This post is not legal advice
Today, I return to looking at farmland leases and a recent court decision out of West Virginia. The farmland lease in question restricted the tenant to only using the property for an agricultural purpose. But what if the tenant met with a concert promoter and permitted the promoter to use the farmland for a music festival, pending the approval of a zoning permit? Is this a breach of the lease, allowing the landlord to then terminate the lease? Because the parties withdrew the permit application before approval, the district court and West Virginia Supreme Court agreed there was no breach.
In Stiles Family Limited Partnership v. Riggs and Stiles, Inc, the lease in question was between family members, a brother and sister. The farmland lease required the brother to use the farmland for an agricultural purpose unless he had received prior approval. The brother allowed a concert promoter to seek a seasonal use permit to determine if a five-day concert could be held on the leased farmland. Concert promoter filed an application for the permit with the county; sister submitted a written objection and withdrew the application. After the promoter had withdrawn the application, sister filed a complaint alleging the brother had breached the lease by filing the application with the county. The district court dismissed the complaint.
On appeal, the sister claimed the brother had breached the lease, and the district court should have followed the doctrine of anticipatory breach. An anticipatory breach is one where a party demonstrates an intention to refuse performance in the future. The sister claimed the fact the application was filed was enough to show anticipatory breach.
The Supreme Court of West Virginia disagreed, finding that the property had never come out of agriculture and farming had never ceased on the property. The court also points out the application was ultimately withdrawn. None of this was consistent with a party intending to breach the lease. Filing an application which was later withdrawn was not enough in the court’s eyes to breach the lease.
Why Should We Care?
Leasing in agriculture is common, and many leases may be in writing with terms requiring the land be used for an agricultural purpose. This court decision shows that filing a permit application for a non-agricultural use and then withdrawing the application may not be enough to constitute a breach of a lease.
What should you be doing in a case like this? Communicate with the landlord before seeking the permit. This court decision does not discuss what communications may have gone on between the brother and sister before seeking the permit. They may have discussed the issue and the brother thought he had the approval to work with the concert promoter to get the permit; the sister may have changed her mind after filing the application. Or there could have been no communication at all. Discussing these issues before moving forward with an activity that could breach the lease can help preserve the landlord-tenant relationship.
For additional leasing information, see the University of Maryland Extension’s Ag Leasing page with the Grain Marketing Program.
Reference
Stiles Family Limited P’ship v. Riggs & Stiles, No. 16-0220, 2016 WL 6819788 (W.V. Nov. 18, 2016).