FOR ASPIRING FARMERS

What has to be in a flexible farm lease?

A flexible farm lease has to say which land and who's bound, the term and what happens at the end, exactly how the rent is worked out, who looks after what, what happens to improvements, and how it ends.

Why writing matters

A written lease matters because without one the terms are hard to prove, and the person who comes off worst is usually the tenant who has just spent four years improving the place.

The rules differ by state. What applies on one side of a border may not apply on the other, and a template written for somewhere else can't be relied on.

Before you sign, the question to put to a solicitor is whether a spoken lease would hold for this term in this state, and what that law gives you that the document doesn't say.

What the lease must cover

• The land and the parties. Exactly which land, and exactly who's bound.
• The term, and what happens at the end. Including any right of renewal and how it's exercised.
• The rent, and exactly how the flexible part is worked out. This clause makes or breaks a flexible lease. What's the base, what's the share, and a share of what? Can a bad year take the rent below the base, or is the base the least that's paid? Who calculates it, from what records, verified by whom, and when is it paid? "A share of profit" is an argument waiting to happen.
• Rent review. Whether and how the base moves over time. On a long lease this matters enormously. Fixed rent is usually a percentage of land value but paid out of farm profit, and those numbers don't move together. A review tied to land value rather than farm returns brings that problem back.
• Obligations on both sides. Maintenance, repairs, fencing, weeds, rates, insurance, water. Itemised.
• Improvements. What the tenant may do, what needs consent, and what the tenant is compensated for at the end. Don't let this clause be vague.
• A condition report at the start. Photographs and a written record. Cheap, dull, and the only thing that settles the argument later.
• Sustainability conditions, if the owner wants them. Stocking rates, fertiliser, chemical, exclusion zones, native vegetation.
• Annual review meetings. Scheduled in the document, so problems surface at a table rather than at the end.
• Dispute resolution. And how either party can end it early.

Read more: What kills a flexible farm lease? and What to ask your solicitor and accountant before you lease a farm.

This is general information, not legal or tax advice.

The full guide, You Can Own a Farm, is free at cultivatefarms.com/resources.

You can build your own plan at cultivatefarms.com/plan.