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Leasing Land

What to Include in a Lease Agreement?

April 6, 2021

Land is a valuable asset, and when it comes to leasing, tenants want to have a hassle-free experience just as much as landowners do. This all starts with a detailed and comprehensive lease agreement that will prevent unexpected costs, property damage, and legal problems for both parties involved.

Don’t leap into a lease agreement without ensuring that the following four items are included:

1. Established Permitted Uses

Is there a pond or lake on the property? If so, will tenants be allowed to fish? Will it be catch and release only, or will they be allowed to keep certain species in accordance with applicable state law? If hunting is allowed, what species will they be able to harvest? Will tenants have access to any buildings on the property? Will they be allowed to park their camper on the property during the term of their lease? If so, where?

These are all common questions that, if not answered in detail, could leave things up in the air and cause problems down the road. Thus, permitted uses for the property being leased should be clearly identified in a lease agreement. These establish all the ways a tenant is allowed to use the property with all other property rights being reserved by the landowner. 

By identifying permitted uses, landowners can eliminate future problems and tenants will have a solid understanding of what they can and can’t do on the property being leased.

2. Clear Ground Rules

Time is valuable and should not be wasted. When leasing land, tenants and landowners alike know this to be true. That’s where having clear-cut ground rules in a lease agreement will come in handy. 

Ensure there are reasonable rules about vehicle access (on and off-road use) in the lease agreement. Trucks, all-terrain vehicles, and dirt bikes can do serious damage if rules haven’t clearly identified where tenants can go. This could cause landowners to spend time, money, and effort repairing damage that could have easily been avoided.

Another example includes setting the ground rules for communication between the tenant and the landowner. If the tenant and landowner need to speak with one another, what is the best way for them to get in contact? Providing the other party the lease agreement with emergency contact information would be wise. What if the tenant is unable to get in touch with the landowner? Is there anyone else they can or should contact?

In the end, having clear ground rules included in the lease agreement will save both parties time and effort. 

3. Maintenance Requirements

Will the tenant or landowner be responsible for the maintenance of the property during the term of the lease? Who will be in charge of snow removal or fixing a leaky roof on the cabin that’s on the property?

No matter how long a lease agreement is set for, this is another vital piece of information to include in a lease agreement. Landowners should factor in maintenance costs and should clearly identify whose responsibility it is to perform the maintenance. 

For accurate information, landowners should consult a leasing specialist for suggestions on identifying a budget for maintenance requirements.

4. Adequate Insurance Coverage 

It’s pretty easy to see how important insurance coverage is when owning a house or car, but that same rule applies to leasing as well. 

For land leasing where tenants may be using the space for things with potential risks such as hunting, farming, mining, commerce, or more, tenants will want to make sure that they’re adequately covered. Inadequate insurance coverage could leave parties open to civil lawsuits.

Landowners should make sure that information on insurance and how it will be maintained is included in the lease agreement. A commercial general liability policy, commonly in the amount of $2 million aggregate and $1 million per occurrence should be included. The landowner and tenant should both be covered in the policy. 

Use a Leasing Specialist

A Leasing Specialist has the knowledge to advise the landowner in regards to establishing a lease price, setting the ground rules, potential maintenance costs, and how and where to obtain proper insurance. Tenants and landowners should always consult with an attorney for any legal advice or issues. Attorneys can also be helpful in reviewing any contracts associated with the leased property.

A little planning and forethought before entering into a land lease could save everyone involved valuable time and money.

Get in contact with one of our Leasing Specialists by clicking here.

About the Author
National Land Realty specializes in farm, ranch, recreational, timber, country estates, and commercial development properties. We’ve created the world’s best way to buy, sell, lease, and experience land. One seamless hub of knowledge, unprecedented data, and game-changing technology— accessible from anywhere. Our agents offer local expertise, with the support of a national network.