LAND LEASE AGREEMENT
A LAND SHARE UNDERSTANDING
__ Farmer or Business
____ Agrarian Commons
THE LAND AND THE COMMUNITY
THIS LAND LEASE AGREEMENT (“Lease”) is effective as of the _____ day of ______ (“Effective Date”) by and between ____Agrarian Commons, 501(c)(2) (“Lessor” or “Commons”), including its successors and assigns, and __________ (“Lessee”) and its successor entities and assigns, if any. The Lessor and Lessee are collectively called the “Parties.” This Lease describes use of Land, which the Parties define as, and intend to include all: agricultural property, real estate, and related assets that support Lessor, Lessee, and community.
The purposes of this Lease are in furtherance of current laws, including [add in state and/or local laws here], as hereinafter amended.
____Agrarian Commons 501(c)(2) and its parent Agrarian Land Trust 501(c)(3) are organized for public welfare purposes, per section 501(c)(3) of the Internal Revenue Code, including:
(a) To hold title to real property in order to protect agricultural lands from real estate speculation, unsustainable development, and to promote the renewal of the living earth as the foundation of sustainable communities
(b) To hold title to real property to protect affordable agricultural land and housing access
(c) To protect ecological integrity on diversified farmland that serves local communities through cultural, educational, vocational, agricultural, spiritual, and recreational activities
(d) To support, develop, and share equitable and ecologically responsible land care practices and models of agrarian livelihood
Discussion: Lease Language
Lease language should try to capture the complex and living nature of a diversified farm and related community.
Commons’ vs Government’s Definition of Agriculture
Conservation easements are often constrained by the government’s definition of agriculture. By adopting a broader definition, agriculture can encompass diverse land management plans and community appropriate meanings.
Parties to the lease may decide to change “. . .prioritize an agrarian landscape . . .” in favor of a more defined value. Some land trusts have found that trying to preserve this kind of aesthetic is subjective and problematic, and in some cases, detrimental to farm viability.
Leases should also include farm specific details, including street addresses, lot numbers, and an appendix with a land survey, tax map, and boundary sketch.
Broad Definition of Agriculture
The Equitable Lease defines agriculture in the broadest sense possible, including traditional agricultural practices as well as related agricultural purposes that support land and/or community health. This broad definition is meant to encompass the flexible, diverse, and holistic land management central to the mission of the Agrarian Trust.
The lessee manages land for some or all of the following: soil health, biodiversity, sustainable grazing, a healthy ecosystem, and water quality. The local AC lessor should determine what managing for these can look like through a Management Plan and Ecological Stewardship Standards, recognizing that the AC is working with lessees from many different cultures and experiences with land.
Defining Active Farming
There are a variety of examples to pull from to defining active farming, including standards in Montana and Massachusetts. While the definition should be specific, it should also leave room for a diversity of situations and contain provisions for unanticipated or emergency situations. How “farming” and “active” are defined; how regionality, land base, and varied farming types are considered within the two definitions; what are allowed exemptions to requirements, and what recourse is available are items to adapt to place/context in each individual lease.
An income requirement demonstrates that the farmer-lessee is active in the agricultural economy. However, AT is committed to supporting a variety of livelihoods on the land and the ability of disenfranchised communities to reconnect with the land– these priorities sometimes do not align with production agriculture. In these cases, an income requirement can be waived so that subsistence farming is supported and encouraged. Lessees are also coming in with different goals, geographic, economic, demographic, and socioeconomic contexts and potentially different models. A “pick and play” approach that puts this language simply such as “if your goals are x, y, or z, then here are provisions that would be useful” captures some hypotheticals and allows an AC to determine, with the lessee, the best approach for defining active agriculture or land care and concomitant lease considerations.
The affirmative agriculture requirements should be flexible, and allow for excused recesses from production under reasonable circumstances.
The management zones should be negotiated between the land-owning body (the AC) and the lessee. In many cases, the lessee will already have direct knowledge of how best to manage the land. In those cases, management zones will codify preexisting uses, rather than create new zones.
Defining Active Farming with Respect to Retirement
Mike: what retirement means for the affirmative ag requirement and their right to stay in the housing. And their ability to sub-lease land to someone else, especially in that transition period. How to address this under different circumstances.
Eliza: Aging farmer, we are enabling a life estate for the farmer. 99-year rolling ground lease…
Affirmative ag requirements within the lease should take retirement and the transition of responsibility in account. Leases should allow retired tenants to stay in their housing and sub-lease the land to someone else, where appropriate.
Essential Elements of the Lease
The lease should include conflict resolution protocols and building community agreements to prevent communication breakdowns. Leases should also ensure transferability through proper estate planning at the conception of the lease.
The length of lease terms, as well as the possibility to renew, are determined by each state. Architects of the lease should be sure to check relevant state law before agreeing to lease terms.
Flexible lease structures are important because many forms of agriculture do not fit into traditional private ownership models. Lessee could look to Trustees of Reservations as an alternative model.
Deed restrictions may not be a good general practice. They require anticipating too many details too far into an uncertain future, and if the original “deeder” is gone or unwilling, they can only be changed through expensive court processes. They’re also not nearly as easy to enforce as an easement, for example, since there is no natural third party holding them.
WHEREAS, this lease recognizes the land management and infrastructure improvements that prioritize an agrarian landscape and support other local businesses, especially women and BIPOC-led businesses (Black, Indigenous and People of Color).
WHEREAS, the Parties acknowledge the ownership, conservation, and protection structures and encumbrances that exist in: (1) the 501(c)(3) Agrarian Trust local 501(c)(2) or 501(c)(25) Agrarian Commons model, (2) conservation easements, (3) development restrictions, and/or other zoning protections.
WHEREAS, this Lease recognizes that the Land is subject to terms, conditions and restrictions memorialized in Attachments _____. The terms, conditions and restrictions are enforced and monitored by ____________________, with a primary point of contact of ________________.
WHEREAS, the Parties will strive to further develop and expand upon resource sharing Agreements and Understandings, recognizing that both Parties have shared philosophies and practices that can benefit cultural, education, and vocational objectives. Specifically, but not limited to . . .
WHEREAS, the Lessor wishes to provide to Lessee long-term and affordable, non-extractive, and equitable agricultural land use to enable agricultural production, a viable business, and healthy soil for the long-term and Lessee desires such use of _______________ for such ends.
WHEREAS, Lessee shares the purposes and goals of the Commons and enters this Lease to further the charitable purposes of the Commons.
NOW THEREFORE, Lessee and Commons agree on all the terms and conditions of this Lease as set forth below.
ARTICLE I. DEFINITIONS
1.1 Land: Parcels of land located in the Town of _______ , State of_____. Address, lot number(s).
1.2 Buildings: Buildings and Infrastructure comprised of _______________
1.3 Lease Term: _______________
1.4 Trial Period: ___________________
1.5 Lease Commencement Date: ___________________
1.6 Lease: As defined in Section_________________
1.7 Operating Charges: As defined in Section _______
1.8 Stewardship Contribution: As defined in Section __________
1.9 Lessee Notice Address:
1.10 Lessor Notice Address:
1.11 Lessor Payment Address:
1.12 Notices: All notices, requests, demands and other communications which are required or permitted to be given under this Lease will be in writing and will be deemed to have been duly given (a) upon receipt if delivered in person, or (b) within seven business days if mailed, or (c) the following business day if sent by recognized overnight courier, with proof of delivery.
ARTICLE II. LAND AND BUILDINGS
This Lease is for certain tracts or parcels of Lands with all structures, improvements, and soil resources and with all Buildings, Infrastructure thereon in the Town of __________ and State of _________ known as…..
Tax Map / Lot
Tax Map / Lot…
subject to current conservation easement(s), attached as Exhibit(s) ____ on __________of the lots, held by: ___________________________
The Agricultural Buildings on Map…..
The primary homestead (“Main House”) is the residence located on Map ____ and comprised of approximate size, style, major systems.
ARTICLE III. USE AND OCCUPANCY
Discussion: Equity, Building Capital, and Affordability
It’s important for the lease to effectively convey that Agrarian Trust, local Agrarian Commons, and the Lessee share in the stewardship of the land, that the land is removed from the market and can’t be encumbered by debt, and that the lease incorporates provisions that enable the lessee to build equity.
“Equity” can encompass several concepts. Equity can mean building a way for the lease holder to accrue value from land, related to the value of land over time. It can also refer to racial and economic equity–ensuring fairness and justice in the distribution of benefits, and informing decisions with existing cultural and historic inequities and injustices.
Building a foundation for both kinds of equity (above) into the lease at the forefront is vitally important to ensure fair relations between Agrarian Commons and lessee, as well as conditions where lessees can thrive as part of the Agrarian Commons.
Agrarian Trust does not allow ACs to encumber the land more than 20% so that there is no risk of foreclosure, and thus loss of the land back to the marketplace. When the land is removed as a vehicle for collateral, making it potentially more difficult for a lessee to access capital, it is critical to have alternative kinds of financing.
501(c)(2) has limited administrative costs, allowing lease fees to serve the land and lessees
Part of the Commons model is ensuring we do not set up a system where lease rates are supporting just another NGO that operates on the ground. Instead, these ACs, being (c)(2) entities are limited in scope by the IRS–they do not have the ability to operate with the scope that a 501(c)(3) nonprofit would. Agrarian Commons is set up to be the land holding structure only, and AT requires the land to come in with philanthropic dollars and/or very low debt, so the model narrows the focus and limits the financial burdens that would dictate a market value lease rate.
Revolving Fund for Building Capital
Lack of access to capital has been historically unjust in the United States, and in many ways is getting more difficult.
Agrarian Trust does not allow ACs to encumber the land more than 20% so that there is no risk of foreclosure, and thus loss of the land back to the marketplace. Limiting the ability for land to take on debt is one step toward decommodifying land. Because the Agrarian Trust is removing the land as a vehicle for collateral, making it potentially more difficult for a lessee to access capital, we are developing and growing a revolving capital fund for lessees in place of traditional loan funds, and it is critical to have alternative kinds of financing.
The CLT “model lease” has language around permitted mortgages that would allow Lessees to finance new infrastructure with bank loans. This might be crucial for some operations, and the bank would need very clear language in place in a ground lease. In the Commons context, no more than 20% of land can be mortgaged, though an individual Lessee who privately owns their own home and/or other infrastructure can mortgage privately owned property.
“Equity” can encompass several concepts. Equity can mean building a way for the lease holder to accrue value from land. It can also refer to racial and economic equity: ensuring fairness and justice in the distribution of benefits, and informing decisions with existing cultural and historic inequities. Through the Agrarian Commons, equity in governance is valued as Lessees participate on the board and with decisions such as membership fees.
There are a diversity of models to look to for securing equity in a lease. For example, worker cooperatives, where workers receive income based on the profitability of the company is an aligned structure. Another tool to greater equity in a lease could be matching retirement savings plans–an important part of building equity in our economy. A retirement fund can serve to distribute collectively raised funds and accrued rent/lease rates back to lessees. Another way to build equity would be to provide a low or no cost lease for mission aligned lessees. More ideas are detailed in equity suggestions, below.
Distributing Equity to the Community, Land as Community “Resource”
The land is a community resource, so sustainable returns (e.g. from lease rate) can be shared with the community. This can look like an AC investing in public access to portions of a farm for walking, educational experiences on farms, and more.
Mission-aligned lessees, and in particular historically marginalized farmers, should have access to low- or no-cost leases.
The Agrarian Commons should explore cultural respect easements and agreements and implement them wherever appropriate.
Leases can be structured to give or transfer back to indigenous groups after 99 years.
In all cases, Commons and lessees should consult with Indigenous groups to ensure a transfer or other agreement is a viable possibility for tribal communities.
Equity suggestions from the Agrarian Commons Creation Committee
Commons and lessees can choose different aspects of these equity building considerations that make the most sense for place and context. They can be included in the lease or in an appendix to the lease:
- An equity commitment as an appendix to the lease, including examples depending on context.
- Equity should include at least participation in governance and shared monetary distributions. It’s broader than the lessee’s ability to transfer improvement to other parties and get revenue.
- Equity could include standing up to racism in ag, land loss, land dispossession, lack of subsurface rights in places like Appalachia, and more, as a group of Agrarian Commons
- For example, devise ways the AC can support farmers who have lost subsurface rights but still want to stay on land or access farmland. AT principles around why we stand for reunification of rights and how to dismantle barriers to farmers staying on land and getting access to land.
- Equity can include retirement options for lessees (e.g. portion of lease into IRA or retirement fund)
- Low or no cost lease to mission aligned lessees. incl historically marginalized farmers. “Historically marginalized farmers”could be defined and groups included that are specific to place.
- Stewardship and soil health and land care as ways to gain equity and relate affordability to stewardship
- Describe that maintaining infrastructure and improvements could come from outside funding, or AC funding, or AT fundraised dollars. It may be difficult for a lessee to cover costs for infrastructure and improvements.
- In cases where rent is tied to a percentage of gross farm income or farm output/financials, it can be tiered over years and by farm size/growth.
- Consider capping re-sale values and ensure AC approves infrastructure so the next lessee isn’t burdened with exorbitant costs or inability to maintain infrastructure.
- Equity can look like provisions for retirement and structuring aging in place. Supporting farm transitions and sharing knowledge, even if it doesn’t look like full time farming/production is important.
- Cultural respect easements
- After 99 years the lessee could be gifted or transfer land back to an indigenous group. Commons and lessees should consult with indigenous groups to ensure a transfer is a viable possibility for tribal communities, and if so, what a transfer could look like and how it could be accomplished to ensure viability.
- Look to Community Land Trusts for affordability tools for ground leases and re-sale formulas. There are also examples of revolving loan funds that are site specific and capitalized through grants or paid into by residents.
- Ensure farmers can leverage equity in land to finance operations without risking losing the land back to the marketplace.
- Reduce tax burden by including wild land, where the wider community can be invested in its care.
- Use a ground lease that includes a lessee owning buildings and infrastructure
- Shared equity possibilities between the AC and a lessee:
- Timber (example below)
- Solar/methane/geothermal energy production (different solar companies could provide model they use)
- Utility lease
- Regenerative management, investment
- Soil and Ecological Stewardship
Example – Timber Revenue and Infrastructure Improvement Equity Plan
Both parties have mutual interests: in managing the forest land for multiple benefits; and in renovating, repairing, and restoring all farm infrastructure, including the farm buildings, the cabin, and the studio, so that the property and the sustainable viability of the active farm are maintained, and therefore agree as follows:
- Plans. The parties will collaborate to have plans that govern operations, including at least the following: a Forest Management Plan; a Farm Conservation Plan; a Grazing Plan (“Plans”). Such Plans will be developed and continuously maintained as current and active. When required by the Conservation Easements or otherwise, a Plan according to the standards of the Natural Resources Conservation Services (“NRCS”), or other similar public or private farm agencies, will be developed and followed. Generally, Plans for farm and forest management will reflect practices that adhere to the standards required for organic certification or standards that are similar or superior, although certification is not required. Where standards are inconsistent, the standard that most furthers long-term soil health will be included in the Plans.
- Forestry and Agroforestry Uses. The following forestry and agroforestry uses take priority over commercial forest management for timber revenue: maple sugaring; on-farm use firewood; trail creation and maintenance; silviculture; orchard restoration, creation, and maintenance; permaculture; and Christmas Tree Farm. Both parties agree that commercial forest management for timber revenue should be completed only for multiple benefits and only to accomplish many Forestry Uses listed in the Use Agreement and Understanding attached to and incorporated into the Agricultural Farm Lease Agreement as Exhibit B.
- Timber Revenue. Net revenue received from commercial forest management for timber revenue will be calculated on stumpage value and will be placed into an interest-bearing account (“Timber Revenue Account”). Revenue will accrue in the Timber Revenue Account up to and exceeding $_________. $________ shall be maintained as a minimum balance. The minimum balance of $__________ shall not be used except that funds may be borrowed by the Lessee in the event that payment of municipal taxes, property insurance, or utility payments are in arrears as a result of the Lessee’s violation of the Agricultural Farm Lease Agreement. In such cases, Lessee shall repay the borrowed amount as soon as practicable. Any funds in the Timber Revenue Account in excess of $_______ may be: used for renovating, repairing, and restoring all farm infrastructure, which use of funds will not need to be repaid to the Timber Revenue Account; or used to pay the Lessor per Section __.
- Equity Payments to Lessee. When funds in excess of $________________ are intended to be used for renovating, repairing, and restoring all farm infrastructure, or when Lessee uses other funds for new construction, the equity that will result from such investment will be evaluated and quantified by a qualified third party mutually agreed-upon by both parties. After the work is completed, the amount of equity that the third party determined would result from the work will be credited to the Lessee. The form of such credit will be mutually determined by the parties, but may take the form of application towards the purchase price in the event Lessee purchases the property in the future, or may be paid to Lessee from the Timber Revenue Account so long as the minimum balance of $____________.
Leases should include retirement options for lessees, including creating a retirement fund, structuring aging in place, and facilitating the sharing of knowledge between generations.
The Agrarian Commons should develop creative approaches to equity building, including building equity through soil health and land care.
Leases can be designed to include wild land, with the wider community invested in care, to reduce the tax burden on lessees.
Leases should clearly define the division of responsibility and ownership of the lessees and lessors, and should describe the availability of outside funding for infrastructure or other improvements.
Rent can be tied to a percent of gross farm income or farm output, and can be tiered over years to provide additional support.
The Agrarian Commons should cap resale values and approve infrastructure so the next lessee is not burdened.
Each Agrarian Commons can determine whether AT or the AC undertakes the maintenance of buildings. In other scenarios, buildings will be owned by Lessees through a ground lease so that Lessees can gain equity.
The Lessor and Lessee can come to agreement on a resale formula that both restricts resale value to ensure affordability for the next Lessee, while ensuring an equity-return for the Lessee. This item is particularly relevant in cases where the Lessee owns infrastructure.
Equity and affordability are complex. Leases should contain simple provisions to ensure equity and affordability. Lease affordability can also be determined by farm/ranch viability and its capacity to afford, tied to profitability more than a set amount. In some cases, lease rate may not be based on business income or profitability so that subsistence farming is supported and encouraged.
Affordability of buildings and infrastructure is vital. The lease should be structured to keep housing affordable, while encouraging needed improvements on the home.
Fair Wages and Worker Safety
Fair payment of wages can be included in lease terms. While not enforceable, language in the lease could encourage good practices and discourage extractive or exploitative practices.
Rent: Possibilities for Determination
Tying rent to a percentage of the farm’s gross income avoids the challenge of tying rent to land value, which is subject to change. This rent determination also allows rent to connect with farm outputs. However, this kind of valuation may only be relevant for certain lessee contexts, particularly that of a farm business.
3.1 The Commons hereby leases to Lessee, and Lessee leases from Commons the Land, Buildings, and Infrastructure upon the conditions and covenants set forth in this Lease.
3.2 Subject to Section 3.14, Lessee shall use and occupy the Lands for the broadest definition of agriculture including: feed, forage, and grain production; vegetable and fruit production; animal husbandry; non-timber forest production; and related agricultural purposes that support land and/or community health including agritourism, agri-education, land restoration and stewardship, and soil improvement. The Buildings and Infrastructure shall be used primarily for purposes that further those in support of and aligned with the Lands. Lessee may make use of existing agricultural buildings and infrastructure. Lessee shall not use or occupy the Land for any unlawful purpose, or in any manner that will violate zoning or other ordinances or that will constitute waste, nuisance, or an unreasonable annoyance. Lessee shall comply with all present and future laws, ordinances (including without limitation, zoning ordinances and land use requirements), regulations, and orders (including, without limitation, those made by any public or private agency having authority over insurance rates) (collectively, “Laws”) concerning the use, occupancy and condition of the Land and all machinery and equipment used thereon, all of which shall be complied with in a timely manner at Lessee’s sole expense. If any such Law requires an occupancy or use permit or license for the Land or the operation of the farm conducted thereon, then Lessee shall obtain and keep current such permit or license at Lessee’s expense and shall promptly deliver a copy thereof to the Commons. Use of the Land is subject to all covenants, conditions and restrictions of record, including any existing conservation easements.
3.3. Subject to Section 3.14, Lessee shall store all vehicles, equipment, implements, material, inputs, feed, and any other related items stockpiled for use of Land in locations mutually agreed upon by the Commons and Lessee. Stockpiled items are items that are stored in a location for more than ten (10) months.
3.4 The specific Land provided by the Commons to Lessee in this Lease is depicted in the Management Plan described in Section 3.14. This Land will be managed for some or all of the following: (1) soil health, (2) flora, fauna and habitat diversity, (3) sustainable grazing, foraging, and hay land, (4) a healthy ecosystem, (5) to protect water quality and quantity, and ________.
3.5 Subject to Section 3.14, the agricultural Land will be maintained in sod, for use as, productive hay and pasture grazing land, with the exception of land: (1) in tillage food production agriculture, (2) planted in cover crop to address soil restoration, improvement and overall health, (3) for a land management objective, including but not limited to pollinator habitat, (4) managed for agroforestry, and/or (5) that is converted for development or infrastructure, as allowed.
3.6 Subject to Section 3.14, the land will be maintained in active agricultural and ecosystems stewardship at all times. Active shall be defined by annual gross production standards determined by _______. A grace period of non-active agriculture and stewardship of up to ____ months for every ____ years term provided in lease is provided to support personal, climate, and business related considerations.
3.7 Subject to Section 3.14, Lessee obtains use of forest land for rotational grazing and foraging use as long as soil health and compaction are monitored and maintained at appropriate markers as determined through collaboration with ____________, Natural Resources Conservation Services, or other. Forest rotational grazing and foraging will utilize temporary electric fence for short duration use of no longer than 6 months, followed by nutrient rich wildlife mix cover crop and an appropriate rest.
3.8 Subject to Section 3.14, habitat Land will primarily be managed for food and shelter production for wildlife. Lessee obtains use of habitat land for rotational grazing and foraging use as long as soil health and compaction are monitored and maintained at appropriate markers as determined through collaboration with ___________________, Natural Resources Conservation Services, or other. The rotational grazing and foraging will utilize temporary electric fence for short duration use, followed by nutrient rich wildlife mix cover crop and long rest.
3.9 Subject to Section 3.14, Wild Land will be primarily … ________________
3.10 Subject to Section 3.14, Lessee agrees to complete appropriate Soil Tests that include ________________ __________ to establish a baseline, for all areas to be actively used. Lessee shall provide copies of all soil tests to the Commons. Lessee then agrees to complete follow up soil testing on a schedule agreed to between Lessee and Commons.
3.11 Subject to Section 3.14, Lessee will adhere to Agrarian Trust Principles and local Agrarian Commons Farm, Forest, and Ecosystem Standards, if any.
3.12 Notwithstanding the rights to reasonable self-defense from parties or actions posing immediate physical danger to persons or Land, subject to Section 3.14, Lessee shall use the Land in a manner so as not to cause actual harm to others or to support activities that intentionally seek to denigrate, demean or discriminate against persons on the basis of race, ethnicity, gender identity and expression, sexual orientation, class background or identity, age, ability, or religion.
3.13 Subject to the terms, covenants, conditions, restrictions, reservations, and provisions of this Lease, so long as Lessee pays and performs all of its obligations under this Lease, Lessee has the right to not be disturbed in its possession of the Land by Commons, any management agent contracted by Commons, or any other person lawfully claiming a right to possession through or under Commons, except for annual monitoring visit with prior notice. The Commons has no desire or intention to interfere with the personal lives, associations, expressions, or actions of the Lessee in any way not permitted by this Lease.
3.14 The Parties shall, within six (6) months of the Effective Date of this Lease, develop a mutually agreeable Management Plan to address the uses permitted by this Lease, including agriculture, storage, management objectives, forest, habitat, wild lands, soil testing, Principles, and inclusion described in Sections 3.2, 3.5, 3.6; 3.3; 3.4; 3.7; 3.8; 3.9; 3.10; 3.11; nd 3.12, respectively. Where any management plan called for by a conservation easement, the Natural Resources Conservation Service, or similar already exists (“Pre-existing Plan”), the Parties may opt to waive the requirement of the Management Plan called for in this Section and instead adopt the existing plan. The Management Plan or the Pre-existing Plan shall be incorporated into this Lease as Attachment____.
ARTICLE IV. TERM
4.1 The term shall be _______ years, beginning on _______ (“Lease Commencement Date”) and terminating on ________________, unless terminated sooner or extended as provided by below. Any lots/land added to the premises, regardless of when they are added, will run continuous with this term.
4.2 This lease may be renewed for an unlimited number of additional periods of ____ years at the sole option of the Lessee.
(a) Not more than 365 nor less than 180 days before the last day of the current ______period, Lessor shall give Lessee a written notice that states the date of the expiration of the first _____ period and the conditions for renewal as set forth in the following Section(“the Expiration Notice”). The Expiration Notice shall also describe any changes that the Commons intends to make in the Lease for the renewal period.
(b) Lessee shall then have the right to renew the Lease only if the following conditions are met: (i) within 60 days of receipt of the Expiration Notice, Lessee shall give Lessor written notice stating Lessee’s desire to renew (“the Renewal Notice”); (ii) this Lease shall be in effect on the last day of the expiring ___year term; and (iii) the Lessee shall not be in default under this Lease or under any Permitted Mortgage on the last day of the expiring ___ year term. If the Commons has not given the Expiration Notice by 60 days after the 180 days specified above, then the Lessee can request renewal of the Lease Agreement, in writing, within 90 days of such failure.
(c) When Lessee has exercised the option to renew, Lessee and Lessor shall sign a memorandum stating that the option has been exercised. The memorandum shall comply with the requirements for a notice of lease as stated in Section 1.12 above. The Commons shall record this memorandum in the ________County Registry of Deeds (or its successor institution) promptly after the beginning of the renewal period.
4.3 “Lease Year” shall mean a period of twelve (12) consecutive months commencing on January 1st, and each successive twelve (12) month period thereafter.
4.4 This Lease is intended to be a flexible framework that will allow the Parties’ relationship to grow without having to renegotiate its terms. Changes can be made in the Lease pursuant to Section 4.6 below.
4.5 Both Parties shall review the status of this Lease and confer with each other at a minimum at least once every ____ year intervals to be sure that both Parties are reasonably satisfied with its terms and that it continues to accurately reflect the mutual understanding of both Parties.
4.6 The Parties shall review the status of this Lease and confer with each other when a substantive change is intended, such as new land additions, new conservation or other easements, modifications to existing conservation or other easements, changes in use of the farm or forest lands, construction of any new buildings, upgrade any existing buildings, change in use of any buildings, or similar occasions. This review shall take place in person at a mutually agreed upon time and location with at least a majority interest of both the Commons and Lessee represented. Mutually agreed upon substantive changes to this Lease can be accomplished with an addendum to this Lease.
4.7 In the event that ownership of, or title to, the Land is conveyed or transferred, voluntarily or involuntarily, by the Commons to any other person or entity, this Lease shall not cease, but shall remain binding and unaffected.
ARTICLE V. OPERATING CHARGES, STEWARDSHIP CONTRIBUTION, AND REAL ESTATE TAXES
Discussion: Duties of Each Party
Duties of Parties to the Lease
Maintenance and Repairs
An articulated facilities report is recommended before occupancy, as well as determining who is responsible for repairs and maintenance.
It is up to each local AC and lessee to determine what constitutes normal wear and tear versus negligence of maintenance.
The Agrarian Commons should encourage the use of natural and native materials when feasible, and improvements that account for material, water, and resource conservation can be given priority.
ACs will determine locally how permanent improvements are handled and valued. For example, if a lessee needs a frost-free water system on a portion of the land, who pays for this permanent improvement and/or how might the lessee be supported in making investments in permanent long-lived infrastructure improvements? Does Lessor have any obligations to lessee with regard to lessor-owned improvements? What are the details regarding the relation between lessee and the improvements that they rent?
Lessors should give lessees at least 48 hour notice before visiting the property, except in emergencies. This requirement may become irrelevant as the relationship between lessee and lessor develops, but the requirement is minimally restrictive on the lessor and cultivates mutual respect between the parties.
Land for Good’s Liability and Insurance in a Farm Lease Guide can be helpful regarding insurance decisions between land owner and lessee.
Due Diligence/Soil Testing
The Agrarian Trust will be responsible for conducting soil and water testing and ensuring good title and rights. The cost of the land and infrastructure is then determined by a baseline cost year-to-year.
Real Estate Taxes
Depending on location, quality, and breadth of land, taxes could make the lease amount less affordable for some farmers, especially if subsistence farming is being practiced. Lessor and lessee may decide to split taxes (e.g., personal property is lessee’s responsibility, while real estate taxes are lessor’s).
Damage vs. Ordinary Wear and Tear
At what point is damage to the land and infrastructure due to the lessee and not ordinary wear and tear? This could be further clarified between lessor and lessee.
Lessor and lessee should consider how permanent improvements are valued. For example, if Lessee needs a frost-free water system on a portion of the land, who would pay for this permanent improvement and/or how might the lessee be supported in making investments in permanent long-lived infrastructure improvements? In cases where Lessee rents Lessor-owned improvements, does Lessor have any obligations? The details regarding the relation between lessee and the improvements that they rent from lessor could be captured in this Lease or a separate agreement.
Reassessment of Lease Fee
The AC and lessee should determine what constitutes a significant change to trigger a reassessment of the lease fee, and who determines this. Changes may include local updates of property valuation, personal or business changes, and more.
Waiving Defaulted Rent
In the event of emergency, the Commons may waive defaulted rent. Waiver can be decided on a case-by-case basis, but before the waiver is effective, the lessee must first notify the Commons, both must agree that the hardship circumstances merit a waiver, and the waiver must be in writing and signed by the Commons.
5.1 Lessee shall be responsible for the Lease Fee, all Operating Charges, the Stewardship Contribution, and all Real Estate Taxes, all as subsequently defined.
5.2 “Lease Fee” shall be $_______. This Lease Fee will consider farm viability, ecological stewardship, and ____ Agrarian Commons management. The intent of the Lease Fee is to cover all expenses relating to ownership and stewardship of Agrarian Commons, including administrative costs; to contribute to the long-term sustenance of the Agrarian Commons and its mission; and provide Lessee long-term and affordable, non-exploitative, and equitable agricultural land use to enable agricultural production, a viable business, and healthy soil for the long-term; and includes an indigenous solidarity payment and a disenfranchised farmer support payment. If Lessee is BIPOC, the Lease Fee can be reduced by the amount of the indigenous solidarity payment and disenfranchised farmer support payment. Lessee shall pay the Lease Fee to Lessor.
5.3 Reassessment of Lease Fee will take place: (1) at least every six (6) years, or (2) sooner than six years when a significant change occurs with farm productions and operations; sales, market, and/or community; and/or stewardship needs or goals.
5.4 “Operating Charges” shall mean all expenses incurred in the operation, maintenance and repair of the Land, including, but not limited to, the following: (1) water, electricity, and other utility charges of every type and nature; (2) premiums and other charges for insurance and deductibles under such insurance policies; (3) any business, professional and occupational license tax payable by the Lessee with respect to the Land; (4) any costs to comply with legal or insurance requirements applicable to the Land (5) Real Estate Taxes associated with the total Lands leased and any farm infrastructure associated with this Lease; and (6) any other expense incurred in maintaining the Lands. To the extent possible, Lessee shall be billed directly for Operating Charges and pay directly to the bill issuer. To the extent not possible for Lessee to be billed and pay directly, Lessor shall be billed and pay the bill issuer. In such case, Lessee shall reimburse the Commons on account of the amount of the Operating Charges that are incurred by the Commons during the Lease Term. The Commons shall submit a statement, at least quarterly, setting forth such Operating Charges to Lessee. Lessee shall pay to the Commons the full amount of such Operating Expenses within sixty (60) days after Lessee’s receipt of such statement. Lessee’s obligations under this Section incurred up to the expiration or earlier termination of this Lease shall survive the expiration or earlier termination of this Lease.
5.5 The Lessee shall have the right to contest the amount or validity of any taxes or assessments on the Improvements or on the Land. The Commons may, upon written request by the Lessee, join in any such proceedings if the Commons shall reasonably determine that it shall be necessary or convenient for the Commons to so join in order for the Lessee to prosecute such proceedings. All costs and expenses of such proceedings shall be paid by the Lessee.
5.6 “Stewardship Contribution” shall be something of value contributed by Lessee for the proactive betterment of the Land included in this Lease and the activities permitted by this Lease to be made on such Land. Stewardship Contribution will be dynamic and targeted as Stewardship must be. The Contribution shall be mutually agreed to by both Parties and can be in a financial fee, goods, service, investment, management, time, or other valuable consideration. Stewardship fee will be reassessed: (1) at least every six years, or (2) sooner than six years when a significant change occurs with farm productions and operations; sales, market, or community; and/or when stewardship needs or goals.
5.7 “Real Estate Taxes” shall mean (1) all real estate taxes, special user fees, rates, and assessments (including general and special assessments, if any), ordinary and extraordinary, foreseen and unforeseen, which are imposed upon the Commons or assessed against the Land, and (2) any other present or future taxes or governmental charges that are imposed upon the Commons or assessed against the Land which are in the nature of or in substitution for real estate taxes, including any tax levied on or measured by the rents payable by lessees of the Land. Notwithstanding the foregoing, Real Estate Taxes shall not include any inheritance, estate, gift, franchise, corporation, net income or net profits tax assessed against the Commons from the operation of the Land, including all costs, fees, taxes and charges associated with Commons others uses, subleases and/or all forestry or Commons created agricultural products of the land. Lessee shall reimburse the Commons on account of the amount of the Real Estate Taxes that are incurred during the Lease Term. The Commons shall periodically submit a statement setting forth such Real Estate Taxes associated with the total Lands and any farm infrastructure associated with this Lease. The amount of the associated Real Estate Taxes will be determined by_________.
5.8 Upon their payment, each party will furnish evidence satisfactory to the other documenting the payment of all Taxes, assessments, and charges paid by such party as required or permitted by the provisions of this Lease. A copy of a paid receipt for such charges showing payment prior to the due date shall be the usual method of furnishing such evidence.
5.9. From and after notice (by the taxing authority having jurisdiction, or by the Commons) that the Lessee is delinquent in payment of any taxes, the Commons may require that some or all of such payments be made to the Commons as an additional payment, with payment due monthly in an amount (the “Advance Tax Payment”) determined by the Commons based on its estimate of the taxes to be escrowed so that the Commons will hold a sufficient amount to pay all such taxes not less than thirty (30) days prior to the date on which such items become due and payable. The Commons shall keep Tax Payments in a tax escrow account. Such tax escrow account may contain funds collected for such purpose from other Lessees of ___ Agrarian Commons. The Commons shall not be entitled to any interest on the payments made. Lessee’s failure to make Advance Tax Payments as a remedy to the event of failure to pay taxes described herein shall constitute a default as described in Article XIV of this Lease Agreement. The curing of such default shall proceed according to Article XIV, and must include a repayment plan with the Commons for all Tax Payments made on behalf of Lessee.
5.10 Lessee shall pay before delinquency any business, rent, or other taxes or fees that are now or hereafter levied, assessed, or imposed upon Lessee’s use of the Land, the conduct of Lessee’s farming operations on the Land, or the use of Lessee’s equipment, inventory or personal property. If any such tax or fee is enacted or altered so that such tax or fee is levied against the Commons or so that the Commons is responsible for collection or payment thereof, then Lessee shall pay as additional rent the amount of such tax or fee.
ARTICLE VI. INDEMNIFICATION and HOLD HARMLESS
6.1 Lessee shall not cause or permit any Hazardous Materials (as defined herein) to be generated, used, released, stored or disposed of in or about the Land. At the expiration or earlier termination of this Lease, Lessee shall surrender the Land to the Commons free of Hazardous Materials and in compliance with all Environmental Laws. “Hazardous Materials” means (1) synthetic pesticides, (2) asbestos and any asbestos containing material and any substance that is then defined or listed in, or otherwise classified pursuant to, any Environmental Law or any other applicable Law as a “hazardous substance,” “hazardous material,” “hazardous waste,” “infectious waste,” “toxic substance,” “toxic pollutant” or any other formulation intended to define, list, or classify substances by reason of deleterious properties such as ignitability, corrosivity, reactivity, carcinogenicity, toxicity, reproductive toxicity, or Toxicity Characteristic Leaching Procedure (TCLP) toxicity, (3) any petroleum and drilling fluids, produced waters, and other wastes associated with the exploration, development or production of crude oil, natural gas, or geothermal resources, and (4) polychlorinated biphenyls, urea formaldehyde, radon gas, radioactive material (including any source, special nuclear, or by-product material), medical waste, chlorofluorocarbon, lead or lead-based product, and any other substance whose presence could be detrimental to the Land or hazardous to health or the environment. “Environmental Law” means any present and future Law and any amendments (whether common law, statute, rule, order, regulation or otherwise), permits and other requirements or guidelines of governmental authorities applicable to the Land or the Land and relating to the environment and environmental conditions or to any Hazardous Material (including, without limitation, CERCLA, 42 U.S.C. § 9601 et seq., the Resource Conservation and Recovery Act of 1976, 42 U.S.C. § 6901 et seq., the Hazardous Materials Transportation Act, 49 U.S.C. § 1801 et seq., the Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq., the Clean Air Act, 33 U.S.C. § 7401 et seq., the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq., the Safe Drinking Water Act, 42 U.S.C. § 300f et seq., the Emergency Planning and Community Right-To-Know Act, 42 U.S.C. § 1101 et seq., the Occupational Safety and Health Act, 29 U.S.C. § 651 et seq., and any so-called “Super Fund” or “Super Lien” law, any Law requiring the filing of reports and notices relating to hazardous substances, environmental laws administered by the Environmental Protection Agency, and any similar state and local Laws, all amendments thereto and all regulations, orders, decisions, and decrees now or hereafter promulgated thereunder concerning the environment, industrial hygiene or public health or safety).
6.2 Notwithstanding any termination of this Lease, Lessee shall indemnify and hold the Commons, its employees, trustees, agents and others associated with the Commons harmless from and against any damage, injury, loss, liability, charge, demand or claim based on or arising out of the presence or removal of, or failure to remove, Hazardous Materials generated, used, released, stored or disposed of by Lessee or any Invitee in or about the Land. In addition, Lessee shall give the Commons immediate verbal and follow-up written notice of any actual or threatened Environmental Default, which Environmental Default Lessee shall cure in accordance with all Environmental Laws and to the satisfaction of the Commons and only after Lessee has obtained the Commons’ prior written consent, which shall not be unreasonably withheld. An “Environmental Default” means any of the following by Lessee or any Invitee: a violation of an Environmental Law; a release, spill or discharge of a Hazardous Material on or from the Land; an environmental condition requiring responsive action; or an emergency environmental condition. Upon any Environmental Default, in addition to all other rights available to the Commons under this Lease, at law or in equity, the Commons shall have the right but not the obligation to immediately enter the Land, to supervise and approve any actions taken by Lessee to address the Environmental Default, and, if Lessee fails to immediately address same to the Commons’ satisfaction, to perform, at Lessee’s sole cost and expense, any lawful action necessary to address same. If any governmental agency shall require testing to ascertain whether an Environmental Default is pending or threatened, then Lessee shall pay the reasonable costs as additional rent. Promptly upon request, Lessee shall execute from time to time affidavits, representations, and similar documents concerning Lessee’s best knowledge and belief regarding the presence of Hazardous Materials on the Land.
ARTICLE VII. ASSIGNMENT AND SUBLETTING
7.1 Lessee shall not assign, transfer or otherwise encumber (collectively, “assign”) this Lease or all or any of Lessee’s rights hereunder or interest herein, or sublet or permit anyone to use or occupy (collectively, “sublet”) the Land or any part thereof, without prior written approval from the Commons. Such approval shall not be withheld provided that the Lessee can demonstrate that the requested approval will further agricultural and economic collaboration across lands and farmers and that such collaboration or activity will be consistent with Agrarian Commons’ goals. If the Commons permits subleasing, the sublease shall be subject to all terms of this Agreement.
7.2 Except as allowed in the Preamble, any event (whether voluntary, concurrent or related) resulting in a dissolution, merger, consolidation or other reorganization of Lessee, or the sale or transfer or relinquishment of the interest of shareholders who, as of the date of this Lease, own a controlling interest of the capital stock of Lessee, shall be deemed an assignment of this Lease subject to the provisions of this Article. In addition, a transfer of all or substantially all of the assets of Lessee, either by merger, consolidation, or otherwise shall be deemed to be an assignment. This Lease does recognize and the Commons does recognize and consent to allow Lessee to reorganize and transfer the Lease, in full.
ARTICLE VIII. MAINTENANCE AND REPAIRS
8.1 Lessee, at Lessee’s sole cost and expense, shall promptly make all repairs, perform all maintenance, and make all replacements in and to the Land that Lessee is the primary user of to keep the Land in good, safe, farmable condition, and otherwise in accordance with all Laws and the requirements of this Lease. Lessee shall suffer no waste or injury to any part of the Land, and shall, at the expiration or earlier termination of the Lease Term, surrender the Land in an order and condition equal to or better than their order and condition on the Lease Commencement Date, except for ordinary wear and tear and damage by the elements. Except as otherwise provided, all damage to the Land caused by any act or omission of any invitee, agent, employee, contractor, client, family member, licensee, customer, or guest of Lessee (collectively, “Invitees”) or Lessee, shall be repaired by and at Lessee’s expense, except that the Commons shall have the right with written notification to the Lessee to make any such repair and to charge Lessee for all reasonable costs and expenses incurred.
ARTICLE IX. WASTE
9.1 Waste is considered beyond normal wear and tear to the property, and consists of the following: (a) voluntary waste occurs if Lessee intentionally or negligently causes harm to the land or other assets depleting any and all-natural resources; (b) permissive waste if Lessee is passively negligent, failing to maintain the property physically or financially (e.g. failure to pay property taxes, violation of conservation easement, non-report of mold in homes or buildings); (c) ameliorative waste if Lessee makes unauthorized improvements to the land (e.g. constructing a building in violation of a conservation easement or converting agricultural zoned land to commercial use); (d) equitable waste where Lessee commits unreasonable waste (e.g. extracting minerals, eroding the soil, or heavy application of deadly fertilizer).
9.2 If Lessee commits any type of waste on the property referenced in 9.1 and all dispute resolution provisions have been exhausted per Section 18.13, the Lessee may opt for a no-fault and termination of the Lease whereby the Lessee must vacate the property. If Lessee does not opt for no-fault and termination of lease, then a lawsuit will be brought against all Parties to the Lease to recoup monetary damages and/or possession of the Land. The Lessee will also be held responsible for any waste committed by any and all assignee(s), visitor(s), and/or temporary guest(s).
9.3 The Commons does not lease to the Lessee the right to remove from the Land any minerals lying beneath the Land’s surface. Ownership of such minerals remains with the Commons, and the Commons shall not remove any such minerals from the Land or lease the mineral rights to any entity. The Commons is also prohibited from leasing its water rights to any entity other than Lessee.
ARTICLE X. IMPROVEMENTS
10.1 Lessee is under no obligation to make any structural or other alterations, decorations, additions, improvements or other changes (collectively, “Improvements”) on or to the Land with the exception of items outlined in Attachment ________ and items referenced within this Lease.
10.2 If any Improvements are made they will be made after review and consent by the Commons, with the Commons’ decision based on Lessee autonomy to develop farm infrastructure as needed for viability, while being accountable to the wider values of the Commons. The Commons shall make decisions within six weeks of Lessee’s proposal for Improvements. If improvements are made without the prior written consent of the Commons, the Commons shall have the right at Lessee’s expense to remove and correct such Improvements and restore the Land to its condition immediately prior thereto, or to require Lessee to do the same.
10.3 All Improvements made by Lessee, whether purchased, constructed, or installed, on any part of the leased Land at any time during this Lease shall become the property of Lessee. Lessee retains the right to remove all Improvements and other items on the Land and return the land to its original condition.
10.3(a) If Lessee is not in default under this Lease, Lessee shall have the right to remove any non-permanent Improvements, including, but not limited to, arbors, movable sheds, appliances, solar panels, and other structures not anchored permanently to below-grade foundations. Removal of permanent Improvements may be undertaken only with the prior written consent of the Commons, which the Commons in its discretion may withhold for reasons related to its organizational purposes. If the Commons withholds consent to remove permanent improvements that were constructed at the Lessee’s expense, the Lessee shall be compensated for associated costs, less depreciation value.
10.3 (b). Dollar Value of Ownership Interest in Improvements. The dollar value of Lessee’s ownership interest in said Improvements shall be calculated in accordance with the formula in Appendix
10.4 At the expiration or earlier termination of the Lease Term, if the Land is not in a state similar to its original condition the Commons shall have the right at Lessee’s expense to repair all damage and injury to the Land caused by such removal or to require Lessee to do the same. If such equipment is not removed by Lessee prior to the expiration or earlier termination of the Lease Term, the same shall at the Commons’ option become the property of Commons and shall be surrendered with the Land as a part thereof; provided, however, that the Commons shall have the right at Lessee’s expense to remove from the Land such equipment and any Improvement that the Commons designates in writing for removal or to require Lessee to do the same. If Lessee fails to return the Agricultural Land to the Commons as required by this Section, then Lessee shall pay to the Commons, as additional rent, all reasonable costs incurred by the Commons in effecting such return. If improvements have rendered the original condition irrelevant, the Lessee shall not liable for expenses.
ARTICLE XI. INSPECTION
11.1 The Commons may inspect any part of the Land, except the interiors of fully enclosed buildings, at any reasonable time after notifying the Lessee at least 48 hours before the planned inspection. No more than four (4) regular inspections may be carried out in a single year, except in the case of an emergency, a report of a potential Lease violation, or in the event of an ongoing Lease violation. In such exceptional cases, the Commons may inspect any part of the Leased Land except the interiors of fully enclosed buildings, after making reasonable efforts to inform the Lessee before the inspection. Except in the event of an emergency, the Commons shall use all reasonable efforts to minimize disruption to Lessee’s farming operations in connection with any such entry.
11.2 Subject to the terms, covenants, conditions, restrictions, reservations and provisions of this Lease, so long as Lessee pays and performs all of its obligations under this Lease, Lessee has the right to not be disturbed in its possession and use. The Commons has no desire or intention to interfere with the personal lives, associations, expressions, or actions or with the agricultural and agrarian enterprises of the Lessee in any way not permitted by this Lease.
ARTICLE XII. INSURANCE
12.1 Throughout the Lease Term, Lessee shall obtain and maintain (1) general liability insurance (written on an occurrence basis) including contractual liability coverage insuring the obligations assumed by Lessee under this Lease and (2) worker’s compensation insurance for all employees if the business is of scale and income for worker’s compensation insurance to be viable. Such commercial general liability insurance shall be in minimum amounts typically carried by prudent lessees engaged in similar farming operations, but in no event shall be in an amount less than ______________ Dollars ($) combined single limit per occurrence with a ______________Dollar ($) annual aggregate. Such worker’s compensation insurance shall carry minimum limits as defined by the law of the jurisdiction in which the Land is located (as the same may be amended from time to time). The insurances above shall be adjusted to match usual and customary practices by similar organizations, as it is not possible to delimit or predict an appropriate amount over a 5-year period.
(a)All such insurance shall: (1) be issued by a company that is licensed to do business in the jurisdiction in which the Land is located, and that has been approved by the Commons; (2) name the Commons as additional insured/loss payee; (3) contain an endorsement that such policy shall remain in full force and effect notwithstanding that the insured may have waived its right of action against any party prior to the occurrence of a loss (Lessee hereby waiving its right of action and recovery against and releasing the Commons and its employees, trustees, agents and others associated with the Commons from any and all liabilities, claims and losses for which they may otherwise be liable to the extent Lessee is covered by insurance carried or required to be carried under this Lease); (4) provide that the insurer thereunder waives all right of recovery by way of subrogation against the Commons, its agents, employees, and representatives, in connection with any loss or damage covered by such policy; (5) be acceptable in form and content to the Commons; and (6) contain an endorsement prohibiting cancellation, failure to renew, reduction of amount of insurance or change in coverage without the insurer first giving the Commons thirty (30) days’ prior written notice (by certified or registered mail, return receipt requested) of such proposed action. No such policy shall contain any deductible provision except for a commercially reasonable deductible. The Commons reserves the right from time to time to require Lessee to obtain higher minimum amounts, situational, or different types of insurance if it becomes customary for other lessors of farmland in _______________ to require similar sized farms to carry insurance of such higher minimum amounts or of such different types of insurance. Lessee shall deliver a certificate of all such insurance and receipts evidencing payment (and, upon request, copies of all required insurance policies, including endorsements and declarations) to the Commons concurrently with Lessee’s execution of this Lease and at least annually thereafter. Lessee shall give the Commons immediate notice in case of fire, theft or accident on the Land, and in the case of fire, theft or accident on the Land if involving Lessee, its agents, employees or Invitees. Neither the issuance of any insurance policy required under this Lease nor the minimum limits specified herein shall be deemed to limit or restrict in any way Lessee’s liability arising under or out of this Lease.
12.2. In the event the Commons shall be required to pay any sum that is the Lessee’s responsibility or liability, the Lessee shall reimburse the Commons for such payment and for reasonable expenses caused thereby.
ARTICLE XIII. LIABILITY OF LESSOR
13.1 Except as otherwise set forth in the last sentence of this Section, the Commons, its employees, trustees, agents and others associated with the Commons shall not be liable to Lessee, any Invitee or any other person or entity for any damage (including indirect and consequential damage), injury, loss or claim (including claims for the interruption of or loss to business) based on or arising out of any cause whatsoever, including, without limitation, interruption in the use of the Land; any accident or damage resulting from any use of the Land or the operation on the Land of equipment or apparatus; termination of this Lease by reason of damage to the Land; or any fire, robbery, theft, vandalism, mysterious disappearance or any other casualty. If any condition exists which may be the basis of a claim of constructive eviction, then Lessee shall give the Commons written notice thereof and a reasonable opportunity to correct such condition, and in the interim Lessee shall not claim that it has been constructively evicted or is entitled to a rent abatement. Any property placed by Lessee or any Invitee on the Land shall be at the sole risk of Lessee, and the Commons shall not in any manner be held responsible therefor. Any person receiving an article delivered for Lessee shall be acting as Lessee’s agent for such purpose and not as the Commons’ agent. Notwithstanding the foregoing provisions of this Section, the Commons shall not be released from liability to Lessee for any physical injury to any person or property damage caused by the gross negligence or willful misconduct of the Commons, its employees, trustees, agents, and others associated with the Commons to the extent such injury or damage is not covered by insurance (a) carried by Lessee or such person, or (b) required by this Lease to be carried by Lessee.
13.2 Except to the extent caused by the gross negligence or willful misconduct of the Commons, its employees, trustees, agents, and others associated with the Commons, Lessee shall reimburse the Commons, its employees and agents for (as additional rent), and shall indemnify, defend upon request and hold them harmless from and against all costs, damages, claims, liabilities, expenses (including attorneys’ fees), losses, penalties and court costs suffered by or claimed against them, directly or indirectly, based on or arising out of, in whole or in part, (a) use and occupancy of the Land or the farming business conducted therein, (b) any act or omission of Lessee, its employees or agents or any Invitee, (c) any breach of Lessee’s obligations under this Lease, including failure to comply with Laws or surrender the Land upon the expiration or earlier termination of the Lease Term, or (d) any entry by Lessee upon the Land prior to the Lease Commencement Date.
13.3 If Lessee or any Invitee is awarded a money judgment against the Commons, then recourse for satisfaction of such judgment shall be limited to execution against the Commons’ estate and interest in the Land. No other asset of the Commons, or any director, member, or officer, trustees, agents and others associated with the Commons shall be available to satisfy or be subject to such judgment, nor shall any such person or entity be held to have personal liability for satisfaction of any such claim or judgment.
ARTICLE XIV. CONDEMNATION
14.1 If all of the Agricultural Land is taken by eminent domain or otherwise by government entities, or if so much of the Agricultural Land is lost or damaged beyond repair (collectively, “condemned”), then this Lease shall terminate on the day prior to the date Lessee is required to give up possession of the Agricultural Land and rent shall be apportioned as of such date.
14.2 All awards, damages, and other compensation paid on account of such condemnation shall be used for the Commons and the continuation of its mission-aligned projects. The Commons may also decide to equitably allocate damages between Lessee and Commons. Nothing in this Lease, however, shall prevent Lessee from pursuing a separate claim against the authority for relocation expenses and for the value of crops, equipment, and personal property on the Land at Lessee’s expense and which Lessee is entitled pursuant to this Lease to remove at the expiration or earlier termination of the Lease Term.
14.3 If this Lease is terminated as a result of damage, destruction, or taking, the Commons shall take reasonable steps to allow Lessee to enter into Lease on another parcel of Land owned by the Commons if such Land can reasonably be made available. Lessee understands there are numerous reasons why it may not be possible to make such Land available, and shall have no claim against the Commons if such Land is not made available.
ARTICLE XV. DEFAULT
15.1 Each of the following shall constitute an “Event of Default”: (a) Lessee’s failure to make when due any payment of or other fee; unless Lessee notifies the Commons and both agree hardship circumstances merit a reduction or waiver of payment or fee for an agreed upon timeframe (b) Lessee’s failure to perform or observe any covenant or condition of this Lease, and failure continues for ten (10) days after the Commons delivers written notice thereof to Lessee; (c) Lessee’s failure to farm or failure to complete stewardship practices for more than fourteen months, unless Lessee notifies the Commons and both agree hardship circumstances merit waiver of Affirmative Agriculture and Stewardship Requirements; (d) an Event of Bankruptcy as specified in Article XV; (e) Lessee’s dissolution or liquidation; or (f) any Environmental Default as specified in Section; or (g) any subletting, assignment, transfer, mortgage or other encumbrance of the Land or this Lease, unless agreed to under Section.
15.2 In the Event of Default, even if prior to Lease Commencement Date, then the Commons shall have the right to terminate this Lease and initiate summary proceedings under applicable law against Lessee. If necessary, the Commons may proceed to recover possession of the Land under applicable Laws, or by such other proceedings, including re-entry and possession, as may be applicable. If the Commons elects to terminate this Lease and/or elects to terminate Lessee’s right of possession, everything contained in this Lease on the part of the Commons to be done and performed shall cease. The Commons shall have additional rights and remedies to recover from Lessee arrears of rent and damages from any preceding breach of any covenant of this Lease.
15.3 Whether or not this Lease and/or Lessee’s right of possession is terminated or any suit is instituted, Lessee shall be liable for any Base Rent, additional rent, damages or other sum which may be due or sustained prior to such default, and for all costs, fees and expenses (including, but not limited to, brokerage fees, expenses incurred in enforcing any of Lessee’s obligations under the Lease or in placing the Land in rentable condition, and advertising expenses) incurred by the Commons in pursuit of its remedies hereunder and/or in recovering possession of the Land and renting the Land to others.
15.4 The Commons shall in no event be in default in the performance of any of its obligations under the Lease unless and until the Commons has failed to perform such obligations within sixty (60) days, or such additional time as is reasonably required to correct any default, after notice by Lessee to the Commons properly specifying the Commons’ failure to perform any such obligation.
15.5 All rights and remedies of the Commons set forth in this Lease are cumulative and in addition to all other rights and remedies available to the Commons at law or in equity, including those available as a result of any anticipatory breach of this Lease. The exercise by the Commons of any such right or remedy shall not prevent the concurrent or subsequent exercise of any other right or remedy. No delay or failure by the Commons to exercise or enforce any of the Commons’ rights or remedies or Lessee’s obligations shall constitute a waiver of any such rights, remedies or obligations. The Commons shall not be deemed to have waived any default by Lessee unless such waiver expressly is set forth in a written instrument signed by the Commons. If the Commons waives in writing any default by Lessee, such waiver shall not be construed as a waiver of any covenant, condition or agreement set forth in this Lease except as to the specific circumstances described in such written waiver.
15.6 Neither the payment by Lessee of a lesser amount than the annual installment of Base Rent, additional rent or of any sums due hereunder nor any endorsement or statement on any check or letter accompanying a check for payment of rent or other sums payable hereunder shall be deemed an accord and satisfaction. The Commons may accept the same without prejudice to the Commons’ right to recover the balance of such rent or other sums or to pursue any other remedy. Notwithstanding any request or designation by Lessee, the Commons may apply any payment received from Lessee to any payment then due. No re-entry by the Commons, and no acceptance by the Commons of keys from Lessee, shall be considered an acceptance of a surrender of this Lease.
15.7 If Lessee fails to make any payment to any third party or to do any act herein required to be made or done by Lessee, then the Commons may, but shall not be required to, make such payment or do such act. The taking of such action by the Commons shall not be considered a cure of such default by Lessee or prevent the Commons from pursuing any remedy it is otherwise entitled to in connection with such default. If the Commons elects to make such payment or do such act, then all expenses incurred by the Commons shall be added to the next Base Rent payment, and shall adhere to terms set forth for Base Rent.
15.8 If Lessee fails to make any payment of Base Rent, additional rent or any other sum on or before the date such payment is due and payable, then It shall be an Event of Default if such failure is not cured by Lessee within sixty (60) days. However, if Lessee shall make a good faith partial payment of at least half (1/2) of the amount owed during such initial 60-day period, then such period shall be extended one additional 30-day period. Should Lessee be unable to cure the default in either grace period, the Commons may grant further 30-day extensions at its discretion provided that Lessee offers a reasonable explanation of the default and a plan to cure such default within a reasonable period of time.
15.9 The Commons at its sole discretion may reduce, delay or waive entirely the Lease Fee at any time and from time to time in consideration of the hardship or incapacity of the Lessee or Lessee’s general ability to pay. The intent of this Section is to foster continued occupancy and farming by the Lessee despite the occurrence of unforeseeable financial and personal hardship, if reasonably possible. Any such reduction, delay, or waiver must be in writing and signed by the Commons before it will be effective.
ARTICLE XVI. BANKRUPTCY
16.1 An “Event of Bankruptcy” is the occurrence with respect to Lessee of any of the following: (a) Lessee becoming insolvent, as that term is defined in Title 11 of the United States Code (the “Bankruptcy Code”) or under the insolvency laws of any state (the “Insolvency Laws”); (b) appointment of a receiver or custodian for any property of Lessee, or the institution of a foreclosure or attachment action upon any property of Lessee; (c) filing by Lessee of a voluntary petition under the provisions of the Bankruptcy Code or Insolvency Laws; (d) filing of an involuntary petition against Lessee as the subject debtor under the Bankruptcy Code or Insolvency Laws, which either (1) is not dismissed within thirty (30) days after filing, or (2) results in the issuance of an order for relief against the debtor; or (e) such person making or consenting to an assignment for the benefit of creditors or a composition of creditors.
16.2 Upon occurrence of an Event of Bankruptcy, the Commons shall have all rights and remedies available pursuant to Article XV; provided, however, that while a case (the “Case”) in which Lessee is the subject debtor under the Bankruptcy Code is pending, the Commons’ right to terminate this Lease shall be subject, to the extent required by the Bankruptcy Code, to any rights of Lessee or its trustee in bankruptcy (collectively, “Trustee”) to assume or assign this Lease pursuant to the Bankruptcy Code. After the commencement of a Case: (i) Trustee shall perform all post-petition obligations of Lessee under this Lease; and (ii) if the Commons is entitled to damages (including, without limitation, unpaid rent) pursuant to the terms of this Lease, then all such damages shall be entitled to administrative expense priority pursuant to the Bankruptcy Code.
16.3 Any person or entity to which this Lease is assigned pursuant to the Bankruptcy Code shall be deemed without further act or deed to have assumed all of the obligations arising under this Lease on and after the date of assignment, and any such assignee shall upon request execute and deliver to the Commons an instrument confirming such assumption. Trustee shall not have the right to assume or assign this Lease unless Trustee promptly (a) cures all defaults under this Lease, (b) compensates the Commons for damages incurred as a result of such defaults, (c) provides adequate assurance of future performance on the part of Trustee as debtor in possession or Trustee’s assignee, and (d) complies with all other requirements of the Bankruptcy Code. If Trustee fails to assume or assume and assign this Lease in accordance with the requirements of the Bankruptcy Code within sixty (60) days after the initiation of the Case, then Trustee shall be deemed to have rejected this Lease. If this Lease is rejected or deemed rejected, then the Commons shall have all rights and remedies available to it pursuant to Article XV.
ARTICLE XVII. HOLDING OVER
17.1 If Lessee does not immediately surrender the Land or any portion thereof upon the expiration or earlier termination of the Lease Term, then the rent payable by Lessee hereunder shall be increased to equal one hundred fifty percent (150%) of the Base Rent, additional rent and other sums that would have been payable pursuant to the provisions of this Lease if the Lease Term had continued during such holdover period. Such rent shall be computed by the Commons and paid by Lessee on a monthly basis and shall be payable on the first day of such holdover period and the first day of each calendar month thereafter during such holdover period until the Land has been vacated.
17.2 Notwithstanding any other provision of this Lease, the Commons’ acceptance of such rent shall not in any manner adversely affect the Commons’ other rights and remedies, including the Commons’ right to evict Lessee and to recover all damages. Any such holdover shall be deemed to be a tenancy-at-sufferance and not a tenancy-at-will or tenancy from month-to-month.
ARTICLE XVIII. COVENANTS OF LESSOR
18.1 The Commons covenants that it has the right to enter, share, and use the Land for the primary purposes of: (1) engaging in land and property management and/or stewardship activities, (2) hosting, promoting, engaging members and community in Agrarian Commons and (3) any other planning, evaluation and assessment, and/or actions to address its goals, vision, and mission of the __ Agrarian Commons and of Agrarian Land Trust. The Commons must give Lessee at least 48 hours notice before entering, sharing, or using the Land to accomplish property management and/or stewardship activities. The Commons must give Lessee at least seven days’ notice before entering, sharing, or using the Land to accomplish any other activities outlined in (2) or (3).
ARTICLE XIX. GENERAL PROVISIONS
19.1 Lessee acknowledges that neither the Commons nor any broker, agent, employee, trustees or others associated with the Commons has made any representation or promise with respect to the Agricultural Land except as herein expressly set forth, and no right, privilege, easement, or license is being acquired by Lessee except as herein expressly set forth.
19.2 The Commons and Lessee each warrants to the other that in connection with this Lease it has not employed or dealt with any broker, agent, or finder. Lessee shall indemnify and hold the Commons harmless from and against any claim for brokerage or other commissions asserted by any broker, agent, or finder employed by Lessee or with whom Lessee has dealt. The Commons shall indemnify and hold the Lessee harmless from and against any claim for brokerage or other commissions asserted by any broker, agent, or finder employed by the Commons or with whom the Commons has dealt.
19.3 All notices or other communications required under this Lease shall be in writing and shall be deemed duly given and received when delivered in person (with receipt therefor), on the next business day after deposit with a recognized overnight delivery service, or on the second day after being sent by certified or registered mail, return receipt requested, postage prepaid, or any other legally recognized conveyance, to the following addresses: (a) if to the Commons, at each of the Lessor Notice Addresses specified in Article I; (b) if to Lessee, at the Lessee Notice Address specified in Article I. Either party may change its address for the giving of notices by notice given in accordance with this Section.
19.4 Each provision of this Lease shall be valid and enforceable to the fullest extent permitted by law. If any provision of this Lease or the application thereof to any person or circumstance shall to any extent be invalid or unenforceable, then such provision shall be deemed to be replaced by the valid and enforceable provision most substantively similar to such invalid or unenforceable provision, and the remainder of this Lease and the application of such provision to persons or circumstances other than those as to which it is invalid or unenforceable shall not be affected.
19.5 The provisions of this Lease shall be binding upon and inure to the benefit of the Parties and each of their respective representatives, successors, and assigns, subject to the provisions herein restricting assignment or subletting.
19.6 This Lease contains and embodies the entire agreement of the Parties hereto and supersedes all prior agreements, negotiations, letters of intent, proposals, representations, warranties, understandings, suggestions and discussions, whether written or oral, between the Parties. Any representation, inducement, warranty, understanding, or agreement that is not expressly set forth in this Lease shall be of no force or effect. This Lease may be modified or changed in any manner and at any time by an instrument signed by both Parties. This Lease includes and incorporates all Exhibits attached.
19.7 This Lease shall be governed by the Laws of the jurisdiction in which the Agricultural Land is located. There shall be no presumption that this Lease be construed more strictly against the party who itself or through its agent prepared it, it being agreed that all Parties have participated in the preparation of this Lease and that each party had the opportunity to consult legal counsel before the execution of this Lease.
19.8 Time is of the essence with respect to each of Lessee’s and the Commons’ obligations under this Lease.
19.9 This Lease may be executed in multiple counterparts, each of which shall be deemed an original and all of which together constitute one and the same document. Faxed signatures shall have the same binding effect as original signatures.
19.10 Notice of this Lease shall be recorded ________________
19.11 If the Commons or Lessee is in any way delayed or prevented from performing any obligation (except, with respect to Lessee, an obligation to pay rent, additional rent, or other sums owed by Lessee to the Commons under this Lease) due to fire, act of God, governmental act, or failure to act, strike or labor dispute involving employees other than those of the party seeking to rely on this Section, inability to procure materials, or any cause beyond such party’s reasonable control (whether similar or dissimilar to the foregoing events), then the time for performance of such obligation shall be excused for the period of such delay or prevention and extended for a period equal to the period of such delay, interruption, or prevention.
19.12 Lessee and the person executing and delivering this Lease on Lessee’s behalf each represents and warrants that such person is duly authorized to so act; that Lessee is duly organized, is qualified to do business in the jurisdiction in which the Land is located, is in good standing under the Laws of the state of its organization and the Laws of the jurisdiction in which the Land is located, and has the power and authority to enter into this Lease; and that all action required to authorize Lessee and such person to enter into this Lease has been duly taken.
19.13 All disputes arising out of or relating to this Lease Agreement or the performance of either party hereunder shall first be submitted to non-binding mediation to be held in ___________ or in close proximity. The complaining party shall notify the other party in writing of its intent to submit a matter to non-binding mediation. Within thirty (30) days after the other party’s receipt of this notice, each party shall either:
19.13(a) appoint either a person experienced in sustainable farming in ___________________or the agrarian real estate market in the same region to serve as a mediator. The two mediators shall select a third mediator who also must meet one of the qualifications set forth in the preceding sentence. The three mediators shall work with the Parties to help them in reaching a resolution to their dispute, OR
19.13(b) agree to work with the Agricultural Mediation Program for ______[state].
19.14 If the Parties are still unable to reach a resolution after this mediation process, then either party may submit the matter to binding arbitration or to a court, as described below. Any non-equitable dispute arising out of or relating to this Agreement or the performance of either party hereunder shall be finally settled by binding arbitration to be held in ______________. The Commercial Dispute Resolution Rules of the American Arbitration Association shall govern the arbitration, except that the Federal Rules of Evidence shall also apply. Any decision made pursuant to such arbitration shall be binding on the Parties and judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. Any equitable action entitled to be taken by a party arising out of this Agreement shall be filed exclusively within the courts of the State of ______________ and the Parties consent to, and agree not to contest, the jurisdiction of such courts for the purposes of any such action. In the event that the arbitration or court should rule in favor of the Commons, the Lessee shall pay one-half (50%) of the Commons’ expenses and in the event that the arbitration or court should rule in favor of the Lessee, the Commons shall pay one-half (50%) of the Lessee’s legal expenses.
19.15 Notwithstanding any requirement of this Lease for Lessee to obtain advance permission, approval, allowance or similar from Lessor to perform an act, engage in a use, or make any improvement (“Approval”), Lessee shall not be required to obtain such Approval where such act, use or improvement would involve less than $5,000 and less than 500 square feet of land and would not trigger the application any governmental approval or notice requirement.
IN WITNESS WHEREOF, the Commons and Lessee have executed this Lease as of the day and year first above written.
___ Agrarian Commons ____________________________________________
Printed name, title w/__AGRARIAN COMMONS, INC.
Printed name, title
Duly authorized (if lessee is an organization)
EXHIBITS/ATTACHMENTS may include the following, if applicable:
- Ecological Stewardship Standards
- Conservation Easement and/or pre-existing encumbrances on the property
- Use area mapping
- Land Goals
- Collaborative work and/or sharing of goods/services/use/land agreements/sublease/rental/other use agreements conveyed out by lessee
- Building, Infrastructure, and Investments agreements
- Home rental agreements
- Equipment lease
- Pre-occupancy comprehensive facilities report
- maintenance and improvements plan
- Baseline documents referenced in Good Faith Understanding (agreement between AT and AC)