Your farmland leases and the importance of September 1st in Nebraska and Iowa…
As we approach September 1st:
There is evidence that in Nebraska and Iowa, most farm leases are oral year-to-year leases. This is important because Nebraska law governs how to terminate such leases and September 1 is a critical day should a landowner wish to terminate an oral lease.
First, the law:
The Nebraska Supreme Court has ruled that a farm lease begins on March 1 for oral year-to-year leases. To terminate an oral year-to-year lease, however, the Court has ruled that six months notice must be given prior to March 1. In other words, to terminate an oral year-to-year lease, a notice to quit must be received by the tenant prior to September 1 of the preceding year.
Second, some examples:
Example 1:
The landowner as an oral year-to-year tenant. Landowner decides she wants to terminate her lease with Tenant because she wants her nephew to rent the land beginning March 1, 2020. Landowner sends a letter to Tenant and Tenant receives it October 30, 2019. Is the lease terminated so the nephew may rent it on March 1, 2020?
No, the lease is not terminated because an oral year-to-year lease requires a tenant to receive notice by September 1, 2019. Here, Tenant received notice from Landowner on October 30, 2019. This means that Tenant may lease the farm land until February 28th, 2021.
Example 2:
Same facts as above except now, Landowner sends a notice to quit to Tenant, which Tenant receives on August 30, 2019. Is this lease terminated so the nephew may rent it on March 1, 2020?
Yes, the lease will terminate as of February 28, 2020. Keep in mind the lease between Landowner and Tenant continues through February 28, 2020 but the Tenant has received a proper six months notice of termination, which is required under Nebraska law.
Third, some gotchas:
The above represent the default rules in Nebraska for termination of unwritten year-to-year leases. The landowner and tenant can come to a mutual, voluntary agreement to modify the default rules. Thus, if both the landowner and tenant agree, an unwritten year-to-year lease may end in June with 30 days notice. The key is that there must be a mutual, voluntary agreement to do so.
If a landowner is terminating an unwritten year-to-year lease, it is advisable to do so with a letter and not in-person. Additionally, it is best to send the notice to quit with time to spare from the September 1 deadline, as the tenant must receive the notice by September 1; it is not relevant when the landlord sends the notice.
Moreover, the above rules do not apply to written leases. To terminate a written lease, the landowner and tenant must merely review what the lease states about termination and follow the lease provisions.
If you need clarification or just want to ask about dates and deadlines, you are welcome to contact us. We’re happy to help farmland owners. Call Ashley Kruse Broker/Owner (402) 719-4208 today!