In the Mid-South, we regularly see agricultural leases negotiated in a verbal format rather than written. While verbal leases will hold up in a court of law, there are many discrepancies that may arise due to a lack of communication or a differing recollection from either party in the lease. Therefore, even if a verbal lease is enacted, it is prudent for both parties to write down the terms and conditions of the lease.
An important aspect of verbal leasing is the termination date enforced by state law. For written leases, the date of lease termination laid out in the lease agreement designates the end of the lease. In Arkansas, A.C.A. § 18-16-105 states a landowner must notify a tenant under an annual lease that the lease will be terminated at the end of the year by June 30 of the same year. The notice must be in writing and sent via certified mail to the tenant. If no notice of termination is given by this date, the tenant assumes that the lease will continue as is throughout the following year.
According to MS Code § 89-7-23 (2013), leases in Mississippi that do not expire at a fixed time require written notice to be given at least two months from the end of the year or lease term. Lease terms of a half year or quarter year must have at least one month’s notice of termination, and lease terms lasting monthly or weekly must have one week’s notice of termination.
In Missouri, MO Rev Stat § 441.050 states that an annual lease may be terminated if proper notice is given no fewer than 60 days from the end of the lease. For a month-to-month lease, at least 30 days’ notice must be given. All forms of lease termination notice must be delivered in writing.
For Tennessee, annual leases traditionally see a written notice at least six months before the end of the lease. However, there is no definite law in Tennessee that requires this action. It is important to establish a written lease to protect both the lessor and lessee from any potential disputes.
No matter where your farm is located, we highly recommend working with legal counsel to put your lease in writing to avoid miscommunication about terms and document if heirs or successors become involved during the lease term.