Inflation remains high. Landlords, particularly agricultural landlords, may well want or need to raise rents. Raising rent on an agriculture lease may be especially difficult.
Generally, the terms of a written lease control the modification of rent. In contrast to a typical written lease, many agricultural leases are verbal, and the tenancy is typically on a year-to-year basis. Therefore, an agricultural landlord will need to terminate the verbal lease to raise rent.
The Wisconsin statutes set out elements of an enforceable lease. Verbal leases are valid in Wisconsin, but subject to statutory guidelines and timeframes that limit what landlords can do or claim for damages. Most agricultural leases are for a minimum of one year, although many are multiyear leases.
A valid multiyear lease under Wis. Stat. sections 704.03(1) and 706.02 requires several items.
Under Wis. Stat. section 704.03(2), an unwritten, verbal agricultural lease is deemed to be a year-to-year lease. To terminate a verbal agricultural lease, the landlord must provide at least 90 days’ notice.1 The notice to terminate the tenancy under Wis. Stat. section 704.19(4) must follow these requirements:
- the notice must be written (either formal or informal). Even a handwritten notice on a napkin may be sufficient; and
- the notice must contain information that substantially informs the tenant of:
- the landlord-tenant relationship;
- the landlord’s intent to terminate tenancy and date of termination; and
- the landlord name, the tenant name, property address, notice period of termination, e.g., 90 days, and date that tenancy will officially end.
A notice with errors that do not mislead is still valid. Errors may include missing the names of one of several landlords or tenants. Under Wis. Stat. section 704.19(5), an incorrect termination date will become the next valid termination date applicable to the tenancy and will rollover to the next valid termination date applicable to the tenancy.
If a tenancy is terminated due to rent or breach violations, the notice must identify the amount of rent owed and/or breach at issue. Notices for breach of lease or failure to pay rent require a cure period before an eviction can commence. A breach of a verbal agricultural lease allows for termination upon five days of notice, whereas ending the tenancy requires 90 days of notice.
A new, one-year verbal agricultural lease is created under Wis. Stat. section 704.25 if an agricultural landlord chooses to keep a tenant on verbal lease at the end of a lease period. If a tenant stays on the property past the termination date, then they are a holdover tenant. If the landlord accepts rent from the holdover tenant, then a year-to-year lease is considered to continue.
If the agricultural landlord does not accept rent payments after termination, landlord can recover damages from the holdover tenant. Wis. Stat. section 704.27 grants landlords damages of twice the daily rent value each day held over for as long as the tenant is in possession of the property.
Service of the notice is also important. Improper service of the notice may make the notice invalid, and the landlord will have to reserve the notice and update the termination date. Improper service of notice on tenants will restart the 90-day notice period even if the landlord has complied with the other service requirements.
There are five approved methods for serving a notice under Wis. Stat. section 704.21:
- personal service – i.e., handing the notice physically to the tenant or a family member at least 14 years of age;
- leaving notice with an individual apparently in charge of the premises and mail a copy via regular mail;
- post a copy in a conspicuous place and mail a copy via regular mail to the address
if the tenant cannot be served after three attempts;
- certified mail (the preferred choice and the easiest; however, you must save the certified mailing green receipt as proof of service to be used in court); or
- serve tenant as prescribed in Wis. Stat. section 801.11 for service of a summons.
Wis. Stat. section 704.21(5) is a catch-all provision that states, “if notice is not properly given under section 704.21(1) but is actually received by tenant or other party, then notice is deemed properly given but burden is on party alleging receipt (usually the landlord) to prove by clear and convincing evidence that notice was received.”
To avoid these problems, an agricultural landlord should almost always utilize a written lease. To enforce a lease for a term of longer than a year, it must be written and comply with two sets of statutory requirements.
The written lease must, under section 706.02:
- identify the parties;
- identify the land subject to the lease;
- identify interest conveyed and any material terms;
- be signed by all parties; and
- be delivered.
And under section 704.03, state:
- the amount of rent or other consideration;
- the time of commencement and expiration of the lease; and
- a reasonably definite description of premises.
Written leases protect agricultural landlords in a variety of situations. Agricultural landlords can preserve claims for waste and breach of lease with a written lease. Breach of lease claims are difficult to enforce, and in some cases unenforceable, without a valid written lease defining litigable breaches and permissible activities on the property.
For example, an agricultural landlord with a verbal lease would struggle to enforce a breach claim such as if the tenant chose to plant a different crop or use an unapproved pesticide on the property.
The absence of a written lease makes it difficult to discern whether a breach has occurred at all. Therefore, a written agricultural lease that discloses permitted uses protects all parties involved. This may be especially true where certain uses may harm the landlord’s underlying property.
Conclusion: Use Written Leases
The definitiveness of a written lease and its value cannot be overstated. A written lease can determine rent, tenancy duration, and default with unmatched precision relative to a verbal lease. Without written provisions, agricultural leases are governed in-part by statute and in-part by the costly bane that is litigation.
Therefore, agricultural landlords should insist on written leases that set out the parameters of approved uses on a property, the termination of the lease, and damages for breach claims.
Absent such protective provisions, a landlord may find themselves foreclosed from claiming damages for harm to their property, the disposal of a holdover tenant’s property, and for the removal of a holdover tenant at the end of an unwritten lease.
This article was originally published on the State Bar of Wisconsin’s
Solo/Small Firm & General Practice Blog of the Solo/Small Firm & General Practice Section. Visit the State Bar
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1 Wis. Stat. § 704.19(3).