statutory termination
Yes, you read it right: our roundup of agricultural law questions includes a question on popcorn--not one we often hear. Below is our answer to it and several other legal questions we’ve recently received in the Farm Office.
A farm lease landlord didn’t notify a tenant of the intent to terminate a verbal farm lease before the new September 1 deadline. What are the consequences if the landlord now tries to enter into a new lease agreement with another tenant operator?
Ohio’s new “statutory termination law” requires a landlord to provide written notice of termination of a verbal farmland lease by September 1 of the year the lease is effective. The law is designed to prevent a tenant from losing land late in the leasing cycle, after the tenant has made commitments and investment in the land. The new law now establishes September 1 as the deadline for a valid termination, unless a lease provides otherwise. If a landowner terminates after September 1, the consequences are that a tenant could either try to force continuation of the lease for another lease period or seek damages for the late termination. Those damages could include reimbursement for work already completed, such as fall tillage, nutrient applications, and cover crops; reimbursement for input costs such as seed and fertilizer that tenant cannot use or return; and lost profits from the tenant's loss of the crop. Find our law bulletin on the new statutory termination date for farm leases on the Farm Office website.
A farmer plans to build a barn and grain bins close to the property line of a neighbor. Does the neighbor have a legal right to stop the farmer from building so close to the boundary?
No, probably not. Because the neighbor lives in a rural area, Ohio’s “agricultural exemption” from local zoning regulations applies to the situation. The agricultural exemption law states that except in limited circumstances, agricultural land uses and structures used for agriculture, like barns, are not subject to township or county zoning regulations and building permit requirements. If this township has building setback requirements in its zoning resolution, for instance, the farmer is not subject to the regulations and can build the barn closer to the property line than the setback provisions require and farmer is not required to obtain a zoning or building permit for the barn. One exception is that if the farmer’s land is less than five acres and is one of at least 15 lots that are next to or across from one another, the agricultural exemption would not apply to the farmer's land. Find the agricultural exemption from zoning in Ohio Revised Code 519.21.
In replacing a line fence, a landowner entered a neighbor’s property and cleared 10 feet from the fence of all brush and trees, even though the neighbor warned the landowner not to do so. Did the landowner have a right to cut and remove the neighbor’s trees and vegetation?
No. Ohio law in Ohio Revised Code 971.08 does allow a person to enter up to 10 feet of an adjacent neighbor’s property for the purpose of building or maintaining a line fence, but it is only a right of entry for the purpose of working on the fence. It allows a person to access the neighbor's property without fear of legal action for trespass. But the law does not allow a person to remove trees or vegetation within the 15 foot area. In fact, the law specifically states that a person will be liable for any damages caused by the entry onto the neighbor’s property, including damages to crops. Additionally, since the neighbor stated that the trees should not be removed and the landowner removed them anyway, the landowner could be subject to another Ohio law for “reckless destruction” of trees and vegetation. That law could make the landowner liable for three times the value of the trees that were removed against the neighbor’s wishes. Find the reckless destruction of vegetation law in Ohio Revised Code 901.51.
Would a milk contamination provision in an insurance policy address milk that could be contaminated as a result of the East Palestine train derailment?
Probably not. Milk contamination coverage provisions in a dairy's insurance policies typically only apply to two situations: unintentional milk contamination by the dairy operator and intentional contamination by a party other than the dairy operator. Contamination resulting from an unintentional pollution incident by a party other than the dairy operator would not fit into either of these situations. But insurance policies vary, so confirming a farm’s actual policy provisions is important when determining insurance coverage.
A grower of popcorn wants to process, bag, and ship popcorn. Does the grower need any type of food license?
No. Popcorn falls under Ohio’s “cottage food law.” Popcorn is on the list of “cottage foods” identified by the Ohio Department of Agriculture (ODA) as having lower food safety risk than "potentially hazardous foods." A producer can process and sell a cottage food without obtaining a food license from the ODA or the local health department. However, the producer may only sell the food within Ohio and must properly label the food. Labeling requirements include:
- Name of the food product
- Name and address of the business of the cottage food production operation
- Ingredients of the food product, in descending order of predominance by weight
- Net weight and volume of the food product
- The following statement in ten-point type: "This product is home produced."
Read our law bulletin on Ohio’s Cottage Food Law on the Farm Office website.
Tags: farm lease, statutory termination, line fences, trees, Zoning, agricultural exemption, dairy, Insurance, popcorn, cottage foods
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September 1 is fast approaching, and this year it’s an especially important date for landowners leasing cropland under an existing lease that doesn’t address when or how the lease terminates. In those situations, September 1 is the new deadline established in Ohio law for a landowner to notify a tenant that the landowner wants to terminate the lease. If the landowner does not provide notice by September 1, the lease continues for another lease term.
This September 1 deadline only applies to verbal or written leases that don’t have a termination date or a deadline for giving notice of termination. If a crop lease already includes a termination date or a deadline for giving notice of termination, those provisions are unchanged by the new law. The new September 1 termination date also only affects leases of land for agricultural crops. It does not apply to leases for pasture, timber, farm buildings, horticultural buildings, or leases solely for equipment.
To meet the new legal requirements, a landowner must give the notice of termination in writing and deliver it to the tenant operator by hand, mail, fax, or email on or before September 1. While the law does not specify what the termination must say, we recommend including the date of the notice, the identity of the lease property being terminated, and the date the lease terminates, which the law states will be the earlier of the end of harvest or December 31, unless the parties agree otherwise.
Tenant operators are not subject to the new September 1 termination deadline—the law applies only to the landowner. Even so, it’s important for tenant operators to understand the new law because it protects a tenant if a landowner attempts to terminate a lease after September 1. In those instances, the law allows the tenant to continue the lease for another term because the termination notice was late.
A lesson this new law teaches is the importance of having a written farm lease that includes termination provisions. The parties can agree in advance when the lease will terminate or can set a deadline for notifying the other party of the intent to terminate the lease. Such terms provide certainty and reduce the risk of conflict and litigation over a “late” termination.
Read the new “termination of agricultural leases” law in Section 5301.71 of the Ohio Revised Code.
Tags: farm lease, farm lease termination, statutory termination, September 1, crop lease
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Is it time to start thinking about your farmland lease for next year? We think so! There are new legal issues and updated economic information to consider for the upcoming crop year. That’s why we’ve scheduled our next Ohio Farmland Leasing Update for Thursday, August 11 at 8 a.m. Join the Farm Office team of Barry Ward, Robert Moore and Peggy Hall for an early morning webinar discussion of the latest economic and legal farmland leasing information for Ohio.
Here are the topics we’ll cover:
- Ohio’s new statutory termination law for verbal farmland leases
- Using a Memorandum of Lease and other lease practice tips
- Economic outlook for Ohio row crops
- New Ohio cropland values and cash rents survey results
- Rental market outlook
There’s no cost to attend the Zoom webinar, but registration is necessary. Visit https://go.osu.edu/farmlandleasingupdate for registration. And if you’re already thinking about your next farmland lease, also be sure to use our farmland leasing resources on https://farmoffice.osu.edu.
Tags: farmland lease, leasing, rental rates, rental market, farm leases, statutory termination
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Lawsuits over late terminations of farm crop leases might reduce after a new law in Ohio takes effect on July 21, 2022. The law will affect situations where the parties in a farm crop leasing arrangement have not addressed a date or method for terminating the lease--typically verbal leases, although a written lease might also fail to address termination. A landlord in those situations who wants to end the crop lease will have to do so by delivering a written notice of termination to the tenant operator by September 1. A late attempt by the landlord to terminate the lease after September 1 would not be effective and the lease would continue for another crop year, although a tenant operator can choose to agree to accept a landlord's late termination.
Why the new law?
It's been common practice in Ohio for landlords and tenants to enter into a simple farm lease arrangement, usually verbal, that repeats from year-to-year with the only term up for discussion sometimes being the rental amount. Other important leasing details are overlooked, such as when the lease ends and what one party must do to terminate the lease. The lack of these details is especially problematic when the land changes hands due to a sale or a landlord's death, or if another operator tries to "bid up" the leasing amount. Without any termination notice provisions, the landlord might try to terminate the leasing arrangement in late Winter or early Spring, after the tenant operator made investments on the belief that the lease would continue for another crop year. f the operator stands to lose investments and income, litigation is the likely outcome and a court will decide if the landlord attempted to terminate the lease "too late." We'e seen many cases like this in Ohio.
Ohio's new law aims to reduce farm lease termination conflicts by requiring the landlord to give advance notice of the intent to terminate the lease. A termination by the landlord by September 1 should provide the operator with sufficient notice that the lease is not continuing, keeping the operator from making post-harvest and end-of-year investments for the next crop year. This is a common law in other states, and Ohio is one of the last states in the Midwest to enact this type of "statutory termination date" for farm leases.
New law highlights the importance of a written farm lease
We always encourage parties to put their farm lease agreement in writing. A written farm lease can detail important terms such as termination, preventing uncertainty in the future. A written lease also complies with Ohio's Statute of Frauds. That law requires a farm lease to be in writing, meaning that verbal leases aren't automatically enforceable in a court of law. Due to the Statute of Frauds requirement, parties to a verbal farm lease must convince the court that their lease deserves an "exception" from the law and if the exception is granted, would have to prove the terms of their verbal agreement. Verbal leases are always at risk of non-enforcement and disagreement over the terms of the lease.
Using a written lease, the parties may agree to their own termination procedures and dates and the statutory termination law would not apply to their leasing arrangement. The law is simply a default for those crop leasing situations that do not address termination.
Details of the new law
We've developed several questions and answers that help explain the new law, available here and in our newest Law Bulletin, Ohio’s New Statutory Termination Date for Farm Crop Leases, available on farmoffice.osu.edu.
What farm leases are subject to the new law?
The law applies to both written and verbal “agricultural lease agreements” that address the planting, growing, and harvesting of agricultural crops. The law does not apply to leases for pasture, timber, farm buildings, horticultural buildings, or equipment.
What if a lease already addresses termination?
The new law only applies when a leasing arrangement has not provided for a termination date or a method for giving notice of termination. If the landlord and tenant operator have addressed these provisions in their leasing situation, the provisions are unchanged by the law and continue to be effective.
When is the termination effective?
If a landlord gives notice of termination in writing by September 1, the law states that the lease is terminated either upon the date harvest is complete or December 31, whichever is earlier. However, the law allows the parties to establish a different termination date if agreed to in writing.
How must a landlord give notice of termination?
The landlord must give the notice in writing and deliver it to the tenant operator by hand, mail, facsimile, or email by September 1. The law does not require using specific language for the notice, but we recommend including the date of the notice, an identification of the lease property, and a statement that the lease will terminate at the end of harvest or December 31, 20____ unless the parties agree in writing to a different date.
What if a landlord terminates after September 1?
Unless the leasing arrangement provides otherwise, a termination delivered by the landlord after September is not effective and the lease would continue for another period. However, the tenant operator could agree to accept the late termination. If so, the parties should both sign a termination date agreement.
Can a tenant terminate a lease after September 1?
A tenant operator is not subject to the new law and can terminate a lease after September 1 unless the leasing arrangement provides otherwise.
Help with farm leases
Our farmland leasing library contains several resources about the legal aspects of farm leases. We also address the economic side of farmland leasing with data on cash rents and farmland values, custom rates and machinery costs, and enterprise budgets. If you need assistance finding an agricultural attorney who works with farm leases, we can help with that too; contact us by email at aglaw@osu.edu. We'll do our best to help you reduce the uncertainty and risk of your farm leasing arrangement.
Tags: farmland leasing, farm leasing, farm crop lease, statutory termination, farm lease termination, H.B. 397
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