A farm lease automatically continues from year to year unless either party (landlord or tenant) gives notice of termination. In Iowa, a lease termination notice must be properly served by September 1, prior to the end of the lease year.
This applies to both cash and crop share leases, but not to custom farming agreements, explains Steve Johnson, an Iowa State University Extension farm management specialist. A written lease may state a date earlier than September 1 for serving a termination notice. The requirement to terminate a farm lease by September 1 does not apply to tracts under 40 acres in size (in Iowa). However, even an oral lease is automatically renewed if it is not properly terminated in time.
The termination notice must fix the termination of the tenancy to take place on the following March 1. If notice is not served, the lease continues for another crop year under the same conditions and terms. However, if mutually acceptable to all parties concerned, a lease can be terminated or modified at any time, and can have a different stated expiration date.
Iowa law specifies three methods of serving a farm lease termination notice to terminate the tenancy on the following March 1 date. The following is quoted from the Code of Iowa, section 562.7:
"Notice—How and when served. Written notice shall be served upon either party or a successor of the party by using one of the following methods:
By delivery of the notice, on or before September 1, with acceptance of service to be signed by the party to the lease or a successor of the party, receiving the notice.
By serving the notice, on or before September 1, personally, or if personal service has been tried and cannot be achieved, by publication, on the same conditions, and in the same manner as is provided for the service of original notices, except that when the notice is served by publication no affidavit is required. Service by publication is completed on the day of the last publication.
By mailing the notice before September 1 by certified mail. Notice served by certified mail is made and completed when the notice is enclosed in a sealed envelope, with the proper postage on the envelope, addressed to the party or a successor of the party at the last known mailing address and deposited in a mail receptacle provided by the U.S. postal service."
A form entitled "Notice of Termination of Farm Tenancy" is available as AgDM file C2-19. The file is available on ISU's Ag Decision Maker site http://www.extension.iastate.edu/agdm/. Other forms are available from attorneys.
SUMMING UP: "A good lease is the first step toward a satisfactory operating relationship between a landlord and a tenant, says ISU's Steve Johnson. "Although it is difficult to develop a lease that will provide for all possible situations, the parties should try to anticipate areas where problems could arise and include provisions in the lease to handle them. Only the parties involved can determine what is fair to each and what the final agreement should be. Many factors influence a leasing agreement, and each contract should be modified to fit the individual situation."
For farm management information and analysis, go to ISU's Ag Decision Maker site www.extension.iastate.edu/agdm and ISU Extension farm management specialist Steve Johnson's site www.extension.iastate.edu/polk/farmmanagement.htm.