Smart Leases for a Tight Land Market

Thursday, March 19, 2026

Communication & relationships support more secure agreements

By Emily McKinlay

When exploring opportunities for farm growth, limited land availability and rising purchase prices often leave farmland leases as the primary option for expansion.

Farming unowned land comes with uncertainty, but transparent communication and a strong written lease agreement can mitigate some of that risk.

Jill Verwey, president of Keystone Agricultural Producers, farms on her family’s multi-generational mixed grain, oilseed, and pulse farm just outside of Portage la Prairie, Man. She says many lease structures are changing.

“I think there are still a lot of farm leases, especially with older generations, that are based on a handshake, paying the rent, and trusting that you are going to have that land the next year or as long as the owner is around,” says Verwey.

“The rental agreement for a lot of producers is heavily weighted on the trust and good relationship that you have with the landowner. There is a risk to not having an agreement in writing, but there are probably a lot of acres rented on that basis. With rising intergenerational change of ownership on a lot of land, the next generation might want something in writing for their farmland lease.”

Leigh Anderson, a senior economist at Farm Credit Canada, says that managing this risk starts by sharing expectations for the land and lease agreement.

“Open communication of needs and expectations on both sides, while thinking about the long-term, is the first step to a win-win arrangement for both parties,” says Anderson.

When arranging land leases, Prairie producers should focus on upfront communication and good relationships with landowners and their community, in addition to risk management strategies.

Finding land & building relationships

Even when leasing, land availability can be challenging.

“Land can be very hard to find,” says Janet Patriquin, deputy farmers’ advocate for Alberta’s Farmers’ Advocate Office.

“There isn’t much available, and most landowners don’t have to advertise. They will put the word out around town. If you know a farmer in your area who is going to retire or if they have a renter who’s going to retire, you can put your name out there.”

When land does become available, farmers with good relationships with neighbours and the community are often the first to hear about it.

“A lot of finding rental land is still word of mouth and knowing your neighbours,” says Verwey, who notes the importance of respecting other farmers.

“Most farmers don’t drive from yard to yard anymore. I think a lot of leases are based on gentlemen’s agreements in our area. Our farm tries to satisfy the terms of the long-term rental agreements we have, and we aren’t out to try to take land away from someone already renting it.”

Patriquin also recommends a respectful approach to contacting landowners.

“Here in Alberta, it’s a bidding war. If you’re going to approach a landowner, you need to be respectful of the current renter. Just let them know you’re interested if things don’t work out, but approaching the landowner and offering a much higher rental rate than they are currently getting creates so much animosity in the community,” warns Patriquin.

“If you’re respectful and something doesn’t work out, you’re going to have a better chance at getting land. Having a good relationship with other renters benefits everybody.”

Connections with other renters can also be valuable for exploring current rental rates or learning about prospective rental farms.

Verwey adds, “Starting a lease agreement goes past the monetary remuneration that you may pay. It speaks to the relationship you have with the landowner, and that starts with having a good reputation and relationship with the community.”

Trust is the basis for a successful landowner-renter team and plays a role in negotiating the details of an agreement.

Creating a lease agreement

In the past, many leases were based on a handshake and a verbal agreement. While built on trust and respect, they can create space for misunderstandings and risk.

“If the agreement is in writing, everyone should be clear on expectations on both sides,” says Anderson.

When negotiating a lease, Patriquin recommends starting with a discussion of priorities and expectations.

“Decide what type of agreement you want to have. Determine what rate works for both parties based on what they feel is reasonable,” says Patriquin.

A complete understanding of the property's productivity and related agreements can inform rate discussions.

“Do your due diligence. You should find out about the land’s growing capabilities and if there are other agreements in place,” says Patriquin.

“Make sure there isn’t somebody who has a current lease on the title and know what else is on title in terms of surface leases, right-of-ways, and wetlands. Find out if there are unwritten access agreements with neighbours.”

Anderson also recommends asking the landowner whether they have access to production records, including fertilizer rates, production potential, and recent crop history.

After gathering information, rental rates and agreement terms can be adjusted to meet the needs of both parties. There is no single correct way to lease land.

“As long as you’re in agreement, a lease can be anything. There are endless possibilities,” says Anderson.

“Cash rent is still most common, especially in Western Canada. Landowners can set rental rates based on what they have previously received, what other owners are getting down the road, or to cover costs or land taxes. Some flexible rental agreements can fluctuate with commodity prices, meaning rent can go up or down depending on conditions. This helps both parties.”

He says other arrangements could include crop-share agreements or an option to share or borrow equipment.

Lease length should also be discussed. Producers intending to farm long-term or make improvements may prefer a long-term lease.

Patriquin also recommends discussing lease agreement options with an accountant to understand the tax implications.

‘Important Considerations for Land Rental Agreements’ is an Alberta Farmers’ Advocate Office fact sheet which offers these lease recommendations:

• Complete tenant and landowner information,
• A description of the land, including a legal land description, the number of acres, and any features that are included or excluded,
• The agreement length and terms of renewal,
• Compensation terms,
• A description of land use, maintenance, and protection,
• A description of how default and termination would be handled,
• Any liability insurance requirements and statement of governing law,
• A description of the protocols for subletting and sale of lease property,
• A statement of indemnity to protect the landowner from damage caused by the tenant,
• Descriptions of any other access agreements and the landlord's right of entry,
• And any other agreements between the landowner and renter.

The FAO recommends that a written agreement be reviewed by lawyers and signed in the presence of witnesses.

A complete written agreement can avoid surprises for both the landowner and the renter.

Mitigating risk

Farming unowned land comes with risk. With short-term leases, producers may not realize the full benefits of their crop rotation and could incur financial losses from land improvements if the farm changes hands or the lease is terminated.

Strong communication of plans, expectations, and agreement details can mitigate this risk.

“Thinking about managing that risk and balancing it is becoming more and more important,” says Verwey.

While many leases are still based on a handshake, a written agreement is safer.

“A good agreement should protect both parties equally,” says Patriquin.

One of the most common risks Patriquin sees with lease agreements is the property changing hands, especially when investments have been made in the land.

“We see a lot of problems with an unexpected transition, and whoever inherited the farm is not aware there is a lease on the property,” says Patriquin.

“Then you have a renter who maybe already bought or applied inputs, and whoever inherited the land finds someone else who will pay twice as much rent, and then they are in a legal battle.”

To avoid this risk, Patriquin says it’s possible to register a lease agreement on the property title. The caveat attached to the lease agreement would ensure that the lease is honoured, or the renter would be compensated for their loss.

Seeking a longer-term lease can also ensure the renter benefits from any improvements.

“To mitigate risk, have a clause to sign the agreement longer-term, especially if you put money into fencing or buildings,” says Anderson.

“A lot of large farms increase the number of cultivated acres. They should consider if they need clauses in their agreement to only pay rent on the initial acreage or if the owner should cover some of the cost of improvements. It would be good to structure the lease so that both parties can benefit. It should include what happens to the rent price and what happens if they lose the land. How is the tenant compensated for those improvements?”

Planned improvements should be discussed in the initial lease conversations. Good communication over the duration of the lease can keep landlords involved and invested in the success of the farm and ensure that expectations are clear.

“Whenever payment is being made, or at least once a year, it’s a good idea to sit down and have a discussion about plans for the farm,” says Patriquin.

“It isn’t to get the landowners' approval for every small decision, but some landowners still like to know what’s happening on their land as a common courtesy.”

Verwey adds, “You have to realize that, like the landowner, you are doing business with someone who was likely a farmer themselves. When they are looking to rent their land, they want a reputable farmer who practices good agronomy and takes care of the land. They have a sense of pride — they still own the land and want it to be farmed well and want those producers to do well.” BF

KEY TAKEAWAYS

Many Prairie leases still run on trust and handshakes, but rising land values and generational change mean more owners now expect written agreements.

Farmers who build strong reputations and handle land rental conversations respectfully are more likely to hear about opportunities and avoid community friction in a competitive, “bidding war” environment.

A good lease starts with clear priorities, full information on productivity and existing agreements, and tailored terms on rate, length and structure that work for both parties.

Written, lawyer reviewed leases and regular check ins with landowners are essential to manage risk when ownership changes, improvements are made and long term plans are at stake. BF