A solid contract underpins any successful rental relationship. With more producers choosing to rent rather than buy, contract fine print is more important than ever. Andreas Greeff, managing director of Vleissentraal Eiendomme, explains how to avoid legal pitfalls.
What is the golden rule of a farm rental contract?
Write everything down. Verbal agreements create doubt and later conflict. A good contract specifies exactly what is being rented, for how long, and who is responsible for maintenance.
How long should a farm be rented for the agreement to work well for both parties?
Three years is the minimum. It gives the tenant time to benefit from improvements and actually farm the land. Contracts of five years or more are ideal for long-term projects such as perennial crops or irrigation.
How are improvements regulated?
Put it in the contract and establish whether improvements transfer without compensation, or whether a compensation clause must be included for any improvements, including soil improvements made using fertiliser or other inputs.
How does land reform affect contracts?
Where ownership may change, the contract must make provision to protect the tenant’s investments.
What about share farming?
It is a valuable tool, provided that inputs, profits, and risks are clearly defined. Always use an attorney with agricultural experience.
What must be done at the end of a rental term?
Conduct an inspection and document the condition of the farm when you take occupation and when you leave. This protects both parties.
Any other practical advice?
Keep records of everything and communicate honestly with each other. Trust and transparency are worth more than any clause.
For more information phone Vleissentraal Eiendomme on 072 118 7509, or visit vleissentraaleiendomme.co.za.
