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A Farm Property Lease "Primer"
The Cook County Farm Bureau frequently
receives requests from members regarding what the "Fair Rental Rate"
is for
property.
There is no simple answer to the question
other than "Fair Market Value." In other words, what is "fair"
comes down to what two parties, the landowner and a farm
producer, can agree upon.
The value of a farm property for farm
production use varies based on a number of factors. Some of
those factors include:
Soil Quality
Contiguous # of acres
Drainage
Accessibility
Proximity to other farm properties
Nutrients in soil
Neighboring property uses
Farmowner’s requested farming
practices/crop/livestock type
As a farm property owner, an important
consideration should be to have a tenant that treats the soil
and property as you want it treated, both for now and equally
important, for the future. This includes property drainage
systems, replacing soil nutrients from year to year, caring for
the property and even improving it.
Reminder: Under Illinois Statute, most farm
leases in Illinois have an October 31st deadline date
prior to the upcoming growing season for legal notification to
change the farm lease or to switch tenants
(see state statute by clicking here.)
Oral (verbal) leases, common in the past, are
still legally binding in the State of Illinois. However, we
encourage as a general rule that a written lease be developed to
preserve details when memories may differ at a later date.
Our friends at the University of Illinois
have developed (see below) a sample cash lease and share lease document
which can be revised to fit individual needs.
Cash Farm Lease
Crop Share Farm Lease
You may also want to work with your legal
advisor for your specific needs.
While a "Fair Market Value" lease rate is
based on what the two parties can agree upon, there are several
sources of information that farmowners can access for lease rate
ranges and historical data.
Sources include:
www.ilfb.org
www.cookcfb.org
www.farmdoc.uiuc.edu
www.ispfmra.org
www.nass.usda.gov
Unfortunately, there is not a lot of data
relating to smaller farm plot leases which are common in the
Cook County area…leading one back to the "farm market value"
agreement between two parties.
Copyright CookCFB
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