Your land: enjoy new ventures but don’t forget to protect yourself!
In these uncertain times it is more important than ever for farm owners to be adaptable and move quickly to take advantage of potential income streams. Exploring diverse uses of land is vital to ensure the future of any farm but Vicky Hernandez, Director and head of property at Hedges Law warns that farmers should be careful not to rush into things without ensuring they are properly protected.
Historically farmers have liked to do business on a handshake, but times are changing and we are seeing more disputes arise. If you allow a third party to use your land for a new venture, consider putting a simple document in place so the terms of that occupation are clear; in the excitement of a new project the parties can sometimes forget that things may not always go to plan and it is far easier to agree the basis on which someone is going to occupy your land when the position is amicable than after a dispute occurs.
Farmers will be used to the more traditional grazing licence and farm business tenancy arrangements, but these are only a small selection of the legal documents available to you. In most cases where land is not being used for traditional farming a short tenancy (granting exclusive possession of a defined area) or licence (allowing the licensee to share use of land) is all that is needed. This should cover the level of rent or licence fee payable to the farm owner, the length of the arrangement, any conditions you want the occupier to observe and, critically, circumstances in which the arrangement can be ended early. Flexibility is key in the current market and so ensure that you reserve the right to take back your land sooner than anticipated if the new business arrangement is not working out or even if you find a better option for the land. Break clauses, giving both parties flexibility in such circumstances, are now a legal norm and should be included in any agreement.
As you might expect, disputes most frequently arise around questions of money; what exactly is your tenant expecting to pay for? Will the rent include buildings insurance for example? Business rates (where payable)? Utilities? Often an all-inclusive rent can be attractive, especially for a short-term arrangement, but if the parties aren’t in agreement as to what all-inclusive means problems can arise. If the tenant will be occupying buildings as part of your arrangement, repairing obligations are another area that can cause arguments. The ideal scenario from a tenant’s point of view is for you to retain all liability and for the occupier to simply agree not to cause damage (fair wear and tear excepted). However, this may not suit you and where the occupation is for a longer period or the proposed use is intensive you will want to shift some of this responsibility back onto the tenant.
There is no right or wrong position about either of these areas of potential dispute but it will pay dividends to discuss and agree matters up front to ensure that a compromise position both parties are comfortable with, can be agreed.
Of course, the worst potential dispute and nightmare scenario for a farm owner is where it is difficult to get an occupier to vacate land. This can be even more difficult where there is no legal documentation in place. If a party has had exclusive occupation of your land for more than 6 months and you have not taken specific steps to ensure that occupation is not “protected” you run the risk of the occupier acquiring statutory rights to remain. The longer the occupation goes on, the stronger the occupier’s case for having security of tenure. If you do nothing else, you should ensure this point is properly addressed by your solicitor before you allow anyone into occupation.