Flexible-Cash Crop Lease Agreement (Page 3 of 7) in pdf

a base rent tied to a base yield and a base

Put The Agreement In Writing

price for each crop. Any or all of the

It is highly desirable to put the terms of a lease

variations for flexing for prices or yield can be

agreement in writing. A written lease

used with this approach to calculating

agreement enhances understanding and

flexible-cash rents.

communication between all involved parties,

serves as a reminder of the terms originally

Flexed Cash Rent =

agreed upon, and provides a valuable guide

Base Rent x Curr. Year's Price x Curr. Year's Yield

for the heirs if either the landowner or tenant

Base Price

Base Yield

dies.

One variation of this method is to set rent

It is especially important to have the details of

equal to the value of a given quantity of the

a flexible-cash lease agreement in writing.

crop. The price used for determining the

The calculations of flexible-cash rent are more

value would be based on price quotations at a

complicated to figure and easier to forget than

particular location and period. For example,

for other lease agreements.

"the amount of cash rent shall be equal to the

value of 5,000 bushels of wheat based on the

Every lease agreement should include certain

July 15th closing price at Jones' Elevator."

items -- the names of the parties involved, an

accurate description of the property being

Another variation of this method is to

rented, the beginning and ending dates of the

determine a minimum base rent and then

agreement, the amount of rent being paid and

adjust it upward on a percentage basis as the

when and how it is to be paid, and the

value of the crop increases due to increases in

signatures of the parties involved.

price and/or yield.

Furthermore, other provisions (such as the

rights and responsibilities of both parties)

which provide for most of the concerns of

both the landowner and tenant.

Sources: "Fixed and Flexible Cash Rental Arrangements For Your Farm", North Central

Regional Extension Publication 75.

otes...

(For More Information) Contact: Jeff Tranel, Ag. & Business Management, CSU Extension,

etwork

(719) 549-2049,

Jeffrey.Tranel@colostate.edu

(Updated August 2008)

Flexible-Cash Crop Lease Agreement Page 3

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