New 35ha property - now we need to lease it!

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3 years 1 month ago #554268 by Dr. Sea
Kia ora everyone, we’re about to settle on our 35ha property (11 paddocks, some regenerating bush), which we’re planning to subdivide and turn into an eco community in a few years.

However, it’ll be at least two years until we can move there and the previous owner asked us to let him lease the land for cattle grazing. We have no idea what exactly that entails - I’ve read some of the posts here but he’s a difficult character and we didn’t get off on the best foot to start with, so I’d like to go in at least somewhat informed of what he’s asking and we’re able / needing to provide.

Some specific questions I’d really appreciate some advice with:

- is it better to use a formal lease via our lawyer or a written email outlining the terms? Would anyone have either?

- what are current grazing rates for calves and cattle (per head / week)?

- what are usual lease terms if anything happens to his cattle or if they destroy any of our fences?

- what’s a normal term for leases like that (he said he’ll sell the cattle at some stage soon)?

- what happens re the stock wells / water supply - is that a separate cost?

- I read about the need for fertilising. It’s a pretty fertile paddock already by my laywoman’s eyes and we want to go permaculture / organic / Regen Ag once we live there (or sooner if we can lease it to a Regen Ag outfit - that’s another question!), also I don’t think he ever fertilized the land before... so I don’t want to do that. Is that a normal lease requirement of the land owners?

- Finally, the land is in Golden Bay, if everyone knows of any other similar ventures there we’ll be down over Easter and would love to meet some likeminded neighbours! :)

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3 years 1 month ago #554279 by Jaybee
It's best to have a formal lease document drawn up by a solicitor experienced in rural matters.

Generally the lessee pays a fixed amount for the property each month and is responsible for weed control, an agreed rate of fertiliser application and normal maintenance of the fences and yards. The water supply is included in the lease and if electricity was needed to run it the lessee would pay the bill. If something happens to the cattle it's his problem, if they bust the fences it's his responsibility to fix them.

I wouldn't attempt to charge individually per animal per week, the numbers would vary according to the season and it would require a lot of interactions with him, plus in that situation you are more providing grazing services which require you to take responsibility for the animals.

You'd have an agreed notice period, generally at least a month.

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3 years 1 month ago #554282 by Dr. Sea
Thank you so much, Jaybee that is super helpful! How do we know what an acceptable monthly rate is? I know it'll vary by how many cows he'll got on there etc. but what's a ballpark figure so we don't go in completely blind? Many thanks again, Sea

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3 years 1 month ago #554283 by linrae
Ask around where you are what leasing rates are,
Where I am most people lease the lane eg say $200.00 per acre
What person leasing puts on in way stock of is their business They have to ensure that there is enough feed to cover stock no.
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3 years 1 month ago #554284 by tonybaker
Honestly, legal agreements are not worth the paper they are written on! What you have to consider is how would you enforce any wrongdoings? This site is littered with sad tales of when things go wrong. You say you have already had bad words with the lessee so things don't look too good. It's worth looking around for another partner even if you have to make it a freebie. After all, you want someone to care for the land for 2 years, so is the income crucial to the operation?

My first lease was to a local butcher who allowed me to go to his shop every Friday and take whatever meat I wanted, it was embarrassing at first but he was happy and we never had any problems with disputes and had no hassles with income, GST or accountants.

If you do want to waste money on a lawyer, make sure your agreement spells out very clearly what the remedy will be if the lessee doesn't behave, it's no good saying "you will look after the fences" Ideally, you need to take out a lien over his car or cattle etc so that he can't just walk away and ignore you. I doubt that he would sign such a lease though. Good luck!

5 acres, Ferguson 35X and implements, Hanmay pto shredder, BMW Z3, Countax ride on mower, chooks, Dorper and Wiltshire sheep. Bosky wood burning central heating stove and radiators. Retro caravan. Growing our own food and preserving it. Small vineyard, crap wine. :)

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3 years 1 month ago #554285 by Dr. Sea
Thanks for that honest advice, Tony - I can certainly see quite a few pitfalls with that particular character, but he is also our closest neighbour so showing some goodwill may be worth our while longterm? I can see how he'd potentially get more miffed if we bring him some strict legal contract, but then we don't want to risk just getting railroaded straight away either. Sigh. It'll be a bit of a balancing act for sure! Cheers Sea

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3 years 1 month ago #554287 by LongRidge
I've been grazing LSBs for 25 years now, but nothing as large as 35 h. I have tried the formal contract method, but the land owners never want anything what-so-ever to do with it, so won't sign. The land that I graze is steep and unfertile. And without fertiliser inputs your land will not grow pasture very well in three years. Plants cannot eat complex nutrients like poo and seaweed. Before they can use it, these have to be broken down by bugs to simple chemicals. So you might as well put on the correct chemicals in the correct proportions for the crop that you want to grow. For pasture, this is sulphate, nitrate, phosphate, potassium and calcium carbonate. For the animals that graze the pasture additions of selenium, cobalt, sometimes iron, sometimes copper, sometimes magnesium, and sometimes sodium chloride are needed by the animals eating the pasture. If you don't fertilise for pasture then weeds will grow better soon, and then the native vegetation will start to take over.
Remember that when leasing a property that the owner of the land has absolutely no right to use it. Think of you renting a car, TV, house - the owner of that thing cannot use it while you are renting it. So your inspections must be by agreement.
I consider that supply of water and of adequate fencing at the start of the lease is the land owners responsibility. If I have to fix his fences to keep my animals in then I will charge him for that. Ditto if I have to control weeds, or if I have to get the fertility right for pasture.
I prefer to pay for the type and number of animals that I am able to run on the leased land. If the owner does not want me to charge him for the regular fertiliser applications that are essential then I pay less per animal. Most land owners limit which of our animals can be grazed on their land, and they frequently change their minds about what can be grazed. When they start getting finickety for no good reason, it is not worth bothering to graze their property.
We have been trying to get prime heifers away for 6 months now. They are probably cows now so will be worth about $300 less than they were worth 6 months ago. Fortunately, the rigs that we accidently bought don't have an age penalty so are not getting worth less as they get older, but they are a damned nuisance and are trying to play bull games with me now. My body can't handle a bash from a 500 kg bull that wants to play head-butts, but I can't get them away. Your tenants will be in a worse situation than I am in at Brightwater. I need at least 3 months notice to be able to quit stock so that the tenancy is not detrimental to me. If I am able to do it faster than that and profitably I will try hard to do so. But usually a tenant can't.
At the moment $200 per acre per annum for average quality pasture is about correct. An acre should give about $400 gross income, so half to you and half to him. But if he wants to fertilise to increase his income that should be at his cost. But if you are being paid per animal per day, that should be at your cost, since he will be able to run more animals for longer, so your income will be higher.
And don't forget to declare the income from the lease (about $17000 per annum) because he will certainly be claiming it as a cost. Any income, whether or not GST is involved, is supposed to be declared to IRD.
Good luck from over The Hill.
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3 years 1 month ago #554288 by linrae
You say about to settle on this block.
Damm shame you had not thought about this when making an offer for it.
Have you got a plan worked out for future use or going to wing it
Have u any experience in land usage and management.
It is so easy to get caught out on blocks this size not really lifestyle needs more management than someone who is in full time employment can normally give
Good luck with sorting this out shame nothing in purchase agrèment

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3 years 1 month ago - 3 years 1 month ago #554296 by max2
[quote="Dr. Sea" post=554

- is it better to use a formal lease via our lawyer or a written email outlining the terms? Would anyone have either? Federated Farmers have lease contracts but they are hugely expensive esp. if you are not a member. There are already a couple of Acts in Law that offer both parties some protection. It will be excluded from the Tenancy Act being vacant land and if the Lessee does not derive their main income from that piece of land.

- what are current grazing rates for calves and cattle (per head / week)? It per acre/per annum, not per head (despite what people on other forums will tell you! that came about from grazing dairy replacements which involves some work by the lessor

- what are usual lease terms if anything happens to his cattle or if they destroy any of our fences? I read your original post and you say you are going ahead with a subdivision but retaining two blocks for yourself, and that the current owner has already gone to a certain extent to obtain subdivision approval. That being the case, I wouldn't expect new fencing from someone grazing stock, rather basic maintenance for the sake of keeping the stock in. He should have standard public liability cover anyhow as all stock owners are supposed to.

- what’s a normal term for leases like that (he said he’ll sell the cattle at some stage soon)? referring back again to your subdivision plans, what are you planning for the property? Is it def. a fixed term arrangement or possibly might change within that 24 month period? I have to say from personal experience, it is terrible trying to deal with landowners who flip flop about with their plans, as a lessee, you have no idea whether to apply short or long term fert for grass growth/health.

- what happens re the stock wells / water supply - is that a separate cost? Depends on what is on site. We have several lease properties, mostly the water is supplied by the land owner. We supply our own to another, but that came about as the developer never disconnected troughs from the original farm supply which we purchased thereafter.

- I read about the need for fertilising. It’s a pretty fertile paddock already by my laywoman’s eyes and we want to go permaculture / organic / Regen Ag once we live there (or sooner if we can lease it to a Regen Ag outfit - that’s another question!), also I don’t think he ever fertilized the land before... so I don’t want to do that. Is that a normal lease requirement of the land owners? A word of caution, try not to be a google farmer and assume what someone has/hasn't done. It's the first step towards causing poor relationships. If you want to know what fertility/minerals/ph is in your soils, get them tested. By all means, if you want to practice soil health and improvement in a certain way, then make this known at the outset and in writing with anyone who grazes. In saying this though, two years isn't a long time for someone to obtain benefit from applying certain fertilisers so you might be best to foot this bill yourself.

- Finally, the land is in Golden Bay, if everyone knows of any other similar ventures there we’ll be down over Easter and would love to meet some likeminded neighbours! :)[/quote] What is your regional Council's take on the Govt's clean rivers bill? Being that sized property, it's possible you are going to have to foot the bill for an environmental farm plan at some point in the near future

I agree 100% with LR in that if you go down the track of having someone graze your property, you must realise it is not yours to enter unless you have permission.

Two years trying to get soil fertility up and thriving isn't very long, esp. if the block has been neglected (which is quite likely if the owner was drawing up plans to subdivide) so I wouldn't expect much from a grazier other than to keep the pasture in check, fencing repaired as and when required, pest and weed control. Having said that, its been a terrible summer for weeds our way and having re-seeded some pastures, the sprays required to knock over various weeds would have severely compromised the new seedlings. Sometimes as a land owner/grazier, you never feel you are winning!
Last edit: 3 years 1 month ago by max2.
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3 years 1 month ago #554302 by linrae
Well put certainly covers lots of points that should have been settled before buying

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3 years 1 month ago #554304 by Jaybee
It's definitely true that leasing can cause a lot of problems. Our neighbour (who is not a nice man) leases 100 acres of Maori land on our boundary. He is supposed to do annual fertilizer and weed control but never does, the block is a mess and the owners can't do anything to enforce it. The boundary fence is also bad and the livestock keep escaping to our place, but neither party will contribute to fixing the fence so we've had to do it.

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3 years 1 month ago #554305 by max2

Jaybee wrote: It's definitely true that leasing can cause a lot of problems. Our neighbour (who is not a nice man) leases 100 acres of Maori land on our boundary. He is supposed to do annual fertilizer and weed control but never does, the block is a mess and the owners can't do anything to enforce it. The boundary fence is also bad and the livestock keep escaping to our place, but neither party will contribute to fixing the fence so we've had to do it.


Legally the boundary fence is the responsibility of the landowners. If it was me, I would have issued them with a fencing notice as per the act with the necessary quote and then taken it to the disputes tribunal to sort out if the landowners failed to come to the party.

If they have a troublesome tenant/lessee, it's up to them to resolve it, but it doesn't absolve them of their responsibility as an adjoining landowner.

But yeah, dealing with multiple shareholders is an issue all of its own too.

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3 years 1 month ago #554311 by StephHarmon

max2 wrote:

Jaybee wrote: It's definitely true that leasing can cause a lot of problems. Our neighbour (who is not a nice man) leases 100 acres of Maori land on our boundary. He is supposed to do annual fertilizer and weed control but never does, the block is a mess and the owners can't do anything to enforce it. The boundary fence is also bad and the livestock keep escaping to our place, but neither party will contribute to fixing the fence so we've had to do it.


Legally the boundary fence is the responsibility of the landowners. If it was me, I would have issued them with a fencing notice as per the act with the necessary quote and then taken it to the disputes tribunal to sort out if the landowners failed to come to the party.

If they have a troublesome tenant/lessee, it's up to them to resolve it, but it doesn't absolve them of their responsibility as an adjoining landowner.

But yeah, dealing with multiple shareholders is an issue all of its own too.

I agree, would've done the same thing.

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3 years 1 month ago #554324 by Dr. Sea
I think you are missing some context - we are developing the property as a developer business and the original owner had also planned to subdivide and sell lots. He's just asked to graze his cattle on a month-by-month basis til he sells them but was meant to have sold them already by the settlement date (this was a recent request, thus it's not in the purchase agreement). To us, it seemed like a win-win situation (as long as we could ensure some of the questions I asked above were covered by whatever agreement we entered) seeing we won't be moving in any heavy equipment in the short term and it'll keep the weeds down (until we know exactly which parts we want to rewild). We will only keep a lifestyle-sized block for ourselves, half of which is already covered in regenerating bush and the rest we'll build on / develop into gardens. So that's our plan - not large-scale farming or leasing for grazing. Ngā mihi.

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3 years 1 month ago #554331 by linrae
No where in your original post did you say you were a DEVELOPER BUSINESS as in this post.
People offered experience from their past dealings in leasing land,
So I dont think people have been missing the point.
Whatever happens please have courtesy to report your outcome to those who tried to offer help/

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