BEYOND THE DIRT | 08.22.2020

Terminating Farm Leases In Iowa

Whether written or verbal, Iowa law stipulates that leases can carry over into the following crop year.  There is one exception to the rule, which only excludes properties under 40 acres being used for grazing, but it’s better not to play in the grey area.

In our experience, selling a farm with open leases for the following crop year will attract more buyers.  As you can imagine, a farmer who buys your farm likely doesn’t want to wait another full cropping season before receiving rights to farm it themselves.  As I heard one farmer put it, “Why would I buy a piece of ground that I can’t farm?”.  Similarly, an investor or absentee owner usually wants the opportunity to negotiate their own terms with the current tenant.  So, terminating the current lease prior to selling the farm provides a blank slate for any new owner.  In most cases, this is going to attract the most buyers, which yields a better outcome for you as a seller.

However, if you’ve never dealt with terminating a farm lease, it is not straight forward. Fortunately, the state of Iowa provides very specific guidelines on how to terminate leases.  First, and most importantly, the termination date is September 1st.  Iowa Code 562.7 specifies 3 methods for terminating a lease in Iowa, as quoted here:

“Notice—How and when served. Written notice shall be served upon either party or a successor of the party by using one of the following methods:

By delivery of the notice, on or before September 1, with acceptance of service to be signed by the party to the lease or a successor of the party, receiving the notice.

By serving the notice, on or before September 1, personally, or if personal service has been tried and cannot be achieved, by publication, on the same conditions, and in the same manner as is provided for the service of original notices, except that when the notice is served by publication no affidavit is required. Service by publication is completed on the day of the last publication.

By mailing the notice before September 1 by certified mail. Notice served by certified mail is made and completed when the notice is enclosed in a sealed envelope, with the proper postage on the envelope, addressed to the party or a successor of the party at the last known mailing address and deposited in a mail receptacle provided by the U.S. postal service.”

An example Farm Lease Termination letter is available here.

KILOTERRA™ is an Iowa Based Land Brokerage specializing in the sale of Farmland and Rural Properties.  From Acreages and Hunting Farms to Pasture ground and Row Crop Farms, we have you covered.  To schedule an honest review of your farm’s value, contact us today.

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