Today's episode: What would you do?

Fellow approached me 3 years ago and wanted to rent some ground. We settled on a cash rent figure and drew up a self renewing contract with a provision to (in writing) adjust the rent rate up/down and possibility add more acreage in the future. Two years ago he spread about 2 tons lime per acre. He has had continuous beans and last fall he drilled wheat and it will be ready in another 2-3 weeks. He had urea spread about a month ago. His rent was due in February and I've called several times asking about it and asked and what his plans for 2015 were since he has a wheat crop on me and hasn't paid anything. He informed me that he can't pay rent this year but "might be able to pay some" from his wheat crop check that is currently on me. I'm going to talk with an attorney in the morning about a crop lien so I can have at least some income off the that ground and try to find someone to plant beans after the current renter combines his wheat. What is fair - 1/3, 1/2, total rent, shares of the wheat crop? Should I consider some of the lime residual from 2 years ago?

the total amount of rent due plus attorney's fees is what the lien should be for unless you have a late payment agreement where he owes a penalty and that should be in it as well. The lime residual should not be counted as he spread the lime for his benefit not yours. Since he has already benefited from it, it should not be a consideration unless you feel like being generous.

I rent a farm from the neighbor for 2/5-3/5. Land owner gets 2/5 and operator gets 3/5.

I should have been more clear - want opinions on what I should figure rent due from the current defaulted cash renter that has the wheat crop on me. He will not be able to double crop soybeans. Local rumor is he is trying to get a workman's comp settlement from his full time employer.

The lime is good for about six years. I think you owe him for two thirds of the lime bill.

If you are not able to get a lien on the wheat. He probably already has a first lien holder with a loan.
I would have a combine ready to go when that wheat was ripe and run off enough to cover the rent as possession is nine tenths of the law.

Warning, I am not a lawyer, but I did sleep at a Holiday Inn Express once.

Well a general rule of thumb around here is lime is prorated over 3-4 years. So I would think that you will have some value left to credit him for the lime application. As for you getting a crop lien. I would bet that you will find he is already mortgaged to the hilt. You need to check and see what liens he has. It is a Public record. IF he already has a crop lien then you can file a lien against the crop BUT you would be behind the first secured creditors. You really needed a UCC1 filed long before this to have any protection. Forget about "taking" some of the wheat crop as payment unless he agrees and the crop is not mortgaged. IF there is a lien on file and you receive some of the crop YOU can be made to PAY that amount back to the secured party. I have seen it happen. It does not seem right but your are an UNSECURED creditor right now. You really needed to be asking these questions back in Feb. when he defaulted on the rental agreement. Your kind of trying to shut the door after the horse ran away now.

As for renting the ground for double crop soybeans. IT really depends on where your located if that will work. Here in North-East Iowa it does not work out very well.

"Your kind of trying to shut the door after the horse ran away now."
True, but I'm hoping the horse is still in the paddock somewhere. I kept getting assurances. I suppose that I believed him when I saw the urea spreader in mid-April but then he wouldn't answer phone calls until today.

Double cropping beans after wheat is the norm here in this part of Illinois - as late as July 15th with a short season group bean. (30 bushel average, though)

I did not mean to sound flip with you. I would try to talk to the man face to face and try to get a "feel" on how you think he will act. You said he is trying for a disability settlement??? He may be stressed out and life might seem over whelming to him right now. In a face to face meeting by starting out easy you may still be OK as far as payment. It would more than likely be your best bet for payment on the current crop.

As for going forward that would be a different thing. You really need to see how this pans out first. If you line up another tenant right now and the current fellow knows about it your much less likely to get any payment for the current crop.

Just go and see the fellow and try to work with him for now seems your best bet.

I guess things are different in different places but with places I've rented Feb 1st was usually the rent due date and if I didn't pay by Feb 1st I was out period.In my state
whatever improvements are made to real property like a building becomes the property of the landowner if the lease is broken by the person leasing the property.So why would the lime or even the planted crop be different?

"he is trying to get a workman's comp settlement from his full time employer" He sounds like a professional freeloader to me. I wouldn't give a second thought about compensating him for the lime; he probably hasn't paid for that, either. You might even get a bill from his fertilizer supplier.

Unfortunately, with only a couple of weeks before harvest, you don't have enough time to act. In hindsight, you should have sent him an eviction notice back in February or March, which would have given you three months for the case to wind through the court. Most likely he would have showed up for his first court appearance with a rent check in hand. If he had been evicted, you would be within your rights to harvest his wheat and keep whatever proceeds you thought he owed you. Now there's no legal way for you to stop him from harvesting.

Having leased out cropland, I'm really surprised to hear of a renter stiffing his landlord in advance of the crop. Maybe if the rent is split (as mine is) between April and December a tenant might fail to make the December rent, but it's never happened to me.

As far as putting a lien on his wheat, a couple of thoughts come to mind: First, you can be pretty sure there's already a lien against his crop and anything else he owns. Second, you may be surprised to learn that a bushel of wheat has neither a serial number nor a title certificate. Once he hauls his crop out of your field, it may be pretty difficult to stop him from selling it and pocketing the proceeds.

I think you need to talk to LawyerMan. Good luck.

Deere seller I disagree on some of your post. Baring aside state farm laws the crop is on this guys land a stop work order and take the crop if need be. Around me as others said any improvements stay with the land.

Of course the wheat having no serial number works the other way too,I'd have the wheat combined take out my rent and cost of combining and send him a check for the rest with
'full payment for wheat' written on it.No way anyone is going to win that case against the landowner.

>No way anyone is going to win that case against the landowner.

I wouldn't bet on it. Failure to pay rent is a civil matter. Stealing grain is criminal. In this case, it would probably be a felony.

(quoted from post at 19:24:49 06/01/15) I should have been more clear - want opinions on what I should figure rent due from the current defaulted cash renter that has the wheat crop on me. He will not be able to double crop soybeans. Local rumor is he is trying to get a workman's comp settlement from his full time employer.

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Don't matter, he owes for the rent and any fees you incur collecting period.

We had a guy here who rented land without an agreement for the following year. He planted oats as a cover crop for alfalfa thinking that if he did the landlord would have no option to rent to him for the next 5 years. The following spring when he showed up to pay the first half rent he was told it had already been rented to another farmer. When he threaten legal action the guy handed him paperwork from his lawyer that was already filed in the courthouse. Short story is he was out everything. Could not have happened to a nicer guy!

RIck

No criminal court I've ever been around would even consider the matter to be criminal since its a dispute between landowner and tenant,we had tenants steal the washer and dryer when they left a rental house and the cops said it was a civil matter just because it was a dispute between owner and tenant.Anyway possession is 90% of the law.At the very least if it were on my property and I couldn't do anything else all the wheat would mysteriously get knocked down the night before harvest.

When I originally consulted with my attorney, his opinion was pretty close to what you have stated. The grain lien is placed at a specified elevator that the renter sells his grain to. Lien laws are very strict here and the property owner has to be notified in a timely manner. While in the lumber business I had to notify the property owner within 14 days of the first material delivery and then furnished property owner with a lien waiver for the amount the contractor paid each month. When last statement was paid I issued a final lien waiver.

Looks like its been hashed out pretty well.

Every state has different laws, different court cases setting up a pattern to follow in absence of set law.

In the past (1980s) some farmers defaulted on rent for current year, and with no notifications sent out, got to auto renew the lease for the following year at the same rates, and defaulted on those also.

With 2 years of free rent under their belt, they were able to become the BTO in the areas as real farmers struggled to pay their bills and hang on. It left the honest hard working fellas way behind, and set up the sleepy types as the big wheels in each county and a new set of business rules and ethics - well non-ethincs - for the farming world.

So, a word to the wise to follow the advise of the local attorney you have, so you don't get hooked for more damages in the next year.

It sounds like he is down on his luck maybe, and if you can work with him get a plan worked out, as others suggest.

I'd say the lime might be a 5 year deal, but depends what your soil was, what type of lime he applied, and how much. Ag lime at the recommended rate would be a 5 year consideration.

If he is someone you wish to continue working with and this is a down on his luck deal, I would try to get the full amount as the contract spells out eventually, but considering the farm ecconomy and $3.27 corn today compared to $7 corn less than 2 years ago (similar issues with all grain prices), your rental rates might need to be adjusted quite a bit for future years? If he was a good farmer and paid on time/ well in the past, you may want to lighten the load for 2014/15 despite the contract you hold, based on where crop prices have gone.

So as mentioned, a chat and character assessment with him and where you want to go with all this is in order. Work with or kick to the curb, and follow a plan to get where you want to go, protect your side of the ball.

Paul

>we had tenants steal the washer and dryer when they left a rental house and the cops said it was a civil matter

Bad analogy. If you had entered the house while your tenants were still living there, and hauled off their 60 inch flat screen TV in lieu of rent, you can bet your bottom dollar you would have ended up in the hoosegow. And that's exactly what you're telling the OP to do: enter property that's in the possession of the renter and take something that belongs to the renter. Hopefully he's getting better legal advice than that.

(You may be wondering: "how does he know my deadbeat tenant had an expensive TV?" Answer: They ALL do.)

>The grain lien is placed at a specified elevator that the renter sells his grain to.

And if your renter decides to haul his grain on down the road to the next elevator?

Well it sounds like you and his lienholder have something in common,he's going to try to stiff you both.I'd go talk to them,work out a split on the wheat and get it combined and
trucked to them.And about a week before the wheat is ready I'd to the sheriff;s office and
have a no tresspass notice served on him.

The renter has broken the lease and having a crop somewhere is far different and falls under very different laws from someone living in a house.The renter isn't on the premises for one thing only his 'possessions' the wheat and that can cover a big grey area.Even in my state once the renter has moved off the premises anything left over 24hrs becomes property of the owner."He didn't pay the rent so I assume he's out of here" is a very reasonable conclusion and sounds like this guy won't be in any financial situation to cause much trouble.Also going around the area stiffing a bunch of landowners and businesses I doubt the local DA is going to do much for him.

Of course you could do the Christian thing and get a couple neighbors to help and harvest his crop for him and take it to his elevator since he's in such bad shape he has to be on disability and certainly wouldn't be able to do things like run a combine.More than 1 way to skin the ole cat(LOL).Like others said keep your lawyer informed.BTW my wife use to work for a collection agency and knows all the tricks.Oh and I'd get my lawyer to check in on his disability claim as they might not realize he's able to farm.

Jocco it really depends on what state. Here in Iowa the rental laws are real strict. Here are some over views of the rules.

Termination of a Lease:

A farm lease automatically continues from year to year unless a notice of termination is given by either party. Under Iowa law, the lease termination notice must be properly served by September 1, prior to the end of the lease year. The termination notice must fix the termination of the tenancy to take place on the following March 1. If notice is not served, the lease continues for another crop year upon the same conditions as the original lease. However, if mutually acceptable to all parties concerned, a lease can be terminated or modified at any time.


Landlord¡¯s Lien:

In Iowa, a statutory (created by state law) landlord¡¯s lien exists. The lien is applicable whether the lease is for cash rent or crop share. The statutory lien is a lien ¡°upon all crops grown upon the leased premises, and upon all other personal property of the tenant which has been used or kept thereon during the term and which is not exempt from execution.¡±

Over the years, landlord¡¯s liens have been a powerful device for landlords. A landlord¡¯s lien takes priority over the rights of a purchaser of property subject to the lien and it takes priority over security interests held by lenders. Under current law, a landlord¡¯s lien, to have priority, must be filed using a financing statement (UCC 1 Financing Statement). That¡¯s the same document used by a lender to handle a new secured loan. To be effective, the financing statement must be filed when the tenant takes possession of the leased premises or within 20 days after the tenant takes possession. In addition, the financing statement must include a statement that it is filed for the purpose of perfecting a landlord¡¯s lien.


So you see any liens would have had to be filed long before now to be in effect and the dead line to remove the tenant is long past for this year.

Different rules for different areas. So you really need to consult a GOOD local attorney.

Actually, that is exactly what I offered to do - with combine or with the trucking. He said once he got into the cab he'd be OK.