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In a case out of Clayton County:

The tenant had 85 acres of farmland owned Strawberry with a written lease that had automatically renewed each year . The tenant was terminated timely by the city. The tenant complained about how he was terminated (by the city clerk and not the council) but court found that the clerk followed the law and didn't need a separate vote of the council to terminate.

The tenant also took issue with him being barred from harvesting cornstalks following termination but the written lease clearly prohibited him from doing so, even though in a prior year he had made bales.

The tenant's only successful argument was that he was entitled to some prorated credit for lime application. A written amendment to the parties' lease provided that lime and trace materials were to be allocated over 7 years and that "if the Lease [was] not renewed," the tenant was to be reimbursed by the landlord "to the extent Tenant has not received the benefits, on a pro rata basis." The lime application was two years in when the lease was terminated. Strawberry Point unsuccessfully tried to say the lime was not an authorized expense, but because lime was primarily a tenant benefit, the city didn't have to authorize it. Just like it doesn't have to authorize herbicide.

It is clear that if this had been a handshake deal between two parties, it would have been even messier to determine who is entitled to what. As to the lease, I would think three years would be better fit for lime depletion, not seven. Consider the next level of argument, unless it is clearly spelled out in the lease, the lime proration can be determined based on uptake, cost of application, cost of product or some other method. As to the uptake, I have spoken to six different labs over the years and have gotten six different uptake rates (while similar, are still slightly variable) for minerals. Consider also how uptake would be determined, as unless a grid sample is used, data drawn at the beginning of the lease and at the end may not be really be comparing data points at all.

One Horse is all it takes.

This month, the Iowa Court of appeals ruled that one 38 year old nag horse was all that is required to create a farm tenancy. For those who rent out farm acreages, this is a big development. A farm tenancy needs to be terminated timely and appropriately by 1 September, while a residential lease can be terminated at various times. Until 2013, this would have not been a concern as at all. Unfortunately, the legislature changed the law in 2013 , removing exception from the 1 September rule for less than 40 acres unless animal feeding was the primary purpose. (read that to mean hog buildings built on leased ground). One horse is not an animal feeding operation, so 1 September is the date to keep in mind. I would think the legislature would adjust this as even the court thought "it may seem absurd to deem this tenancy a farm tenancy," but left with the black letter of the law, they really had no choice.

Lease Rates

According to Iowa State, farm rental rates slid 6.5% but that slide is not as fast as the crop cash prices. Unless a rally happens in the fall, expect tenants to be looking at their bottom lines and trying to find the best value for their rental dollars.  

Thursday, April 02, 2020
  • Patrick B. Dillon
  • Jill Dillon
Dillon Law PC
Patrick B. Dillon enjoys finding solutions to legal issues and catching problems for clients. Pat practices in the Sumner office regularly represents clients in district, associate district and magistrate courts for agricultural, real estate, criminal and collection issues. He drafts wills and trusts, creates estate plans and helps clients through the probate process.
Dillon Law PC
Jill Dillon focuses on family law, estate planning and IRS matters. Jill is a University of Northern Iowa undergraduate (Political Science Cum Laude) and a Drake University Law School graduate. Jill spent extensive time advocating for low income tax payers in front of the IRS and the State of Iowa Department of Revenue while at Drake.

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