2.6 Effective investigative techniques are used to clarify potential tenants` interest in real estate. Clarity – Are each party`s obligations clearly defined in the written lease agreement? ___yes ___no Despite the fact that most leases are based on local market prices, tenants and landlords should take the time necessary to calculate their costs and the potential revenues from their proposed agreement. This will help them determine if the deal will be profitable. Calculation and knowledge of costs and potential revenues is useful even in the absence of good comparative data on the market. Insurance – Landowners may consider requiring proof of crop insurance, especially if rent has not been paid in advance. Tenants and landlords should also discuss insurance to protect against possible environmental damage. If the tenant plans to store harvested crops on the landowner`s land, there should also be insurance rules for protection against theft or damage. In any of the above cases, the property must be used in agriculture by: Miscellaneous – The lease may contain a clause that would terminate the lease in the event of specific natural disasters. For example, if the land was flooded and the tenant was unable to use the property, it would be unfair to insist that the tenant continue to pay the rent in cash, unless the rent originally calculated took into account the risk of flooding. Other unforeseen circumstances are the installation of a highway, gas line, light sites, etc., on the leased land, which leads to inconvenience and additional operating costs for the tenant.
In some cases, instead of terminating the lease, it may be considered desirable to renegotiate the terms of the lease or to compensate the tenant for any additional costs or reduced income that may be incurred by them. Setting custom operators for cutting jobs can solve this problem. In addition, a share lease agreement under which the landowner shares input costs may also meet the requirements of the agricultural CRA. Discuss these agreements with your accountant. Communal zonal restrictions – The tenant enters into a farm lease with the express intention of carrying out agricultural operations; It is important that the landlord assures the tenant that the land for such use is properly divided into zones.. . .