Lease agreements are legal contracts and have legal implications. It is important that both parties must agree to the conditions set out in the agreements, as it can have numerous repercussions if the agreements are to find void, because of legal technicalities. Assurance that specific legal requirements are met may require the services of a lawyer.
Lease agreements should be negotiated and both parties should understood and willingly agree to the terms and conditions set out in the lease agreement. Determining and agreeing on rental rates as well as who will be responsible for maintenance (both financially and technically) will in most situations, be the difficult aspects of negotiating and agreeing to the lease agreement.
In most situations it is not viable to determine market related rental rates, as the users are generally from the poorer residents and unemployed. It should also not be an opportunity for the TLC to make profit on the income generated from the leases. The agreed rental rates should rather be seen in the light of opportunity costs. Rather forsake making profit from rental rates, to achieve viable commonage projects. However, the TLC should be able to recover some costs of owning the land. This might be expenses for maintenance i.e. Fence repairs and water supplies. Thus, one way of setting the rental rates are to determine what costs will be involved in the maintenance of the farm.
Determining and agreeing on rental rates will also depend on whether the user accesses the commonage for household purposes or whether the user access the commonage through the emergent farmer program. Consideration should be given as to how much the users can contribute, taking into account their financial status. Rental rates for the emergent farmer can initially be low, but should be revised annually as this user should be able to pay more market related rental rates the longer he/she has access to the land. In such instances, aspects such as the need for the user to consider his/her profit potential from the use of the commonage can be used to determine rental rates.
As a lease is a contract, the essential elements of a contract must be present i.e. Names and signatures of the parties, date of beginning and ending of lease, reservation of rent, description of property. The following is a checklist of items, to be included in lease agreements. Items 1 – 7 & 12 – 17 are essential elements for both grazing and production agreements. Items 8 – 11 depend on whether it is a grazing or production lease.
1. Names, addresses and interest of the parties (the lessor and the lessee) involved
2. Legal description of property
3. Lease period
4. Date when lease become effective
5. Date of termination
6. Amount of rent on how it is to be calculated
7. When rent is payable
Grazing agreements
8. Limitation on number of animals allowed
9. Details of agreement concerning health requirements
10. Provisions concerning breachy animals
11. Agreement concerning identification
Production agreements
8. Limitation on crops to be planted
9. Provisions concerning water rights
10. Agreements on the use of irrigation/crop plots
11. Details of irrigation periods and change of periods
12. Renewal provisions
13. Provision for right of entry
14. Provisions concerning subleasing
15. Stated responsibilities of both parties relative to maintenance, improvements etc.
16. General rights and obligations of both parties
17. Provision for settling disagreements (breaches and disputes)
18. Domicilium