One Old Mare Not Enough to Create Ag Lease, Says One State Court

Image by Edwin Remsberg and author knows this is not an old mare

This post is not legal advice. See the site’s reposting policy here.

As we draw closer to summer, I will start reminding you that it’s the time to consider terminating a farmland lease to comply with state law. In Maryland, farmland leases require six months’ notice to terminate without a written lease stating a different requirement. For many leases in Maryland, this means notice to terminate must be given by June 30. This six months’ notice requirement is just for agricultural leases and not for other types of leases. Residential leases, for example, often require shorter time periods to terminate than do agricultural leases. The Iowa Supreme Court has found that one old mare on six acres is not enough to create an agricultural lease which requires longer notice to terminate the lease.

The Hardens had rented a house and six acres from the Porters for 24 years. During the 24 years, the two parties never had any written lease. At some point, there was a falling out between the Hardens and the Porters, and the Porters filed a notice to terminate the tenancy. In response, the Hardens filed a notice that the lease was a farm lease and required six months’ notice under Iowa law. The Hardens also requested reimbursement for various improvements made to the property over the 24 years. At the time notice was given, the Hardens only had one 38-year-old mare on the property. Before the falling out, the Hardens kept cattle and more horses on the property and only downsized to one horse after the falling out.

The district court found the Porters had complied with the law to terminate the lease, and one old horse did not create a farm lease. The Hardens appealed, and the Iowa Court of Appeals reversed, finding that one horse did create a farm lease. The Porters appealed to the state supreme court.

On appeal, the court looked at the language of the farm lease termination statute to determine if the Hardens fell under it. The notice requirement for farm leases applied to a “farm tenancy,” defined as “a leasehold interest in land held by a person who produces crops or provides for the care and feeding of livestock on the land, including by grazing or supplying feed to the livestock.” (Iowa Code Ann. § 562.1A). The court of appeals found this definition did not include a numerical requirement for livestock kept. The court agreed there was no such numerical requirement in the law.

The court found this could interpretation could create odd results, such as backyard chickens potentially allowing an urban lease to become a farm lease. This court looked at the definition of “livestock” in the statute, and found it was borrowed from an existing definition of livestock. The law’s intent was to avoid productive farmland going to waste by requiring significant notice to terminate a farmland lease. The court of appeals view would create unreasonable results. Based on all of this, the court found it was proper to include a “primary purpose” test for defining what constitutes a farm lease.

For those reasons, the court found that keeping a single old horse did not establish the primary purpose for the property as a farm. But this decision is on a case by case basis; the court highlights that one stallion on the farm could result in the property being considered farmland.

A dissenting judge pointed out he would have considered the lease to be a farm lease. This judge’s issue is the record seemed to reflect that the Hardens previously kept more livestock on the property and had downsized when the falling out occurred. To the dissenting judge, this including a primary purpose test would force courts to consider the number of livestock kept at the start or the end of the lease, and cause additional litigation.

Why Care?

Maryland’s notice to terminate statute requires a similar six-months’ notice requirement as Iowa’s. Maryland has yet to have a court decision on when the notice requirement for farm leases is required. The Iowa decision highlights the struggles courts have when considering what constitutes a farm.

Consider a residence in an urban area of Maryland, for example, with backyard chickens or a large garden. Should that residence be considered a farm or a residential lease? Should a Maryland court consider the primary purpose of the leased property? As my questions highlight, this can cause a struggle for courts to draw a firm line to aid tenants and landlords.

One solution around this ambiguity in the law is for landowners to develop a written lease clearly stating the amount of notice which must be given to terminate the lease. Maryland’s notice-to-terminate statute requires parties to fill in the blanks when the issue is not addressed in a written lease. Clearly pointing out what time is needed to terminate the lease gives all parties the same footing to understand what is expected to terminate the lease.

References

Iowa Code Ann. § 562.1A (West 2017)

MD Code Ann., Real Prop. § 8–402 (West 2017).

Porter v. Harden, №15–0683, 2017 WL 942845 (Mar. 10, 2017).