Sun, Sand, and Lease Termination or Renewal
Updated: Jun 26, 2020
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Note: This post is not a substitute for legal advice
This post originally appeared in the May 27, 2014 issue of the Delmarva Farmer (vol. 39, No. 12).
Summer is fast approaching us; many of you have your spring crops planted and some maybe preparing to harvest barley, wheat, or rye. Many of you may be considering summer vacations to beach locations or at least trying to get away for a few days. But summer also means that many of tenants or landlords leasing farmland need to start thinking about terminating or renewing your leases. In Maryland, agriculture leases, unless stated otherwise in the lease, require 6 months’ notice to terminate (Md. Code Real Prop. § 8-402(b)(3)). Many of you like to tell me that notice has to be given by June 30th which is true if your lease began on Jan. 1. For many of you, your leases will begin on Jan. 1 (traditional start date for many leases in Maryland), but you should check your lease to determine if it states a date that the lease began on and calculate 6 months from that date to get your lease termination notice deadline. In Delaware, unless your lease states otherwise, then you need to give 4 months’ notice to terminate. The Delaware Code also specifies that all leases start on Jan. 1 unless otherwise stated so in the lease (Del. Code tit. 25, § 6703). Meaning in Delaware, notice would need to be given by August 31, unless the lease states a different effective date. Regardless of when notice needs to be given, you should start considering the hard issue of should you keep leasing under the same terms, keep leasing under new terms, or terminating the lease.
I realize that Dec. 31 seems far away and you really don’t want to think about a return of cold weather, but this are considerations you need to make now. Have factors changed which could mean the lease needs to be terminated. Is the tenant considering purchasing additional acreage and won’t be able to handle the new acreage and the leased acreage? Is the landlord considering developing or selling the acreage and will need the lease terminated in order to do that?
Another reason notice may need to be given is because both parties cannot agree on modifications to the current lease. Was the rent price set during a period of high crop prices and now tenant’s operation won’t support it? Does tenant need to add irrigation to the property and the landlord is unwilling? Does tenant use practices that the landlord does not approve of? In any of these cases, you may have start negotiating a new lease and realize that neither of you will agree on the necessary terms. In many of these cases, giving notice to terminate maybe necessary so both parties are on the same page that the leasing arrangement is over and new tenants need to be found.
Notice to terminate should always be given in writing by either party. Written notice just insures that both parties have a record for their records. When drafting this notice, a good place to start is on the Agriculture Law Education Initiative’s Publication Library’s page. There we have a form termination letter that you can utilize in developing your own. We also have form leases to help you to develop a written lease.