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Oral Leases Renew on September 1, 2022

Oral Leases Renew on September 1, 2022

By Heather Gessner 

Oral leases for agriculture ground in South Dakota automatically renew on September 1, 2022. However, if either party wishes to make changes to the components of the oral lease, written notice must be given by the September 1 deadline.

Once written notice is given, the oral agreement continues until March 1, 2023, when a new contract can take effect. This timing allows the tenant to finalize any harvesting or grazing on those acres. An exception to this would occur if either landowner or tenant does not live up to the terms and conditions in the original lease.

Terms and Conditions

The automatic renewal includes all the current terms and conditions in the existing lease, including but not limited to:

  • Whom the land is rented to
  • When payment is due
  • The per acre rate
  • Stipulations for grazing, hunting or other land use restrictions
  • Any weed control or fencing agreements

Why September 1?

September 1 allows time for management decisions to change based on the continuation of the agreement or any changes to the lease to be incorporated by the current renter. For example, suppose the tenant knows they will be farming the land in the upcoming year. In that case, they can plan for fall tillage, fertilizer applications, winter wheat or cover crop planting, and residue grazing or baling. However, if the tenant will not have the land the following year, many of those plans will be different.

What is the average rental rate?

SDSU Extension and the United States Department of Agriculture-National Agriculture Statistics Service (USDA-NASS) provide information on average land value and rental rate. Both of these surveys are publically available. The reports are similar in the data they provide. However, there are some differences. The surveys used to gather data target different audiences for the rental information. The SDSU Extension survey targets industry professionals (bankers, land brokers/auctioneers, extension staff), while the USDA-NASS survey targets producers (farmers and ranchers). Other differences include the reporting method, cluster-based and individual county-based, and the time of release. SDSU Extension’s report is released yearly, NASS is every other year.

The surveys can be accessed using the navigation below:

Templates and More Information

As more leases transition to written form, knowing what provisions to include is important. A template can help ensure that all lease topics are discussed and understood by all parties involved. The North Central Farm Management Extension Committee Ag Lease 101 website has example leases and more information about leases. Publications include education on the different types of leases available and templates that can be printed and utilized by the landlord and tenant. Some of the topics covered are:

  • Fixed and Flexible Cash Rents
  • Crop Share Rental Arrangements
  • Pasture Rental Arrangements
  • Facility Rent Agreements
  • Livestock Agreements

Creating a written rental agreement provides security for all parties involved. In addition, utilizing the available tools and information aids in making a fair deal between the landowner and the tenant.

Source : sdstate.edu

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