Cash Lease Workshops Offer Answers for Landowners, Tenants

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With record breaking land auctions making waves across Nebraska, some landowners looking to rent their ground are wondering how to adjust.

UNL Extension Educators are holding workshops to talk about some of those best lease practices.

They say an important thing to understand about cash leases is that land value increases may not drive rent figures up as drastically too.

"The rents need to be based on some level of productivity and unless the landlord knows what their productivity is then it's hard to come up with an equitable cash lease," says Allan Vyhnalek, UNL Extension Educator for Platte County.

Tim Lemmons, an extension educator for Madison and Stanton Counties, told landlords and tenants at a workshop in Hastings that the final prices coming from recent land auctions are a result of several factors. One of which is the fact that in Nebraska a parcel of land is estimated to come up for sale once every 124 years.

"We're looking at the land values not necessarily tied to the productive potential of the ground, but maybe this may be my only opportunity to get a hold of this and not just for my generation, but for my son or daughter that might be coming in behind me," says Lemmons.

While a lot of cash leases involve farm land, renting range land is common too, and officials say that with the drought this year will come a lot of issues that tenants and landlords need to discuss before renting pasture.

"We need to have a conversation about if those cows are going to go on late, or if those cows have to come off early because the grass is dried up, how we're going to adjust that lease," says Vyhnalek. "Everybody has to be agreeable before the next year starts."

Vyhnalek says that as with farmland, determining what water sources are available and who is responsible is also key after a drought year and beyond.

Officials say it goes back to figuring those rent rates based on land productivity.

"As we start to move into 2013 we know that we have pastures that effected, that are maybe not in the best health, and that's going to of course effect how much we can potentially charge per animal or per acre for the new tenants that are coming on," says Lemmons.

The workshop also emphasizes open communication between landlords and tenants, both in terms of yield data and making sure lease terms work for everyone involved.