It keeps happening ...

First, to the land’s current market value. Take a minute and a look at Farm Credit Canada’s website and track the rapid escalation in Alberta and Saskatchewan over the past ten years.

Do what experienced investors do and get a professional valuation update every three years or so, if for nothing else to keep your estate plan current.

You do have an estate plan, right?

Secondly, research into what the open market would be willing to pay on a rental basis. Unfortunately, there is no definitive database like land titles to compare to but there are resources.

Every district has its own range, primarily related to the quality of the land but also to competition. In the Midwest, the range for cash rent is from $50 to $90 per cultivated acre, or higher.

Third, and maybe most importantly, determine what terms should be in a good agricultural lease. It is a legal contract that protects not only the principals on each side, but also their successors.

For this, landowners should be consulting an experienced agricultural lawyer, not Google.

For the record, I don’t understand why landowners feel they need to offer a Right of First Refusal to a tenant.

I do believe loyal tenants who have treated the land and owner with respect throughout the years should be given the first opportunity to make an offer without it being put on the open market.

To construct such an offer, each party should get a separate professional opinion on value, then sit down and see if there is common ground.

I will say this as strongly as I can. Please don’t grant the Right of First Refusal in a lease agreement. All that does is allow the tenant to make the decision about what the sale price will be, instead of the owner, and almost never to the benefit of the owner.

Too many times I have been told by qualified buyers they will not participate in bidding on land with a ROFR as it is often just an exercise to find the price it will sell for to the predetermined buyer.

I am sure this position may generate some snarky phone calls but our family rents land from our neighbours, too.

We appreciate being allowed to be the guest steward of the property, and should the day come when it is time for the ownership to change, hope we will be treated as fair as we have tried to treat the owner.

No more, no less.

Vern McClelland is an associate broker with RE/MAX of Lloydminster and an active partner in his family’s livestock operation. Comments on this article are welcome either by emailing vernmcclelland@remax.net or calling 306-821-0611.