On renting, buying and partnering a farm

Renting or buying a farm is a big deal, one of the most important decisions that a renter or a landowner will make. This article concerns some thoughts on the business aspect of renting and buying. You want a written document that will guide each party in what the other expects, and will secure to each what he has to have to make an economic deal. Both should remember that the other has to have certain things to profit from the exchange, to make it worthwhile.

First, a note on using a lawyer. A lawyer is like an architect, in fact more so, in that you have to tell him what you need (or want). The lawyer knows very little about the farming business. He doesn’t do farming, he has never seen the farm and he doesn’t know the people involved. The farmer is the expert on what has to be done, it’s his life, and he has the responsibility. Don’t depend on a lawyer who doesn’t have training or experience in writing the specialized kind of contract you need. You must take the initiative. Lawyers who know farming are “rare as hen’s teeth” in West Vrginia

Any lawyer can help you avoid falling afoul of the law in adversarial situations, but that is about all. Lawyers all think farming is so simple - there is nothing to writing a farm lease or other document. But they will invariably follow a house or business model for the contract, not a farm model. You need to think about everything you need and be sure it gets in. And like everything else in life, you may still get surprises. Don’t be passive.

Renting is not going to involve big money. The best interest of both parties, renter and landowner, is to keep the place up and avoid adversarial relations with the neighbors. The property that is to be rented must be clearly stated and what the renter can do with it described, and someone designated to be the lessor contact person if a group owns the farm. It should say when the money is due and how much, and the length of time the farm lease is to last (such as ten years, or ten years and as long thereafter as both parties agree).

At this point the lessor’s interest and lessee’s interest diverge. The lessor’s interests include: determination of who will be responsible for damage – if cattle get out, farm assets are damaged, etc. What is the lessee allowed to do? Does it include cutting timber, hunting, fishing, digging mushrooms, ginseng, sassafras and the like? Camping? If brush hogging is required, it should be written in. Likewise fence repair, any required rebuilding of fence, maintenance of roads, etc. that the lessor expects.

The lessee’s interests include: can the lessor drive through the fields at any time? Can the lessor make any use of the facilities? Who is responsible for upkeep? If the lessee must leave, is the cut and stored hay his? Does he have to clean out the barn/s before leaving?

Both parties should have a clear understanding of reasons and procedure to remove a farm tenant. Where housing is not involved, it can be rather simple. If the renter plans to live on the rented farm there is a lot of additional law that becomes applicable because of that. If you keep an eye on the property and notice and act on problems early enough, it helps a lot. Especially if a rented house is involved.

Some things beyond the contract should be ascertained by the lessee before signing. Are there continuing complaints from any neighbor, such as straying animals, odors from farming, excessive dust from a neighbor’s road, a history of children or dogs in the neighborhood intruding, complaints about manure in the waterways and so on? If so, it would be best to look elsewhere. If you have any suspicion, talk around the neighborhood. Don’t rely on the lessor to act against his own interest, even if that would be the moral thing to do! Observe, observe, observe and think, think, think!


The most important part of buying a farm is when. Land varies immensely in price over the decades. In 1962 any farm sold for $20,000, regardless of how large the farm and how fine the house was. Today that wouldn’t buy ten remote acres with a tent on it! Part of the difference is the decline in value of the dollar. It has lost (2008) 18% of its value since 2000, according to the Official United States Inflation Calculator. Part of the low price of land in 1962 was at that there were tremendous farm surpluses. This depressed what you could make from a farm, and consequently what the farm was worth. The population was lower, and industry was booming, too. The lucky ones of us coming of age at that time had the chance of a lifetime. However, $20,000 in 1962 represented as much “real money” (purchasing power) as $140,678 as this is written in 2008 (determined by the Consumer Price Indicator calculator).

The present may or may not be a good time to buy a farm. The currency is very unstable, but the demand for food is rising. Grain looks good, but other countries can produce cattle, which can be imported, so demand for meat is difficult to predict. Land is notoriously high now. Maybe if you have a good income elsewhere and want to invest it, or money to invest, or adjacent land is available, it might be a good risk. At best it won’t disappear completely like so many paper assets (stocks and bonds) did in the “Great Depression” of the thirties. There has been a saying around Central West Virginia for the last two decades or so, “If you want to go into farming, get a car dealership first.” The ordinary farmer should consider renting land, if possible, until he has the assets to operate the new land and put up a hefty down payment.

The second most important part is where. If you already own, and adjacent land comes up for sale and it can be farmed, this might be your chance. Adjacent land is much more valuable. Take it from someoneone who has farmed two tracts 12 miles apart. Adjacent land will reduce fence by the common border, will eliminate the need for travel and transportation of equipment and farm products.
You must have a very good farm on the other end to overcome the cost of much travel.

If you are buying a residence too, the thoughtful person will also be aware of the cost of too much distance from stores, utilities, school bus routes and also church, if so inclined. The quality of the land should be of obvious importance in buying a tract to be farmed.

If you are buying or selling to a family member or someone you trust, consider a “land contract.” When you buy something that will take a long time to pay for, the interest will be one third to one half as much as the principal. If the buyer doesn’t need all the money immediately, he can finance it for you. This arrangement cuts out the middleman who makes the loan, because the seller receives the interest. You should be able to negotiate a lower rate from the seller than a standard lending agency. You will need to talk to someone familiar with this practice and will want to work with a lawyer.



The written agreement between the four parties (including the two wives) when we purchased the our farm was written by a Harvard Law graduate, and was so inadequate one manager of Farm Credit was on the verge of denying us credit until we got something better. The agreement made no provision for the responsibility of the parties. My partner never did any work, and almost nothing to compensate. I made two or three trips to State College, PA, home of Penn State, to get something this Farm Credit manager was happy with. (They have expertise in doing work for serious farmers at Penn State.) I told the Penn State lawyer straight out what the situation was. He dallied and I dallied and finally the manager moved elsewhere and the whole thing fell through. I don’t know if my partner would ever have agreed to it. A partnership contract is difficult, of course, because duties would have to be defined if written properly. There’s nothing worse than a non-performing partner. I know, I’ve been there. Make a dime, share a nickel, loose a dime, make it back by yourself!

A partnership agreement should include the following, at least: What the duties of each person would be, how decisions will be made, what the labor, money, machine, land, etc., input from each partner will be, how earnings will be divided and when (monthly, annually), and how expansion will be handled, or reduction, and termination. Also, if there is housing involved, who will live in each dwelling, who will be responsible for upkeep and repairs additions and such.

There should be formal statement of how records will be kept, both of finances and farm operations. This could be considerable on farms keeping livestock. How will demands such as divorce and disability be handled? These do happen, and they can destroy all the partners.

It takes a certain amount of “guts” and diplomacy to do this. You have to be objective, though, to avoid hard feelings later on and to assure continuity. You must be objective, It’s better to be prepared.