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Grazing Leasing and Liability

Guidelines and Examples

To Honor and Protect the Ranching Way of Life

800-242-7820 | www.tscra.org

Texas and Southwestern Cattle Raisers Association

1301 West 7th, Suite 201

Fort Worth, Texas 76102



TexasandSouthwesternCattleRaisersAssociationisprovidingthisinformation asareferenceonly.Any

informationprovidedinthispublicationisnotintendedtobelegaladvice,norisitintendedtobea

substituteforlegalservicesfromacompetentprofessional.



ThispublicationwasputtogetherwiththeassistanceofChadLee,Attorney:

TheLawOfficeofChadLee

320HemphillStreet

FortWorth,Texas76104

817‐332‐6638

www.aglawsolutions.com



TypesofLeases:

• Grazing

• Farming

• Hunting

• Fishing

• OilandGas

• Wind

• Etc.

WhatIsaLease?

Aleaseisalegallyenforceableagreementbetweentwoormorepartiesthatrequiretheperformanceof

someactionfortheexchangeofsomegood.Leasesareaspecifickindofcontract.

BasicLeaseStructure

Abasicleaseincludestheoffer,subjectmatter,considerations,acceptance,andcapacity.Theofferis

whensomeonewantstoleasetheproperty.Thesubjectmatteristhespecificpieceofpropertyin

question.Considerationsincludethecostoftheleaseandanyotherterms.Thenextstepisthatthe

offer

isacceptedandcapacityisdetermined.



TypesofLeases

Therearemanydifferenttypesofleases.Beforebeginningan

agreement,thetypeofleasemustfirstbedetermined,aseach

typeofleasemayrequireadifferentsetofguidelines.



Keyterms:

Lessor–landlordorowneroftheland

Lessee–thetenantorpersonwhopaysthelease

Lender–bank,farmcreditassociationandsometimesindividuals

Obliger–personwhomthedutyofperformanceunderthecontractis

owed

Obligee–personobligatedtoperform

Example

“I,JohnDoe,agreetoleasemyranchinSomewhere,Texas

toJaneDoefor$500.”



Thisisabindingcontrac t,butleavesatremendousamount

ofroomforguesswork.

FourCornersRule:

Aruleholdingthatifadocument(asa

contract,deed,orwill)appearsonits

facetobecomplete,nooutside

evidencemaybeusedtochallengeit.

BasicRulesofOralLeases:

Validif:

 Performedinlessthanone

year

 Goodssoldareworthless

than$500

LengthsofLeases

TenancyatWill

Tenancyatwillcanbecancelledbythelessororthelesseeatanytime.Thisleaseisgenerally

notwell‐likedbythecourts.Atenancyatwillleaseisoftenmoreuncertainthanwhatmost

peopleprefer.



PeriodicTenancy

Periodictenancycoversmostoralagricultural

leasesandusuallylastsforoneyearorless.This

typeofleaserenewsautomaticallyunlessadequatenoticeisgivenbyoneoftheparties,orthe

partieshavemutuallyagreedtoendthelease.



TenancyforaTermofYears

Thisleaseislongerthanoneyearandmust

beinwriting.It

terminatesattheendoftheleaseunlessanew

agreementismade.The“FourCornersRule”appliesto

thistypeoflease.



TenancyatSufferance

Thisreferstoasituationwhenthereisacontractlikeoneoftheaboveandthelesseerefusesto

leave.Thiscanbeaddress edthrough eviction,fine,doublerentorsimplyallowingarenewal.



OralLeasesandContracts

Oralleasesandcontractsareenforceableundercertaincircumstances.

Thetermsneedtobedecideduponbybothparties.Useoforalleases

shouldbedeterminedbythesituationandlessee/lessorinvolved.Ifthe

verbalagreementfitsanycriteriawithintheStatuteofFrauds,the

agreementmustbeinwriting.



ExamplesofValidOralLeases

 AverbalagreementtoleaselandthatbeginsonJanuary 1andends

onDecember31

 Averbalagreementtogatherandshipcattleinthespringofa

certainyear

 Averbalagreementforaseason‐longhuntinglease

TypesofAgriculturalLeases



InaCashRentLease,thetenantorlesseehasagreedtopayeitherafixeddollarperacreamountora

setrentfortheentirefarmorranch.Thismeansthelessorgetsasteadystreamofincome,regardlessof

theprofitabilityofthelesseewithlittleor

noconcernaboutcommodityprices .Ifdesired,thelessorcan

putinthewrittencontractaclausethattakesintoaccounttheprofitabilityofthelesseethateither

increasesrentingoodyearsorlowersrentinpooryears.Thelesseegenerallyhasmorecontroloverthe

operationbecauseofthe

assumptionthatthelessorismoreinterestedintherentalpaymentthanthe

farmingorranchingpracticesofthelessee.



Somefederalprogramsandstatutesrequirethananindividualbe“activelyengagedinfarming”inorder

toparticipate.Cashrentingfarmlandisoftennotconsideredtomeetthisstandard

becausethelessoris

notsubjecttothe traditionalrisksassociatedwithfa rming.  Becausethe lessoris not“actively  engaged

in farming” (or materially participating), the cash income is not subject to self‐employment tax and is

notconsideredtobeearnedincomeforthepurposesofdetermininghowa

socialsecuritycheckwillbe

modifiedifthelandlordhasalreadyretired.



InaCrop‐ShareLease,thelandlordwilltypicallyshareintheinputcosts(feed,seed,fertilizer,fuel,etc.)

andprovidetheland.Thetenantorlesseewillprovidelaborandtherestoftheinputs.Afterthecropis

harvestedorthecattlesold,thelandlordwilltakean

agreeduponpercentageinexchangeforrentand

theirshareoftheinputs.



Thisprovidesanopportunityforincreasedordecreasedrevenue,dependinguponsuccessofthe

operation.Thelandlordsharestheriskswiththetenant,whichmaysatisfythe“a ctivelyengagedin

farming”requirementofsomegovernmentprogramsand

statutes.Thistypeofleasealsogivesthe

landlordashareinthedecision‐makingprocess.



Moneycollectedbythelandlordwillbesubjecttoself‐employmenttaxesandmaylowertheamountof

alandlord’ssocialsecuritycheckifheorsheisretired.



ThingstoconsideraboutCashRentLeases:

• Whenisrentdue?(atthebeginningorendofthe

lease?)

• Isinsurancerequired?

• Arethereanyactivitiesthatthelesseeisprohibitedfrom

doingontheproperty?

ThingstoconsideraboutCrop‐ShareLeases:

• Canyougetalongwiththetenant?

• Shoulditbeoralorwritten?

• Whatdoyouknowaboutthetenant’sreputation?

DraftingConsiderations

• Soilandwaterquality–are

backgroundsamplesneeded?

• Determinesustainabilityoftheuse.

• Identifyresponsibilityfor

maintenanceoffences,roads,

barns,etc.

• Clarifyallusesoftheproperty

(includingprohibitedactivities).

• Determinewhenthelease

terminates.

• Intheeventofthedeath

ofaparty,

whathappenstothelease?

• Clarifystanceonassignmentand

subleasing.

Ifrestrictionsarenot

communicated,thentheydo

notexist!

HybridLeases



Hybridleasesaregenerallyacombinationofcashrentandcrop‐shareleases.Theyusuallyrequirea

minimumrentwithabonusifprofitabilityisgreaterthanacertainamount.Hybridleasesshouldalways

beinwriting.



AllowedAgriculturalPractices

 RowCrops–Identifywhatthelesseeisallowedtogrow

andwherethisispermitted.Determinehowfertilizerand

chemicaluseisregulated.

 LivestockOperations–Identifywhatspeciesthelessee

isallowedtoraise.Determinestockingratesforspecific

pasturestomakesurelandisnot

beingovergrazed.

 CropRotation–Determinewaterusageandbuffer

zonesaroundwater.

 RestrictedWildlifeHabitat–Thisincludesland

maintainedforpersonaluse,protection,orgovernment

programs.Theseareasneedtobedefinedintheleas e.



MaintenanceofFences,Roads,etc.

Itisimportanttodeterminewhohastheresponsibilityofmaintenanceofsomepartsoftheproperty.

Thisincludeshouses,fences,androads.Iftherearehousesontheproperty,itneedstobedetermined

whowillberesponsiblefortherepairs,taxes,electricity,etc.Iffencesneedtobe

built,thelessorshould

providespecificsonhowthefenceistobeconstru cted.Onceafenceisbuiltbyatenant,thefence

stays.Defineroadusage.Ifroadsarenottobeusedwhenit’smuddy,duringcertaintimesoftheyearor

bycertainpeople,thismu stbe

addressedinyourlease.



PropertyUse



Ifthelandisbeingusedforhunting,thelessorneedstoclarifyif

therearecertaindaysorareaswherehuntingisnotpermitted.The

leaseshouldaddresstrashpickup(hulls,brass,etc.).Anyother

restrictedactivitiesshouldbeaddressedinthelease.Thelease

shouldaddresssubleasing.If

arestrictiononsubleasingisnotinthe

lease,thetenantcangenerallysublease

.



DeathofaParty



Intheeventofthedeathofaparty,theestateofthedescendentwillusuallycontinuetheleaseuntilits

naturaltermination.

Invited,feepayingguests

cannotignoreopenandobvious

dangerousconditions.

TerminationoftheLease

Intheeventofabreachofaleaseconditiondetermineifthereisarighttoterminateafterthebreach.

Generally,thereisn’tarighttoterminateunlessitisclearinthelease.Ifit’snotclear,youmustsuefor

damagesorinjunctiverelief.Abreachof

contract(failuretopay,etc.)givestherighttoterminatethe

lease.Partiescanterminatetheleasebyagreement.



LandownerLiability

Chapter75oftheTexasCivilPracticesandRemediesCode(TCPRC)istheLimitationofLandowner’s

Liability.Thelandownerhasnodutyofcaretoatrespasserandisnotliableforinjuryexceptinthe

eventofwillfulorwantonactsofgrossnegligencebytheowner,lessee,orother

occupantof

agriculturalland.



Thelandownerhasthesamedutyofcareastoatrespassertoinvitedguestswith nochargeforentry

andisresponsibleonlyfordeliberate,willful,ormaliciousinjurytoapersonorproperty.Thisincludes

relativesandneighborswhoareinvited,butnotbeing

paid.



Thelandownermustgivefeepayingusersadequateandtimelynotice

ofdangerousconditionsonthepropertythatare1)personallyknown

or2)areasonableinspectionwouldreveal.



Iftheinvitedguestischargedafee,thelandowner hasnogreaterdutythanisowedatrespasseruntil

the

totalchargescollectedduringtheprevious calendaryearexceeds20timestheamountofthead

valoremtaxesimposedonthepremisesforthepreviousyear.



Thereisliabilityinsuranceavailablethroughumbrellapolicies.Farmand Ranchliabilitycoversbodily

injury,propertydamage,medical,chemi caldrif t,andrecreationallanduseactivities.Contractlabor

assumestheriskoftheirprofessionsolongastheyareengagedinactivitiesoftheirprofession.



The“AttractiveNuisanceDoctrine”coversunaccompanied,trespassingchildrenunder16.Itapplies

whenachildistooyoungtoappreciateorrealizeadangerouscondition;thelocationoftheconditionis

onethelandownerkneworshouldhaveknownthatchildrenfrequent;andtheutilityofmaintainingthe

conditionisslight

comparedtotheprobabilityofinjurytochildren.



Example

Taxesfor2010were$2,000.Ifrevenuegeneratedbyinvited

guestsexceeds$40,000,thenlandownerisnolonger

protectedbythestatute.



GrazingLeaseAgreement



StateofTexas



Countyof  



ThisGrazingLeaseismadeandenteredintoasofthis dayof ,20byand

betweenPARTIESasLessor,and

 ,asLessee.



Lessor,forandinconsiderationof  andNo/100Dollars($###)andgoodandother

valuableconsideration,herebyleasestoLesseetheLeasedPremiseslocatedin   

County,Texas,anddescribedasfollows:



Lesseeshall,duringthetermofthislease,usetheLeasedPremisesforthepurposeof 

(i.e.pasturing,feeding,grazingcattle)limitedtothenumberof

(i.e.cattle)allowedperacreasestablishedbytheTexasAgriculturalExtension

Service.



Thisleaseistocommenceonthedatehereofandendinoneyeartobeautomaticallyrenewed

andextendedfromyeartoyear,unlessterminatedinwritingbyLessororLessee.



LesseeshalloccupythepremisesatLessee’sownriskandLessorshallnotbeliabletoanyone

fortheactionoromissionsofLessee,Lessee’sagents,servants,employees,customers,visitors

orlicensees,andLesseeagreestoindemnifyandholdLessorharmlessfromallclaimsand

causesofactionresultingfromorallegedtohaveresultedfrom

suchactionsoromissions

includingattorney’sfeesandexpensesincurred.Lesseeshallnotbeliabletoanyoneforthe

actionsoromissionofLessor,Lessor’sagents,servants,employees,visitors,orlicensees,and

LessoragreestoindemnifyandholdLesseeharmlessfromallclaimsandcausesofaction

resultingfromor

allegedtohaveresultedfromsuchactionsoromissionsincludingattorney’s

feesandexpensesincurred.



Lesseeshallnotassign,subleaseorpermitthirdpartiestooccupyoruseanyportionofthe

PremisesduringthetermoftheleasewithoutthewrittenconsentofLessor.



ThisLeaseistheentire

agreementoftheparties,andtherearenooralrepresentations,

warranties,agreementsorpromisespertainingtothisLeasenotincorporatedinwritinginthis

Lease.



ThisLeasemaybeamendedonlybyaninstrumentinwritingsignedLessorandLessee.



Notwithstandinganythingcontainedhereintothecontrary,thisleasemaybeterminatedat

anytimebyLessee,provided,however,thatLesseehasgiventhirty(30)dayswrittennoticeto

Lessor.UponterminationofthisGrazingLeasebyeitherLessororLessee,Lessorshallbe

responsibleforfencingthepropertyshouldthey

desiretokeepthecattlefromtheirproperty.



Executedon  

.



LESSOR:LESSEE:







ReleaseofLiabilityandAcknowledgmentandAcceptance

ofDangers,RisksandHazardsofHuntingLease

IherebyacknowledgethatIhaveknowinglyandwillinglyenteredaHuntingLeaseAgreement,

orbecameapartyboundbythetermsandconditionsofaHuntingLeaseAgreementbyand

between_____________,etal.(hereinaftertheLessor,whetheroneormore),and

_______________,etal.,dated_____________,20__.Iunderstandtheterms,provisionsand

conditionsofthatHuntingLeaseAgreementandagreetoabidebyitsterms,provisionsand

conditions.

Ifurtheracknowledgeandunderstandthatnowarranty,eitherexpressorimplied,ismadeby

theLessorastotheconditionofthehuntinglease(hereinaftertheleasedpremises)locatedin

_______________County,Texas,orofanyroads,buildings,gatesorotherimprovements

locatedthereon.Thisdocumenttowarnmethatdangerousconditions,risksandhazardsdo

exist.Mypresenceandactivitiesontheleasedpremisesexposebothmeandmypropertyto

dangerousconditions,risksandhazards,includingbutnotlimitedto:poisonoussnakes,insects

andspiders;blindsandtreestands,whetherornoterectedbyLessor;erosionandgeneral

conditionoftheland,bothonandoffroadwaysorsenderos,creatingrough,hazardousand

dangerousdrivingandwalkingconditions;animalsbothwildanddomesticthatmaybe

diseasedand/orpotentiallydangerous;deepwater;personswithfirearmsbothonoroffthe

leasedpremises;andtheuseofvehicles.IherebystatethatIexpresslyassumeallsuch

dangers,risksandhazards.

Inconsiderationfortherighttoentertheleasedpremises,Iherebyreleaseandagreeto

protect,indemnifyandholdharmlesstheLessorandhisorherrespectiveheirs,agents,

employeesandassignsfromandagainstanyandallclaims,demands,causesofactionand

damages,includingattorneys'fees,resultingfromanyaccident,incidentoroccurrencearising

outof,incidentaltoorinanywayresultingfromtheuseoftheleasedpremisesandall

improvementsthereon,whetherornotcausedbytheLessor'snegligenceorgrossnegligence.

ThisreleaseappliesduringthetimethatIampermittedontheleasedpremises.Ihereby

furthercovenantandagreethatI,myheirs,successorsandassignswillnotmakeanyclaimor

instituteanysuitoractionatlaworinequityagainsttheLessororhisorherrespectiveheirs,

agents,representatives,employees,successorsorassignsbyreasonofconditionsoftheleased

premisesoractivitiesoccurringthereon.

Asusedinthisrelease,thetermsI,mypersonandmyselfinclude

minorsinmycarewhileon

theleasedpremises.

Dateandsignedthis_____dayof___________,20___.

__________________________________________________

(Hunter'sSignature)(Hunter'sPrintedName)



________________________________________________________

(Hunter'sAddress)

GuestLiabilityandIndemnificationAgreement

________________________________________(hereinafterreferredtoasGuest)

Guesthasbeengivenpermissiontocomeuponthe

_________________________________________RANCHlocatedin

____________________________________COUNTY,TEXAS(hereinafterreferredtoas

theOwnersPremises)operatedby________________________________________

(hereinafterreferredtoas"Owner").

Guestacknowledgesandunderstandsthatnowarranty,eitherexpressorimplied,is

madebytheOwnerastotheconditionoftheOwner’sPremises.Thisdocumentisto

warnGuestthatdangerousconditions,risksandhazardsdoexistontheowners

premises.Guestacknowledgesthathuntingandotheractivitiesonruralpropertysuch

astheOwner’sPremisesdoeshaveunknownhazardsandrisksandcanresultininjury

orpropertydamagetotheperson/personsinvolvedintheseactivities.Themany

possibilitiesandsourcesofinjuryordamageareacknowledgedbyGuests,andhe/she

comesontheOwnersPremiseswithfullknowledgethathazardsandrisksexist.

AsapartoftheconsiderationforbeingallowedbyOwnertoenjoyhuntingactivitieson

theOwner’sPremises,GuestHEREBYINDEMNIFIES(RELEASES)OWNERfromallliability

forpersonalinjury(includingwrongfuldeath)orpropertydamagesufferedbyGuest

whichiscaused,inwholeareinpart,byanyactivityorconditionontheOwner’s

Premises.Guestunderstandsthisagreementandhasagreedthatneitherhe/she,nor

hisheirsorpersonalrepresentativeswillbeabletosueOwnerorhisassociatesforany

injuryorpropertydamagethatGuestsufferswhileontheOwnersPremises.

GuestINDEMNIFIESANDRELEASESOWNERFROMALLLIABILITY.



Asusedinthisreleaseagreement,thetermGuest/Guestswillincludeanyminorsinthe

GuestscarewhileontheOwnersPremises.AllGuestswhobringminorsunderstandthe

Ownerisnotresponsibleforthecareorsafetyofminors.TheGuestswhobringminors

ontotheOwnersPremisesassumetheresponsibilityforwatchingandcaringforthe

minor’ssafetyandguardingagainsthazardsatalltimes.



Guesthasreadthisdocumentandunderstandsit.

He/Sheissigningitfreelyandvoluntarily.



Dated_____________________________________________

 ___ ___________

Guest(s)____________________________________________

_ ___________

________________________________________________

_________ _____

Witness___________________________________________

___________

ENDOFAGREEMENT



Page 16

Texas and Southwestern Cattle Raisers Association

1301 West 7

, Suite 201

Fort Worth, TX 76102

800-242-7820