proceed with decisions.

Provide Reports

Tenants can borrow a technique from professional

farm managers who provide their clients with

written reports on a regular basis. Obviously, a

report is more important with a crop share lease

than a cash lease. It may be beneficial for a tenant

with a cash lease to develop an abbreviated form

of reporting, especially for landowners who have

a strong interest in the productivity of the farm.

Sending photos to a landowner who is not close

enough to observe crop conditions regularly is a

very effective communication tool. Digital camera

photos or video files can be easily transmitted

by email, or pictures can be printed and sent by

regular mail. Some tenants are setting up password-

protected or invitation-only websites for individual

landowners to provide information such as soil

maps, fertilizer tests and yield data.

For a crop share lease, keep the accounting of

expenses current. Most input suppliers will invoice

each party individually. However, informing the

owner beforehand that they will be receiving a bill,

and its purpose, is recommended. Tenants renting

from several owners may purchase supplies in

volume and prorate the bill to each of the owners. In

this situation, a copy of the original invoice should

be included. Explain each item on the bill, as names

of farm inputs change frequently. The owner may

not be familiar with commercial product terms for

seed, herbicides, and insecticides, but nonetheless

may have to categorize the expenses for income tax

reporting.

Crop insurance policies and some USDA programs

require information about historical crop yields

before a farm can be enrolled. Landowners need to

have this information each year for making future

decisions about participation in such programs.

See AgDM C2-06: Farmland Lease Annual Report

Form, www.extension.iastate.edu/agdm/wholefarm/

pdf/c2-06.pdf, for an example of information that

could be shared between tenants and landowners in

farmland leasing agreements.

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Have a Written Lease

Written leases make the lease terms more

definite and leave less chance for disagreement

and misunderstanding. People tend to

selectively recall only those portions of

conversations that reinforce their point-of-view.

It protects not only the original parties, but also

assignees and heirs in case either party should

die, or the farm is sold.

A written lease encourages both parties to

consider all aspects of the lease before the

lease period begins. Decisions are made before

the problems occur. In subsequent years, it

provides a basis for changing provisions when

conditions change. Written leases also provide

documentation in case of a tax audit or for

settling an estate. Lease agreements that cover

more than one crop year are required to be

in writing, and leases written for five years or

more must be notarized and recorded at the

county recorder’s office by the tenant.

The document should meet at least the

following minimum requirements:

• It should contain an accurate description of

the property.

• It should specify a definite period for which

the lease is to run.

• It should state the kind and amount of rent,

and time and method of payment (cash

lease).

• It should specify how production, USDA

payments, and input costs are to be shared

(crop share lease).

Sample lease forms, with provisions for multiple

types of lease agreements, are available. See

publications FM1538, AgDM C2-12: Iowa

Farm Lease Form, store.extension.iastate.edu/

Product/1786, or FM1874, AgDM C2-16: Iowa

Cash Rent Farm Lease (short form), store.

extension.iastate.edu/Product/12046.

Legal Considerations

Several federal and state laws affect lease terms. Such legal

considerations promote an efficient business, ensure that

lease provisions are carried out as intended, and protect

the interests of each party. It is vital to seek professional

legal counsel for legal advice and considerations unique

to the state where the property is located.

Self-employment Income

A materially participating landowner must report farm

income as self-employment income rather than as passive

investment income. As such, it is subject to the normal

self-employment tax rate. On the other hand, paying

some self-employment tax will boost Social Security

benefits in the future. A cash rent lease rarely qualifies a

landowner as a material participant, but a crop share lease

may do so. An owner must be in the trade or business

of farming in order to deduct certain expenses such as

interest on operating capital or applications of fertilizer

and lime.

Social Security Benefits

Landowners who are collecting Social Security benefits

and are under age 66 or 67 may have their benefits

reduced if they are actively involved. This depends on

the amount and timing of the income received. When

landowners reach full retirement age, there is no limit

on the amount of active income that can be earned with

respect to Social Security benefits.

See the Center for Agricultural Law and Taxation

(CALT) publications, www.calt.iastate.edu/iowa-tax-law,

for more details.

Estate Tax Valuation

Many farm properties can qualify for “special use

valuation” when the estate goes through probate, which

often results in a valuation below current market value.

This can be advantageous for estates large enough to

trigger federal estate taxes. However, one requirement

for special use valuation is that the decedent or a family

member must have materially participated in the business

five out of eight years prior to death, and a qualified heir

must materially participate for 10 years after the death of

the decedent. The CALT Estate and Succession Planning

for the Farm Workbook, www.calt.iastate.edu/estate-

and-transitions-topics, provides more information and

considerations on farm leases in relation to estate and

succession planning.

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Landlord’s Liens

In Iowa, a statutory (created by state law) landlord’s

lien exists. The lien is applicable whether the lease

is for cash rent, flexible rent, or crop share. The

statutory lien is a lien “upon all crops grown upon the

leased premises, and upon all other personal property

of the tenant which has been used or kept thereon

during the term and which is not exempt from

execution,” and gives the landowner preference over

other security interests such as those of lenders.

The UCC1 form must be filed with the Iowa Secretary

of State’s office within 20 days of when the lease goes

into effect to perfect the landlord’s lien.

More details on legal issues affecting Iowa farm

lease agreements can be found on the Center for

Agricultural Law and Taxation website, Iowa Farm

Leases: A Legal Review, www.calt.iastate.edu/iowa-

resources.

Termination of a Farm Lease

A farm lease automatically continues from year-

to-year unless either party gives a written notice

of termination, separate from the lease. In Iowa, a

lease termination notice must be properly served

in writing by September 1, prior to the end of the

lease year. This applies to both cash and crop share

leases, but not to custom farming agreements. A

written lease may state a date earlier than September

1 for serving a termination notice. The requirement

to terminate a farm lease by September 1 does not

apply to tracts under 40 acres in size (in Iowa) used

primarily for an animal feeding operation. However,

even an oral lease is automatically renewed if it is

not properly terminated in time.

The termination notice must fix the termination

of the tenancy to take place on the following March

1. If notice is not served, the lease continues for

one crop year under the same conditions and

terms. However, if mutually acceptable to all parties

concerned, a lease can be terminated or modified at

any time.

Iowa law specifies three methods of serving a farm

lease termination notice to terminate the tenancy on

the following March 1. The following is quoted from

the Code of Iowa, Section 562.7:

“Notice—How and when served. Written notice

shall be served upon either party or a successor of

the party by using one of the following methods:

1. By delivery of the notice, on or before September

1, with acceptance of service to be signed by the

party to the lease or a successor of the party,

receiving the notice.

2. By serving the notice, on or before September 1,

personally, or if personal service has been tried and

cannot be achieved, by publication, on the same

conditions, and in the same manner as is provided

for the service of original notices, except that when

the notice is served by publication no affidavit is

required. Service by publication is completed on

the day of the last publication.

3. By mailing the notice before September 1 by

certified mail. Notice served by certified mail is

made and completed when the notice is enclosed

in a sealed envelope, with the proper postage on

the envelope, addressed to the party or a successor

of the party at the last known mailing address and

deposited in a mail receptacle provided by the

United States postal service.”

A form, AgDM C2-19: Notice of Termination of

Farm Tenancy is available, www.extension.iastate.

edu/agdm/wholefarm/pdf/c2-19.pdf. Other forms are

available from attorneys.

Summary

A good lease is the first step toward a satisfactory

operating relationship between a landlord and a

tenant. Although it is difficult to develop a lease that

will provide for all possible situations, the parties

should try to anticipate areas where problems could

arise and include provisions in the lease to handle

them. Only the parties involved can determine what

is fair to each and what the final agreement should

be. Many factors influence a leasing agreement,

and each contract should be modified to fit the

individual situation.

Page 10

Improving Your Farm Lease Contract

This institution is an equal opportunity

provider. For the full non-discrimination

statement or accommodation inquiries, go to

www.extension.iastate.edu/diversity/ext.

Revised by Kelvin Leibold,

retired extension farm management specialist

Originally prepared by E.G. Stoneberg,

former extension economist

www.extension.iastate.edu/agdm

store.extension.iastate.edu

Additional References

Publications from Iowa State University Extension

and Outreach are available on the Extension Store

at store.extension.iastate.edu, and the Ag Decision

Maker – Whole Farm Leasing site at www.

extension.iastate.edu/agdm/wdleasing.html:

Rental Rate and Land Value Surveys

FM 1728, AgDM C2-09: Iowa Farmland Rental Rates,

1994-2020, store.extension.iastate.edu/product/1795

FM 1851, AgDM C2-10: Cash Rental Rates for Iowa

Survey, store.extension.iastate.edu/product/1841

FM 1811, AgDM C2-15: Survey of Iowa Farm Leasing

Practices 2022, store.extension.iastate.edu/product/1819

FM 1825, AgDM C2-70: Iowa Farmland Value Survey,

store.extension.iastate.edu/product/1828

Lease Agreement

FM 1801, AgDM C2-20: Computing a Cropland Cash

Rental Rate, store.extension.iastate.edu/product/1818

FM 1724, AgDM C2-21: Flexible Farm Lease

Agreements, store.extension.iastate.edu/product/1794

FM 1823, AgDM A3-15: Custom Farming: An

Alternative to Leasing, store.extension.iastate.edu/

product/1826

AgDM C2-03: Do I Need a Written Lease?, www.

extension.iastate.edu/agdm/wholefarm/pdf/c2-03.pdf

Leasing Forms

AgDM C2-06: Farmland Lease Annual Report, www.

extension.iastate.edu/agdm/wholefarm/pdf/c2-06.pdf

FM 1538, AgDM C2-12: Iowa Farm Lease Form, store.

extension.iastate.edu/product/1786

FM 1874, AgDM C2-16: Iowa Cash Rent Farm Lease

(Short Form), store.extension.iastate.edu/product/12046

Leasing Supplements

FM 1780, AgDM C2-07: Lease Supplement for Investing

in Improvements on a Rented Farm, store.extension.

iastate.edu/product/1803

AgDM C2-08: Lease Supplement for Obtaining

Conservation Practices to Control Soil and Nutrient

Loss, www.extension.iastate.edu/agdm/wholefarm/pdf/

c2-08.pdf

AgDM C2-19: Iowa Farm Lease Termination Notice,

www.extension.iastate.edu/agdm/wholefarm/pdf/c2-19.pdf

AgDM C2-29: Lease Supplement for Drainage, www.

extension.iastate.edu/agdm/wholefarm/pdf/c2-29.pdf

Other Resources

AgDM C2-05: Leasing and Land Ownership Terms,

www.extension.iastate.edu/agdm/wholefarm/pdf/c2-05.pdf

PM 1982, AgDM C2-31: Adapting Crop Share

Agreements for Sustainable and Organic Agriculture,

store.extension.iastate.edu/product/6514

Iowa State University Center for Agricultural Law

and Taxation – Iowa Farm Leases: A Legal Review,

www.calt.iastate.edu/iowa-resources

ISU Extension and Outreach: Farm Management

videos, www.youtube.com/playlist?list=PLyDHx-

rmZpClp3lmdziqhK58m3Zf3Mc3N

Iowa Learning Farms: Talking With Your Tenant,

www.iowalearningfarms.org/resources/talking-with-your-

tenant-series

Iowa Learning Farms: Talking With Your Landlord,

www.iowalearningfarms.org/resources/talking-with-your-

tenant-series

North Central Farm Management Extension Committee:

AgLease101.org was created to help land owners and

operators learn about alternative lease arrangements. The

site includes several samples of alternatives for written

lease agreements.