Leasing out my land for tree farm

[Sara Lung]

Please I need help setting up a 30 year long term lease to a farmer for him to plant almonds. I have 75 acres farm land in No Calif. I want to lease it to him for a flat fee once a year and forget it and go do other things. Like a 30 year Tripple Net lease. This lease could mean 30 years of peace of mind, or 30 years of legal dispute nightmare. I will consult a lawyer later to set it up properly. But I want to learn all about long term agricultural lease first. Can someone give me a good resource for studying about farm land leases? A good discussion forum like BP hopefully please?

Thank you all who share here in BP very much. I have learned so much from you here and will share my experiences too.

[Bill Gulley]

First, is the land mortgaged? You'll need to speak to your lender about long term leasing, but it's not the same issues as with residential, they will want an assignment of lease which is not a big deal so long as you make payments and abide by the terms.

Next, you'll want an escalation clause to increase rents, you can tie the increase to an index. You certainly don't want to rent at fair value today and end up with the same payment 25 years later.

Next, understand that the tenant will be entitled to the crops planted even if the lease is terminated so have your attorney address this in the lease that the crops will be forfeited under default or termination, check your state laws. You can also require the trees to be removed placing the land in like condition when the lease is terminated.

Yes, you can have a triple net, having the tenant pay taxes and insurance and the cost of clearings and maintaining fencing, roadways as well as any improvements, buildings, well, irrigation, whatever. You need to approve any improvements made above some dollar value, like a building upon the property and have your attorney abandon any claims for such fixtures. Hazard insurance can be required as well. Such points are a matter to negotiate.

Ensure the tenant is responsible for all compliance with applicable regulations. County regulations as well, those trees and product are not a big deal but you don't want the back half turning into a tire dump. Specific the purpose for the land use.

The tenant will be entitled to any tax matters related to the crop, trees will have depletion and to any subsidies, unless you are partnering in the shares of the crops (probably don't want to go there if you don't know the business). Your land will be out of service for other ventures to participate in any government program. If the trees are already there and you were in the business see your accountant.

See your attorney. With a good operator it could be a hands free deal with timely payment. It's the case with pulp pines for paper, but messier. Payment are often annual, or semi-annual BTW, what ever is agreed to. So, yes, it could be a great deal without going nuts.

Good luck... :)