Land lease agreements are made between entities who want to utilize a piece of land and those who own that land. The agreements can be for commercial, agricultural or recreational purposes. When writing a land lease agreement it is important to make sure responsibilities and expectations are spelled out clearly so there is little doubt between the parties on how the land will be used and managed.
The description of the land should be as specific as possible. This would include the total acreage amount that the lessor owns, and, if the lessee is using less than the total amount, the portions the lessee will be utilizing. The boundaries of the property should be clearly delineated to eliminate confusion and ensure the lessee does not infringe on acreage he is not allowed to use or on neighboring properties owned by entities not involved in the agreement. A topographical map that shows how the land is laid out can be a useful addendum to the description.
Use of Property
How the lessee will use the property should be detailed carefully. Land lease arrangements are usually done for specific purposes, such as allowing a farmer to plant crops or a hunter to utilize the land during hunting season. Any other activity that has not been agreed upon is typically disallowed. The agreement should detail how the land will be used as well as who will be responsible for maintenance and improvements on it. Expected improvements such as entry roads, utility lines or buildings to support the activities of the lessee should be specified. If the lessor wants to keep the improvements after the agreement ends, then a method should be established for the lessee to receive a return on the cost of his investment in the land. If the lessor wants the land to be returned in its original condition, this should be written into the agreement.
Duration of Agreement
A land lease agreement should have specific starting and end dates. A provision can be written into the document to extend the agreement for specific time periods. A lessor should stipulate the terms to terminate the lease if the land is not used in accordance with the agreement.
Payment terms and amounts should be clearly stated. The lessee should be able to provide proof of liability insurance to support his activities in case of injuries to people or damage to property and belongings. As an extra precaution, the lessor might also wish to have her own liability policy in place to cover any potential damages in the event the lessee fails to provide adequate coverage for injuries to people and property.
Both entities should have their legal representatives review the documents to ensure compliance with contract laws. Disagreements can arise between the lessor and lessee that may involve going to court to settle the dispute. A contract attorney can verify that the language and conditions in the agreement are enforceable in case any legal action arises from using the land.
Griffith Pritchard served as a senior branch manager and banking officer for M&T Bank. He specialized in small business and personal financial, credit and banking products. He also has extensive experience in small business sales and non-profit management. Pritchard is a graduate of Hobart College.