Landlords Also Need Planning
Mar 06, 2014
From Legacy Moment (02.14.2014).
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At least once a week, I receive a question from a non-farming landlord regarding the succession of their family's farmland. The inquiries are usually straightforward and easily addressed. However, I do receive calls from landlords who are uneasy about their farming tenants, but they don't know how to approach them or even what to say. If you're farming leased land and haven't inquired about the landlord's plan for succession, you ought to be troubled. We all know the stories of a newly minted landlord who inherits property one day and puts it on the market the next. Or worse yet, doesn't know the current tenant personally and puts the lease out for bid, not realizing there's a difference between good stewardship and tilling every last dime out of the ground.
Please acknowledge that both landlords and tenants are cooperators in a business relationship. They exist to provide reciprocal benefits to each other, which also means both are mutually dependent. Although farmers take pride in family ties and handshake agreements, farmland has value, especially to a new owner living in the big city. With input costs continuing to rise and equipment loans weighty enough to rival those of a nice home, it behooves you to secure written leases and formal buy/sell agreements.
I strongly encourage both landlords and tenants to plan for succession. As cooperators in the business, each should know the other's plan and, if possible, have a stake in the outcome. It is prudent for you to plan for your situation before you ask the other what their family might have planned. Use the following questions to initiate the conversation:
1. What have you done about succession?
2. Do you want the farm/land to remain in the family?
3. How can I help you achieve your goals for succession?
News & Resources for You:
This review tool will help you assess the viability of your current buy/sell agreement and identify those areas that should be updated.
Whether you're a landlord or a farming tenant, Legacy Project Workshops are designed to help farm families take the critical first steps in starting the succession planning process for their operations. Registration is still open for next week's events in Michigan, Ohio, and New York.
Have you visited eLegacyConnect yet? Here's a quick overview.