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Tuesday, October 7, 2008 9:48 PM CDT
Terminating verbal lease agreements
By SHARON KUHNS
Research indicates landowners and tenants enjoy long term relationships, however there are the usual requests for the process of terminating a lease agreement with a tenant. This information is provided by Ruth Hambleton, U of I Extension Farm Business Management Educator.
The process begins with a division between termination of written lease agreements and verbal agreements. In Illinois, verbal agreements are as binding as written agreements. Written agreements however should be the preferred method of leasing land because of the clarity the written word brings to many leasing situations.
Termination for verbal leases begins with a discussion between landowner and tenant about impending changes. Illinois state statute requires termination of verbal leases to be in writing. For most Illinois lease termination, this letter must arrive BEFORE Nov. 1. The Illinois Compiled Statutes provide as follows: “In order to terminate tenancies from year to year of farm lands... the notice to quit shall be given in writing not less than 4 months prior to the end of the year of letting. Such notice may not be waived in a verbal lease. . . .” In other words, the written termination notice is REQUIRED. The written letter can be delivered in person or most prefer using certified mail as a mean of delivery. This provision requiring notice to terminate the lease applies only to a “year to year” lease of farmland. A “year to year” lease can be a written lease which expressly states that it continues from year to year unless notice is given to terminate the lease, or it can be a verbal lease where the tenant has been in possession for several years without a clear understanding about when the lease will end. While there is no form letter, the following language for a termination notice is suggested in the statutes, “You are hereby notified that I have elected to terminate your lease of the farm premises now occupied by you, being (here describe the premises) and you are hereby further notified to quit and deliver up possession of the same to me at the end of the lease year, the last day of such year being (here insert the last day of the lease year).” This language is appropriate when the landlord is giving notice to the tenant. Some modification would be needed if the notice was being given by the tenant to the landlord.
When is the last day of the lease year? In most regions of Illinois, a year to year lease of farmland is presumed to begin on March 1 and end on the last day of February. But if there is convincing evidence that the lease actually began on some other date, the actual term and its last day are used. Where the last day of February is the last day of the lease, the four-month notice must be given on or before the last day of October. Where all parties to a verbal lease agree that the last day of the lease is Dec. 31 (lease runs on a calendar year) the four-month notice must be given on or before the last day of August.
How is winter wheat handled in a lease termination? Where wheat is a part of a regular rotation, a farmer would be allowed to continue and complete his rotation. That practice takes the old tenant into the following spring where his or her lease will terminate upon the harvest of the crop. The new tenant can begin his or her year with double crop soybeans or sorghum. If the lease is a cash arrangement, then the old tenant is expected to pay half a year’s cash rent, and the new tenant coming in following wheat harvest would pay the other half of the year’s rent.
Sharon Kuhns is county director for University of Illinois Extension in Coles County.
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