Surprisingly, some grazing leases are simple verbal agreements, but for both parties’ protection it is always best to get the agreement in writing, according to a Texas A&M AgriLife Extension Service law specialist.
Tiffany Dowell-Lashmet recently gave an overview of grazing leases at the 2015 Texas and Southwestern Cattle Raisers Association Convention in Fort Worth.
“Sadly, the most common situation is two guys in a pasture who come to an oral agreement,” she said. “Some of you may not think you need a written lease, but you will wish you had one if there is ever a problem. Additionally, in order to be legally enforceable, any real estate lease for a year or more has to be in writing.”Lashmet advised to have limits in a lease. For example, if you lease property, Dowell said be clear on what you are leasing.
“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.”
She also advises to consider having stocking-rate limits specified in the lease, particularly when drought conditions prevail.
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, such as pasture shredding, fence repair, barn maintenance and other items that could become issues.
For cattle producers leasing bulls, Lashmet advised to include liability issues in the agreement. For example, if a bull is injured during the time he is 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, she 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.”
Overall, Lashmet 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 at the AgriLife Bookstore, there is a grazing lease checklist available for individuals 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.”
For additional information on agricultural law, Lashmet has an agricultural law blog at http://agrilife.org/texasaglaw/ providing regular updates on various topics and weekly recaps on legal issues in the news.