RANCHERS’ AGRICULTURAL
LEASING HANDBOOK:
Grazing, Hunting, and Livestock Leases
RANCHERS’ AGRICULTURAL
LEASING HANDBOOK:
Grazing, Hunting, and Livestock Leases
Tiffany Dowell lashmeT
shannon ferrell
rusTy rumley
Paul GoerinGer
Acknowledgements
e authors gratefully acknowledge the invaluable assistance of Ms. Cari Rincker,
owner of Rincker Law, PLLC in New York, New York, Mr. Jim Bradbury, owner
of James D. Bradbury, PLLC, in Austin, Mr. James Decker, partner at Shahan
Guevara Decker Arnott in Stamford, TX, Mr. Trace Blair, partner at Wiginton
Rumley Dunn & Blair in San Antonio, Mr. Austin Voyles, Potter County
Agricultural Extension Agent, and Fred Hall, Tarrant County Agricultural
Extension Agent who provided innumerable insights to the subject matter of this
handbook and reviewed its contents.
Disclaimer
is handbook is for educational purposes only, does not create an attorney-
client relationship, and is not a substitute for competent legal advice by an
attorney licensed in your state. e checklists and forms are provided only as
general guidance and are certainly not exhaustive. On the other hand, many
of the suggested terms may be unnecessary in all circumstances. e authors
strongly suggest that all parties consult with their own attorney when entering
into a lease agreement.
Funding
Funding for the development of these materials was provided by the USDA
National Institute of Food and Agriculture through the Southern Risk
Management Education Center, Agreement Number: 21665-05.
Author Credit
Authorship credit is as follows: Tiany Dowell Lashmet (Chapters 1, 2, 4, 5, 6,
and 7), Shannon Ferrell (Chapters 2, 3, and 4), Rusty Rumley (Chapters 8 and 9),
and Paul Goeringer (Chapters 10 and 11).
Photo Credit
Cover photo courtesy of Paige Wallace Photography, taken at Perez Cattle
Company, Nara Visa, New Mexico.
Intro photos for Chapters 1, 4, and 7 courtesy of Britt Fisk.
Contents
CHAPTER 1: Why Lease Land or Livestock?........................................1
A. Benefits of Leasing to the Lessor . ..........................................1
B. Benefits of Leasing to the Lessee .......................................... 2
CHAPTER 2: Why is a Written Lease Necessary? ................................3
A. The Importance of Written Agreements................................... 3
B. The “Four Corners Rule”................................................... 4
C. Continuation of Lease after Sale of Property?.............................. 5
D. Ending the lease .......................................................... 7
E. Attorney Review of Written Leases ........................................ 9
CHAPTER 3: Setting Payments for your Lease....................................11
A. Cash Rental Agreements versus Share Rental Agreements ................11
B. Setting a Cash Rental Amount ........................................... 14
C. Setting Shares under a Share Rental Agreement..........................20
D. Pasture Lease Rates ......................................................25
E. Conclusions .............................................................28
CHAPTER 4: When can a Landowner/Lessee
be Liable for Injuries to a Third Party? .........................................29
A. Common Legal Claims ..................................................29
B. General Landowner Liability .............................................30
C. Attractive Nuisance Doctrine ............................................33
D. Landowner Liability During Lease Term .................................34
E. Recreational Use Statutes ................................................35
F. Agritourism Statutes .....................................................38
G. Farm Animal Liability Acts...............................................42
CHAPTER 5: Drafting a Valid Liability Waiver ..................................49
A. Texas Law ...............................................................49
B. Oklahoma Law .......................................................... 51
C. Conclusions .............................................................52
CHAPTER 6: Grazing Lease Checklist.............................................53
CHAPTER 7: Sample Grazing Lease ...............................................59
CHAPTER 8: Hunting Lease Checklist ............................................63
CHAPTER 9: Sample Hunting Lease ..............................................69
CHAPTER 10: Livestock Lease Checklist ..........................................73
CHAPTER 11: Sample Bull Lease ...................................................77
Appendix I (TX, OK, & AR Recreational Use Statutes)............................ 81
Appendix II (TX, OK, & AR Agritourism Statutes) ................................ 91
Appendix III (TX, OK, & AR Farm Animal Liability Acts)........................99
CHAPTER 1: Why Lease Land or Livestock? | 1
CHAPTER 1:
Why Lease Land or Livestock?
Whether a person owns land or is seeking to nd land to rent, leasing property for
grazing or hunting leases can be benecial for both parties. Similarly, both the owner
and lessee of livestock benet from lease agreements as well. According to one article,
“Leasing land can benet almost any farmer in any situation.”
1
A. Benefits of Leasing to the Lessor
For a landowner (“lessor”), leasing property can serve many purposes. First, the
payments made by the tenant (“lessee”) for a grazing lease serve as an added
source of income. is may allow a landowner to expand his or her operation
and make land payments using lease income. For example, if a family purchases
land subject to a mortgage and then leases the land to a third party for at least
the amount of the mortgage payment, the family would be able to use that lease
income to build equity in their own land. Second, a grazing lease arrangement
may allow the lessor to ensure care for the property by another, thereby avoiding
some expenses and physical eort otherwise required of the landowner. is is a
particularly desirable situation for older landowners who may no longer be able
to care for the land as they were before.
Another issue that may make leasing land desirable for a landowner involves
the special use valuation for agricultural or open space land with regard to ad
valorem taxes. Most states oer an alternative method of calculating property
taxes due on agricultural land. Rather than basing the taxes owed on the fair
market value of the land—which may be greatly in excess of the potential
agricultural income that can be derived from the property—the property taxes
are calculated based on the potential agricultural productivity value that could
be generated with prudent agricultural practices on the land. is can make
a signicant dierence in the amount of property taxes due by a landowner.
1
See Meg Grzeskiewicz, Building your farm business on leased pasture, On Pasture (May 20, 2013).
2 | CHAPTER 1: Why Lease Land or Livestock?
2
See Dan Nosowitz, USDA vows to help young farmers, but will it be enough?, Modern Farmer (Nov. 13, 2015).
3
Id.
One h-generation ranch in Texas recently reported that without the ag use
valuation method, their taxes would have been 10 times higher, making the taxes
more than the income generated from the land. If a landowner is not in a position
to satisfy the requirements for agricultural valuation, a lease may allow the
landowner to retain the benets of the special tax valuation method. Landowners
should be careful to understand the rules in their states and in their particular
appraisal district in order to ensure they are compliant with the requirements
needed to receive the special use valuation.
ird, with regard to hunting leases, a landowner can supplement his or her
income, while still farming or ranching the land the remainder of the year.
Oentimes, a landowner can run cattle or grow crops while still making a
sizable income from lease payments during prime hunting seasons. Additionally,
allowing hunters to harvest animals that may be competing with livestock for
forage can also be benecial.
Fourth, leasing livestock can be benecial for the livestock owner by allowing the
owner to retain ownership rights in the animal while generating an additional
income and seeing how the animal might produce. For example, if a cattle
rancher has a young bull, he might consider leasing the bull to a neighbor and
seeing how the calves turn out before using the bull on his own herd.
B. Benefits of Leasing to the Lessee
For a tenant, a grazing lease can provide the ability to start or grow a livestock
operation without the high capital investment needed to purchase his or her own
land. For new farmers, the extensive costs involved with getting into the industry
pose a signicant problem. As a result, statistics show that the average age of the
American farmer has risen to 58. is means that for every six farmers over the
age of 65, there is only one under the age of 35. Leasing land may be a key option
in reversing this trend by allowing younger farmers to enter into agricultural
production. Further, leased land allows the lessee to avoid having a large down
payment oen required to qualify for a mortgage to purchase land, and to avoid
paying interest or property taxes on land.
Similarly, leasing livestock can oer cost-saving benets as well. While a producer
may desire to improve the quality of herd or implement new genetics, the costs of
purchasing new livestock—particularly breeding stock—may make doing so seem
unfeasible. By leasing a breeding animal (particularly a male), a producer may
be able to obtain the new genetics at a fraction of the cost that purchasing the
animal outright would require.
Lessees and lessors alike should carefully consider the benets and obligations
oered by grazing, hunting, and livestock leases.
CHAPTER 2: Why is a Written Lease Necessary? | 3
CHAPTER 2:
Why is a Written Lease Necessary?
Lease agreements are governed by state law. Leases are simply one type of contract,
and the principles of contract law apply. ere are several applicable legal provisions
that are important for parties negotiating a lease agreement to consider.
A. The Importance of Written Agreements
e agriculture industry is perhaps that most reliant on the handshake deal.
For decades, producers have made deals with their friends, neighbors, and other
ranchers to lease land. Although in a perfect world, a person’s handshake might
be good enough to memorialize a lease agreement, this is simply not true in the
real world.
e most important step a party to an agricultural lease can take it to put the
lease terms in writing. Here are a number of reasons why.
■
Written leases protect relationships. Oentimes, ranchers say, “I cannot ask
for a written lease; he will think that I do not trust him!” Distrust is simply
not a valid reason to obtain written lease agreements. On the contrary, written
lease agreements can actually help ensure trust and understanding between
the parties and protect the relationship between them. Leases do not have to
be one-sided but can be draed to carefully protect both parties’ interests and
investments.
■
Written leases ensure details are well thought through. When two people
verbally agree to a lease agreement, there are oentimes important details
that just did not come up and were not thought through by the parties.
When a person undertakes to put the details of an agreement on paper, many
additional thoughts, details, and issues arise. Having a written lease agreement
assists not only in memorializing the parties’ agreement but also in helping the
parties come up with the topics on which such agreement is needed.
4 | CHAPTER 2: Why is a Written Lease Necessary?
■
Written leases protect in the event the unexpected happens. Sometimes,
life throws curveballs out of the blue. Written leases can help provide stability
in the event one of these curveballs aects a lease agreement. For example,
assume a cattle rancher leased land from his friend for the past 20 years on
an oral lease agreement without incident. Now assume the friend died, and
the land is inherited by his nephew from New York City, who has never seen
a cow, never set foot on a ranch, and has no idea what is common in a grazing
lease arrangement. e new landlord could make the tenant’s life miserable
if there were no written lease in place for the tenant to rely on to protect his
rights.
■
Some written leases must be in writing to be enforceable. A legal doctrine
known as the Statute of Frauds—which exists in some form in all 50 states—
requires that certain contracts be in writing in order to be enforceable.
Although the details of the Statute of Frauds dier by state, most states require
that at least some agricultural leases be in writing and signed by the person
against whom enforcement is sought. For example, in many states, leases
lasting at least one year must be in writing in order to be legally enforceable.
us, if a person entered into a 5-year oral grazing lease, he or she would not
be able to successfully sue for breach of contract because, pursuant to the
Statute of Frauds, the lease would not be a valid contract.
1
e specic details of the Statute of Frauds dier by State. Here is more specic
information:
• Texas: 3 Texas Business & Commerce Code Chapter 26 requires that
“a lease of real estate for a term longer than one year” be written and
signed by the party against whom enforcement is sought in order to be
enforceable.
• Oklahoma: 15 Oklahoma Code Section 15136.4 requires “an agreement
for the leasing for a longer period than one year” be written.
• Arkansas: Arkansas Code Annotated Section 4-59-101(a)(5) applies to
“any lease of lands, tenements, or hereditaments for a longer term than
one year.”
B. The “Four Corners Rule”
Another important legal principle related to lease agreements is the “Four
Corners Rule,” which deals with how courts analyze lease agreements in the
event of a dispute. e rule, applicable in most states, provides that when
analyzing a breach of contract case, a court will begin with the “four corners of
the document.” In other words, the court will begin by reading the language of
the contract.
If the contractual language is unambiguous—meaning that the language
itself clearly answers the question at hand—the court will not consider any
evidence beyond the lease language in making its decision. In this instance, the
information contained in the four corners of the lease agreement will govern.
1
ere are other legal remedies based in equity that may still be available in this situation, even if a breach of
contract claim is not an option.
CHAPTER 2: Why is a Written Lease Necessary? | 5
If, on the other hand, the lease is silent or ambiguous on the pertinent issue, the
court could then consider other—what is called extrinsic—evidence. Examples
of extrinsic evidence include oral statements made by the parties, testimony
regarding what is common in the industry, and evidence showing the past course
of dealing by the parties.
e lesson to be taken from the Four Corners Rule is that it is absolutely critical that
every detail and every promise involved in a lease agreement be included in writing.
A party who relies on an oral statement or an industry custom could nd herself
without the ability to bring that evidence before a judge or jury based on this rule.
C. Continuation of Lease after Sale of Property?
Suppose a person has leased land for grazing for years from a landowner. en,
one day without warning, the landowner decides to sell the property to someone
the cattle rancher does not know. An important question will immediately arise:
Does the lease continue aer the property is sold? As with most legal questions,
the answer depends on the facts.
■
Texas
ere is surprisingly little Texas case law on this issue. ere does, however,
appear to be fairly settled rules that govern this situation.
First, if the lease agreement itself between the landlord and tenant addresses
the issue, the term will be enforced as written. For example, if a lease states
that the landlord shall have the right to terminate the lease if the property is
sold, then the landowner has that right. It is highly recommended that the
parties consider whether continuation of the lease (or perhaps the right to
continue the lease if desired) will occur aer the property is sold and include
this type of provision in the lease agreement. Having an express agreement
upfront about what will happen if the property is sold is the best option for all
involved.
What about a scenario where the lease is silent as to what happens if the
property is sold during the term? en the common law applies, and the
question becomes whether the new purchaser of the land was on “notice” that
the lease agreement was in place. If the new purchaser had notice, the sale
of the property does not terminate the agreement, and the new purchaser
basically steps into the shoes of the prior owner until the lease is concluded.
How, then, can notice occur?
• Record notice: A lessee can accomplish record notice by ling a
memorandum of lease or a copy of the lease agreement in the deed
records at the courthouse in the county where the property is located.
e ling would then come up in a title search and would inform
potential buyers of the lease’s existence. In this situation, even if the new
purchaser never conducted a title search and found the document, the
fact that it was led in the records would be sucient to constitute notice
and allow the lease to continue.
6 | CHAPTER 2: Why is a Written Lease Necessary?
• Actual notice: Actual notice occurs when the purchaser is informed
of the existence of a lease. Oen, the seller, a realtor, or the tenant
could contact the potential buyer and inform him or her that the lease
agreement exists. Of course, it is always best for a tenant to do this in
writing in order to have proof that actual notice occurred.
• Constructive notice: e most dicult type of notice to prove is
constructive notice, which requires the existence of the lease to be open
and obvious to an ordinary person. For example, assume a farmer is
purchasing farmland in Texas that was owned by a woman in New York
City. Also assume that grain harvest is currently happening and the eld
is full of tractors, combines, grain carts, and semi-trucks. ese are the
types of facts that could put the new purchaser on notice that a lease
exists. However, whether a judge or jury would nd that constructive
notice existed would be determined on a case-by-case basis.
One additional issue that may arise if termination occurs during the middle
of the term involves which party has the right to harvest and sell any growing
crops. is issue is governed by the "doctrine of emblements,” which is
discussed in detail in Section D below.
■
Oklahoma
In Oklahoma, case law provides that a landowner selling land subject to a
lease is selling the landowner’s right to receive the property back to him- or
herself aer the expiration of the lease (his or her “reversionary interest”).
e general assumption of Oklahoma law is that anyone who purchases land
takes that land subject to the leases on the property at the time the purchaser
takes title to the property.
2
A land purchaser that attempts to cancel an
otherwise valid lease on the property he or she purchased may be liable to the
tenant for damages.
3
e assumption that a purchaser takes the land subject to the leases on it can
be changed by the language of the lease; for example, if the lease says that the
sale of the land terminated the lease, the lease will be enforced.
4
As with Texas, one of the most important tools in Oklahoma for protecting
landlords and tenants is the recording of the lease in the county land records.
Recording the lease is construed by the courts as providing notice to the
entire world—including any prospective purchasers of the land—that the
lease is in place.
If a lease is terminated either by sale of the property with a lease that provides
the sale terminates the lease, or if the lease is terminated for any other reason
that is not caused by the tenant (for example, termination for failure to
pay rents would be a termination caused by the tenant, but the failure of a
landlord to renew a periodic lease would not be a termination caused by the
2
See Sevy v. Stewart, 122 P. 544 (Okla. 1912).
3
See Scheer v. Cihak, 142 P. 1007 (Okla. 1914).
4
Cf. Scheer v. Cihak, 142 P. 1007 (Okla. 1914).
CHAPTER 2: Why is a Written Lease Necessary? | 7
tenant), the tenant is entitled to either re-enter the property to harvest any
crops growing at the time of the termination or to have the crops harvested
and turned over to them.
5
D. Ending the lease
Another important issue to consider is how and when the lease may end. Again,
dierent rules apply depending on the state in which the property is located.
■
Texas
First, it is important to note that Texas law respects the parties’ rights to enter
into contractual agreements. Because of this, if the lease agreement addresses
the issue of termination and notice required, the court will respect that
agreement. For example, if the lease states a specic end date, such as “this
lease shall run from January 1, 2016 to December 31, 2016,” then the lease
will terminate based upon its own terms without any additional notice being
required. Similarly, if the lease provides that it lasts “from January 1, 2016
to December 31, 2016, but shall automatically renew unless written notice
is given by either party 60 days prior to the end of the lease term,” the court
would follow this agreement as well, and notice would be required to be given
in writing 60 days before the end of the term.
If, on the other hand, a lease is silent with regard to notice, Texas law will
imply requirements with regard to what notice is required to cancel the lease.
e Texas Property Code provides that if the rent-paying period of a lease
is at least one month, then at least one month notice must be given.
6
If the
rent-paying period is less than one month, the lease terminates at the later
of the day notice is given or the day following the expiration of the period
beginning on which day the notice is given.
7
With agricultural leases—particularly those involving crops such as hay or
other row crops—an issue arises with regard to a tenant’s rights if the lease is
terminated while crops are growing in the eld. As with nearly all potential
issues, the best approach for the parties is to address this issue in the lease
agreement themselves, as set forth the rights and responsibilities should this
arise. If the lease is silent as to the tenant’s rights in this situation, Texas law
provides that this issue is governed by the “doctrine of emblements.”
is doctrine provides that a former tenant has the right to re-enter the
leased property to cultivate, harvest, and remove crops that were planted
prior to the termination of the tenancy. In order for this doctrine to apply,
the following elements must be proven: (1) the tenancy was for an uncertain
duration; (2) the termination was due to an act of God or by an act of the
landlord and the termination was no fault of the tenant and was done without
his previous knowledge; and (3) the crop was planted by the tenant during his
right of occupancy.
5
See Moore v. Coughlin, 128 P. 257 (Okla. 1912), Bristow v. Carriger, 103 P. 596 (1909).
6
Tex. Property Code § 91.001(b).
7
Tex. Property Code § 91.001(c).
8 | CHAPTER 2: Why is a Written Lease Necessary?
• Uncertain duration: In order for the doctrine of emblements to apply,
the lease at issue must be for an uncertain duration. Many times, parties
have unwritten leases or leases that have continued for years without
certain termination dates. ese leases would fall under the doctrine.
Further, a lease for a set period of time, but which could end based on
certain circumstances prior to the conclusion of the set time period is
considered to be a lease of uncertain duration for which the doctrine
can apply. For example, a lease for 5 years that provided that should the
property be sold during that time, the lease would terminate, was found
to meet this requirement.
8
Additionally, if the parties to a lease for a
certain duration agreed to allow a crop to be planted with knowledge
or agreement that harvest would occur aer the lease terminated, the
tenant may still have a right to the growing crops. Generally, however, a
lease for a specic duration of time, such as a lease that will terminate on
a certain date, would not be within the doctrine.
• Termination due to act of God or landlord and not the fault or with
knowledge of the tenant: Not surprisingly, the doctrine does not apply to
situations where the tenant is at fault for the termination. For example, if
a tenant is evicted from the property for failure to pay rent, he or she is
not entitled to harvest the crops that were planted during the lease.
• Crop planted during right of occupancy: In order for the doctrine
to apply, the crop must have been planted during the time that the
tenant was permitted access to the property. For example, if a landlord
terminated a lease in March, but the tenant trespassed and planted crops
in April, the tenant would have no right to harvest those crops. Similarly,
if the tenant knows that a landlord claims possession to the property or
that a lawsuit regarding the title of the property is pending at the time he
or she plants the crop, the doctrine oers the tenant no protection.
■
Oklahoma
In Oklahoma, a lease may provide for an end date within the lease itself.
For example, if the lease says, “this lease shall run from January 1, 2016 to
December 31, 2016,” then the lease ends on its own terms, and no additional
notice is required by either the landlord or tenant to end the lease on that
date. However, many leases may be “periodic” leases, meaning those leases
automatically renew on a regular basis unless either the tenant or the
landlord provides notice to the other party that they wish to end the lease at
the date of the next renewal. In Oklahoma, such notices must be provided in
writing, and have to be provided with the following advance times prior to
the renewal date:
• If the lease period is year-to-year, three-months’ notice.
• If the lease period is from 1to 3 months, 1-months’ notice.
• If the lease period is less than one month, one period’s notice.
8
Dinwiddie v. Jordan, 228 S.W. 126 (Tex. Ct. App. 1921).
CHAPTER 2: Why is a Written Lease Necessary? | 9
For example, if a lease period runs from January 1 to December 31, three
months of notice means the written notice must be provided on or before
September 30.
One factor that can arise in agricultural leases is setting renewal dates (and
the corresponding notice dates) in the middle of a crop’s growth cycle. For
example, many leases have periods running from January 1 to December 31.
A notice that the lease will not be renewed could be provided as late as
September 30th, but crops such as winter wheat would already be planted by
that date. Oklahoma cases suggest that a tenant on a periodic lease who had
planted a crop without knowing the lease would not be renewed would be
allowed to re-enter the land to harvest the crop. However, the most prudent
course for both landlord and tenant is to set renewal periods and notice dates
so that both landlord and tenant can know the status of the next year’s lease
with plenty of time to make planting and other production decisions.
E. Attorney Review of Written Leases
As with all written contracts, it is extremely important to hire an attorney to
review any lease agreement before signing. Although this handbook will provide
checklists and sample lease language, it is by no means a substitute for qualied
legal counsel from an attorney licensed in your jurisdiction. Without question,
having an attorney review a lease is an additional up-front expense. It is, however,
well worth that expense if it can save a legal dispute down the road. Additionally,
because most attorneys bill by the hour, using the resources in this handbook to
prepare a dra lease agreement for an attorney to review, rather than having the
attorney start from scratch, will likely save time and, therefore, money.
How, then, does a person go about nding a knowledgeable attorney to review a
grazing, hunting, or livestock lease agreement? ere are a number of resources
available to assist people in nding attorneys well-versed in agricultural law.
First, the authors of this textbook have numerous connections with agricultural
attorneys across the country and would be happy to assist with locating attorneys
in specic states. Second, the American Agricultural Law Association is the
national membership organization for agricultural attorneys. e executive
director maintains a list of members in all 50 states. ird, attorneys must
register with the State Bar Association in all states in which they are licensed to
practice. Generally, these registrations include seeking information about areas
of practice for attorneys, which may help a person to determine which attorneys
practice agricultural law.
In trying to determine which attorney to hire, the following factors may be useful
in selecting the right representation for an agricultural lease.
• Can you have an intelligent conversation with the attorney?
Unfortunately, not all attorneys are easy to communicate with. In order
for you to obtain the best representation, it is essential that you can easily
communicate with your attorney. You need to be able to understand your
attorney, and your attorney needs to listen carefully and understand you.
ere will need to be an open dialogue between you and your attorney,
10 | CHAPTER 2: Why is a Written Lease Necessary?
and the conversation will likely, at some point, include dicult or
uncomfortable issues. Ensuring that you can communicate well with your
attorney is a key rst step in evaluating who to hire.
• Does he or she promptly return emails and phone calls? e biggest
complaint against attorneys with state bar associations is failure to keep a
client informed of the status of the case with the prompt return of emails
or phone calls. Now, it is important to be realistic in this expectation, as
your attorney has other cases and clients to tend to as well. A good rule
of thumb is that an attorney should respond to you in some way within
24 to 48 hours of you contacting them. is may be a returned phone call
or email discussing the issues you wish to raise, or it may just be a short
email letting you know that he or she is in court but setting a time to talk
in the future. is is something that can be determined by vising with
other clients of the attorney, and by making a phone call or two to the
attorney early on in the process to see how he or she responds.
• Does he or she have experience with the specic legal issue you are
dealing with? One misconception a lot of people have about attorneys is
that in law school, we learned the law, all of it. Sometimes, people expect
an attorney to be able to answer any question from agricultural leases
to DWIs, divorce to patent law. e truth is, it is nearly impossible for
an attorney to be procient in every area of the law! It is important that
you nd an attorney who is capable of handling your specic legal issue.
For example, it may well be that a general practitioner can easily help
you prepare an estate plan, dra a will, and litigate a breach of contract
dispute. If, however, you end up in a complex water law case before
the United States Supreme Court, you may need to bring in another
attorney to assist you. During the initial consultation, be sure you ask
the attorney about his or her experience with your specic legal issue.
• Does the attorney know the dierence between a cow and a bull?
ose of us involved in agriculture may take for granted that everyone
understands farming and ranching. If you have a legal issue for which
a background in agriculture is important, you may want to consider
seeking an attorney who has that type of background. is is not to say
that only attorneys who own cattle are worth hiring, but it is something
to consider depending on your specic legal issue.
• Is the fee structure clear to you? Everyone knows that attorneys are
expensive. ere is no real way to sugar coat that. It is important for
you to understand the fee structure that a prospective attorney will
be using. Oentimes, attorneys bill a set fee per hour worked. Other
times, attorneys may quote a at rate to handle one project (i.e., a will).
Still other times, an attorney might take a case on a contingency basis,
meaning you do not pay upfront, but will share some portion of the
eventual recovery with the attorney. Make sure you understand the
approach that will be taken for your case and ask questions like who
pays for fees such as copying or legal research database charges, how
oen billing statements will be coming in the mail, and exactly how a
contingency fee will be calculated.
CHAPTER 3: Setting Payments for Your Lease | 11
CHAPTER 3:
Setting Payments for your Lease
Note: is chapter is adapted from “Fixed and Flexible Cash Rental Arrangements
for your Farm,” North Central Farm Management Extension Committee Publication
NCFMEC-01, “Crop Share Rental Arrangements for Your Farm,” North Central Farm
Management Extension Committee Publication NCFMEC-02, and “Pasture Rental
Agreements for your Farm,” North Central Farm Management Extension Committee
Publication NCFMEC-03.
As you will see in this handbook, numerous considerations go into writing a lease
agreement for your agricultural land. Chapter 2 emphasized the importance of
a written lease and the fact that the process of negotiating the lease can help the
landowner and tenant think through a number of issues. at process can prevent a
lot of problems before they even occur. Similarly, a thorough discussion of how rents
will be paid encourages the parties to think not only about the economics of their
arrangement but also about how both parties will cooperate in the management of the
property.
A. Cash Rental Agreements versus Share Rental
Agreements
Traditionally, rental agreements fell into two categories: a “cash rent”
arrangement in which the tenant paid a specic dollar amount in rent or a
“share rent” arrangement in which the tenant gave the landlord a share of the
crop produced from the land (usually with the landlord and tenant sharing in
the input costs for growing the crop). Recent years have seen the development
of many varieties of these two basic arrangements. Before committing to either
category of arrangements, though, both landlords and tenants need to consider
the potential advantages and disadvantages of each arrangement.
12 | CHAPTER 3: Setting Payments for Your Lease
1. Cash Rental Agreements
Cash rental arrangements are generally considered the most straightforward
rental arrangements since the tenant makes a pre-determined lease payment
on a regular basis, and the landlord provides little or no input into the
management decisions for the land during the period of the lease. Even in
a cash rental agreement, though, there are a number of considerations to
ponder for both landlord and tenant.
a. Advantages of Cash Renting for Landlords
Perhaps the most easily identied advantage of cash rental agreements for
landlords is their simplicity. As mentioned above, the landlord does not
have to involve him- or herself in production or marketing decisions. is
can be an important advantage for a landlord with little or no experience
in operating agricultural land (note, though, that this does not mean the
landlord should be uninterested in the management of the property and
just wait on the “mailbox money” to come in). Fixed cash rental payments
also shi virtually all of the price, cost, and production risk of the crop to
the tenant, leaving the landlord only with the nancial risk of the tenant’s
ability to pay. Landlords relying on lease payments to support them in
retirement may nd this an important benet. Further, income under
xed cash rental arrangements is not considered self-employment income
(and thus is not subject to self-employment tax) and does not reduce Social
Security benets if the landlord is retired.
b. Disadvantages of Cash Renting for Landlords
Although cash rental agreements can be simple, determining a rental
rate can be dicult, as discussed below. Further, once that rate is set,
psychological factors may make it dicult to change the rate even though
several market forces may suggest a change is needed. e transfer of risk
to the tenant means the tenant not only bears “downside” risk (the risk
that input costs might increase, commodity prices might decrease, or that
production may be low) but that they get all the advantages of “upside”
risk (input costs decrease, commodity prices increase, or production
increases). ere may also be fewer alternatives for tax management
compared to a share lease (the reason for this is discussed below with
share rental agreements). Finally, there are some incentives for tenants to
“mine” the land’s nutrients—especially under a short-term lease—since
the tenant’s prots under a xed cash lease come from increasing yields
while minimizing costs such as fertilizer or soil amendments. However,
longer term leases and well-written leases can signicantly reduce these
risks.
c. Advantages of Cash Renting for Tenants
Tenants in a cash rental agreement have signicant freedom in their
management decisions since there is little or no requirement for
management input from the landlord. e pre-determined nature of the
rental payment makes the cost of operation xed, which provides more
CHAPTER 3: Setting Payments for Your Lease | 13
stability in projecting costs for the year(s) ahead. Since they bear the
majority of risks in production, the tenant can reap all the “upside” risk in
crop production if prices and/or production conditions are favorable.
d. Disadvantages of Cash Renting for Tenants
Bearing virtually all of the risk in a cash rental arrangement, the tenant
may have diculty making rental payments if economic conditions have
been dicult. Psychologically, even if conditions have been dicult for a
number of several consecutive years, landlords may not adjust rental rates
downward. Finally, the tenant faces the cash-ow issues of bearing all
costs of crop inputs (compared to a share arrangement where the landlord
participates in the purchase of crop inputs).
2. Share Rental Agreements
In a share rental agreement, the landlord and the tenant are both actively
involved in the production of the crop. Both parties participate in the
management decisions and the costs of growing and marketing the crop. e
rent paid is a proportion of the crop produced, which can be paid either by
turning over part of the physical commodity itself or paying the landlord that
proportion of the revenue from the sale of the crop by the tenant.
a. Advantages of Share Renting for Landlords
Share rental agreements naturally result in the sharing of risk between the
landlord and tenant. As a result, the benets of a “good year” are shared
by both parties. is enables the landlord to capture some of the “upside
risk” involved in production. If the landlord is an experienced producer,
they can use that experience to aid the tenant in management decisions,
which hopefully increase the returns to the landlord. Since the landlord
is actively involved in the agricultural operation of the land, they can use
that participation to build Social Security base since their income from
the rent is subject to self-employment tax, and the landlord can also take
advantage of Internal Revenue Code Section 179 depreciation on capital
investments made in the agricultural operation.
b. Disadvantages of Share Renting for Landlords
e risk of a “bad year” means the landlord’s returns are subject to the
same variability as those of the tenant. is can mean share leases may
provide too much risk for landlords depending on rents for their primary
source of income. Depending on the nature of the landlord’s involvement,
the income from the lease may also reduce the amount of Social Security
benets for which the landowner is eligible if he or she is retired. e
amount of involvement required for a share lease agreement may also
make these agreements unsuitable for landlords without signicant
experience in operating a farm or ranch.
14 | CHAPTER 3: Setting Payments for Your Lease
c. Advantages of Share Renting for Tenants
Perhaps the two greatest advantages of a share rental agreement for
tenants is the reduction in operating capital requirements and the sharing
of risk with the landlord. Since the landlord and tenant both share in
the operating costs of the land, the tenant is not required to nance the
entire cost of those inputs as he or she would be under a xed cash rental
agreement. Similarly, the cost of rent is reduced (in cash equivalent terms)
in “bad” years. e ability to tap into the expertise of the landlord through
shared management decisions can be another important advantage,
particularly for beginning producers.
d. Disadvantages of Share Renting for Tenants
e risk-sharing features of a share rental agreement mean the tenant
has less ability to capture “upside” risk since that upside must be shared
with the landlord. Determining and delivering shares also involves more
work on the part of the tenant since he or she may have to make multiple
deliveries of product to multiple locations. Finally, the management input
of the landlord may conict with the desired decisions of the tenant.
B. Setting a Cash Rental Amount
Although cash rents are quite simple once established, establishing that amount
can be one of the most complicated and contentious pieces of negotiating a rental
agreement. Determining the rental rate depends not only on the local land market,
but on the land itself and the parties as well. Markets matter, and all other things
being equal, an active local market for land will drive rental rates upward just
as relatively little demand for agricultural land will drive rental rates down. e
characteristics of the land itself, including its soils, drainage, size, shape, location,
and facilities drive values, as do the production history of the tenant and the lease
provisions desired by the parties. All of these factors combine in dierent ways to
create several dierent approaches to establishing a cash-rent value.
1. Cash-Rent Market Approach
e cash-rent market approach is the standard against which all other
methods are measured; if another method yields a rental rate signicantly
above or below the market rate, there should be signicant justication
for that dierence. is is probably the approach coming rst to mind for
landowners and tenants and may sound like the most straightforward—
simply ask around for rates paid for similar land.
However, that simplicity can be deceptive for two primary reasons. First, it
can be dicult to get objective information about rental rates. Rates may be
subject to exaggerations or from transactions that are not the result of arms-
length transactions between unrelated parties. e quality of information
obtained is thus very important. A good place to start are lease surveys
conducted by your state Extension service or the National Agricultural
Statistics Service (USDA-NASS), but also remember that these surveys
CHAPTER 3: Setting Payments for Your Lease | 15
generally present averages of values and may not be specic to your very local
area. at leads to the second reason market data can be deceptive—it reects
values paid for land other than the land actually in question. Numerous
adjustments have to be made from market rates to reect the unique traits of
the land at hand.
Despite these challenges, the cash-rent market approach should be the
starting point of any rental rate calculation. Start with the best data available,
and think carefully about any adjustments that need to be made from the
prevailing rates to take into account the positive or negative production
characteristics of the land to be leased.
a. Landowner’s Ownership Cost Approach
e landowner ownership cost approach does just what its name implies—
calculates the cost of ownership to the landlord—and uses that cost
to determine a base for the rental amount. Put another way, the rental
amount should at least exceed the ownership cost of the land and provide
a measure of prot to the landowner while also providing the tenant the
opportunity to make a prot.
e rst piece of information needed for this approach is the fair-market
price of the land (valued for agricultural use, and not for some other use
such as residential development). Second, an “interest charge” (meaning
the “opportunity cost” of owning the land—in other words, if the land
was sold and placed into an investment with similar risk, what rate of
return would it yield?) must be calculated. is is oen done by using
the “rent to value” ratio reported by USDA-NASS for various regions in
the United States. Together, the price and interest rate provide an annual
charge for the land itself. Next, the real estate taxes paid on the land
by the landowner are incorporated as an ownership cost. Finally, land
improvement costs such as treatments for soil pH, building or maintaining
conservation structures, etc. are included. Adding these costs together on
an annual basis provides a starting point for the landowner’s asking price
in rents.
Figure 3-1: Example of Landowner’s Ownership Costs Calculation (Source: NCFMEC-01)
Crops Grown: Corn, soybeans, wheat Acres: 150
Item Per Acre Value Rate Annual Charge
Land
$
4,000
×
Interest
×
4
% $
160
Real Estate Tax
×
0.5
% $
20
Land Improvements
Tiling
$
500
×
5
% $
25
Surface drainage
$ × % $
Conservation practices
$ × % $
Liming
$ × % $
Total Cost
$
205
16 | CHAPTER 3: Setting Payments for Your Lease
b. Landowner’s Adjusted Net-Share Rent Approach
is approach works to calculate the cash-rent equivalent of a share lease.
e general assumption is that a cash rent should be slightly less than a
share lease amount since, under a cash lease, the tenant bears almost all the
risk. To calculate a cash rent under an adjusted net-share rent approach, the
landlord and tenant must rst determine the prevailing shares for the crop
in question—these shares vary signicantly from crop to crop and region
to region, and frequently occur as 1/3–2/3 shares, 1/2–1/2 shares, or 40–60
percent shares. Next, historical data for the yields of the land in question and
for input and product costs should be gathered to determine what the average
share rent would have been for the property. Finally, and adjustment should
probably be made to reect the additional risk that the tenant will take under
a cash rental approach. e following provides an example of how rent can be
calculated under this approach.
Figure 3-2: Example of Landowner’s Adjusted Net-Share Rent Approach (Source: NCFMEC-01)
Landowner's Share of Gross Crop Value
Crops Acres
Yield
per
Acre
2
Percent
of Crop
Tons or
Bushels Price
3
Total
Value
Per Acre
Value
Corn
5 10 50
%
65
$
4.50
$
28,68
$
Soybeans
40 50 50
%
1000
$
11.00
$
11,000
$
Wheat
5 65 50
%
118
$
6.00
$
6,825
$
Other Income
4
% $ $ $
Totals (A)
150
$
46,512
$
10.08
Landowner's Share of Shared Expenses
Crops
Landowner
Share Seed
3
Fert. &
Lime
3
Pesticides
Harvest/
Drying
3
Total
Cost Cost/Acre
Corn
50
% $
,5
$
4,125
$
1,12
$
1,688
$
10,500
$
Soybeans
50
% $
1,160
$
20
$
400
$
500
$
2,80
$
Wheat
50
% $
560
$
1,12
$
228
$
48
$
2,58
$
Totals (B)
% $ $ $
16,018
$
106.
Landowner's Crop Rent (A–B)
$
20.2
Less risk shifted to operator
5
$
15.50
Net landownder's share rent per acre
$
1 8.
1
If whole farm leased on a cash-rent basis, list all crops grown, income and shared expenses from each crop
2
Use average yields, allowing for both good and bad years. Incorporate trend in yields
3
Use current prices and costs
4
USDA payments, crop stover, etc.
5
Example risk value is 5% of total crop receipts. This number will vary depending on the production risk in your area.
c. Operator’s Net Return to Land Approach
e operator’s net return to land approach is something of a counterpoint
to the landowner’s ownership cost approach in that it is a calculation of
what the tenant (or operator) can aord to pay given the productivity of the
land. is approach takes into account the productivity of the land and the
costs of inputs, xed costs, and returns to labor and management. Per-acre
costs are deducted from per-acre returns to determine how much rent can
be paid at a break-even level given the assumptions made. An example is
provided in Figure 3-3 on the next page.
CHAPTER 3: Setting Payments for Your Lease | 17
Figure 3-3: Example of Operator’s Net Return to Land Approach (Source: NCFMEC-01)
Gross Value of Crops Produced
Crops Acres
Yield
per Acre
2
Price
3
Total Value
Per Acre
Value
Corn
5 10
$
4.50
$
5 ,5
$
Soybeans
40 50
$
11.00
$
22,000
$
Wheat
5 65
$
6.00
$
1,650
$
Other Income
4
$ $ $
Totals (A)
$
,025
$
620.1
Total Variable Costs
3
Crops Acres
Variable Costs
per Acre
2
Total Variable
Costs
Per Acre
Value
Corn
5
$
40
$
25,500
$
Soybeans
40
$
10
$
,60 0
$
Wheat
5
$
180
$
6,00
$
Totals (B)
150
$ $
,400
$
262.6
Total Fixed Costs, Labor, and Management
3
Crop machinery: machinery value per acre
$
500.00
Depreciation for 10 years
$
50.00
Interest on average investment at 6 percent
$
0.00
Taxes at %
$
Insurance at .25 %
$
1.25
(C) Total machinery xed costs
$
81.25
(D) Labor charge5 ( 2.0 hrs/ac @ $13 /hr)
$
26.00
(E) Management charge ( 5.0 % of total crop values)
$
1.01
(F) Total production costs (B+C+D+E)
$
40 0.
(G) Amount that can be paid for rent per acre (A–F)
$
21.24
1
If whole farm leased on a cash-rent basis, list all crops grown, income from each crop, and variable expenses for each
crop.
2
Use average yields, allowing for both good and bad years. Incorporate trend in yields.
3
Use current prices and costs. Variable costs include fuel, oil, repairs, fertilizer, herbicide, insecticide, interest on
operating costs, custom hire, drying, insurance, and miscellaneous costs.
4
USDA payments, crop stover, etc.
5
Labor expense or charge may be included in variable expenses.
d. Percent of Land Value Approach
Perhaps the most straightforward of all the cash rental approaches
discussed here, the percent of land value approach simply consists of
calculating the “opportunity cost” of the land. In other words, if the
landowner sold the land and invested the proceeds in a similar investment
(in the case of land, a long-term investment with similar risks), what
would that investment yield on an annual basis? For agricultural land, the
best way of calculating an opportunity cost is the rent-to-value ratio (the
average ratio in a region of agricultural land’s rent to the total value of the
land). e per-acre value of the land in question is then multiplied by the
“opportunity cost” interest rate—in this example, the rent-to-value ratio—
to determine the desired per-acre rent. Note, though, that this approach
may not reect the market realities in the area, and that rent-to-value ratios
may be slow to change over time and thus may be further o in years where
there have been signicant changes in returns to agricultural land.
18 | CHAPTER 3: Setting Payments for Your Lease
Figure 3-4: Example of Percent of Land Value Approach (Source: NCFMEC-01)
Crops Grown: Corn, soybeans, wheat Acres: 150
Item Per Acre Value Rate Annual Charge
Land
$
4,000
×
Typical Rent to Value
×
5
%
Total Cost or Desired Return
$
200
e. Percent of Gross Revenue Approach
Another angle of attack to determine a rental amount would be to calculate
the percent of gross revenues a landowner would be entitled to under a share
rental agreement. is requires collection of data on the average production
of the land in question, historical commodity prices, and the percentage
of gross income received by landowners under share leases in the region.
Note that there is an important distinction to be made in determining the
landlord’s percentages under this method—the percentages used should
be from leases in which the tenant pays all of the input costs for the leased
land since the landlord will be paying no input costs under this method. An
example of this calculation is provided in Figure 3-5 below.
Figure 3-5: Example of Percent of Gross Revenue Approach (Source: NCFMEC-01)
Crop
Expected
Yield
Expected
Price
Expected
Gross
Revenue
Rent as %
of Gross
Revenue
Cash Rental
Rate
Corn
10 bu.
$
4.50
$
65
% $
252.45
Soybeans
50 bu.
$
11.00
$
550 40
% $
220.00
Wheat
65 bu. 6.00
$
0 45
% $
15.55
Weighted Average:
Based on Corn: 5 acres, soybeans: 40 acres, wheat: 5 acres $ 225.85
f. Dollars per Bushel of Production Approach
A method that can take into account the specic productivity of a piece of
land is the dollars per bushel of production approach. With this approach,
historical rents and crop production records in the area are reviewed to
determine how much rent has been paid per bushel of production. Once
this has been calculated, the landowner and tenant have two options:
they can use the historical average productivity of the specic parcel and
this per-bushel amount to set rent in advance, or they can make the rent
variable based on the actual production of the land that year (though it
should be noted that making the rent variable aects a number of factors
in the advantages and disadvantages of the lease, as well as potentially
impacting the tax implications of the lease).
Figure 3-6: Example of Dollars per Bushel of Production
Approach (Source: NCFMEC-01)
Crops Grown: Corn Acres: 150
Item
Average
Yield
1
Price per
Bushel
2
Annual
Charge
Corn 10
×
$
1.20
$
204
1
Certain states have a productivity rating that may be used
2
Based on a percent of observed historical rents
CHAPTER 3: Setting Payments for Your Lease | 19
g. Fixed Bushel Rent Approach
e xed bushel rent approach is something of a variation on the dollars
per bushel of production approach in that the xed bushel rent approach
uses the historical average production of the land and an agreed price to
calculate a rental rate. It also relies on information from share rental rates
in the region to determine what share of production would be paid to the
landlord (assuming the landlord pays no other expenses other than land).
Assuming that a dollar-per-bushel amount is xed at the time the lease is
entered, the lease is considered to have a xed cash rent, but if that number
is exible, the lease is considered a variable rent, with all that implies.
Figure 3-7: Example of Fixed Bushel Rent (Source: NCFMEC-01)
Crops Grown: Corn Acres: 150
Item
Bushel
Rent
1
Price per
Bushel
2
Annual
Charge
Land
56 bu.
×
$
4.50
$
252
1
Based on historic rent as a percent of revenue. Based on an equitable
crop share percentage (landowner paying no expenses except land) with a
discount for production risk.
h. Flexibility in Cash Leases
A common theme throughout this discussion has been the allocation of risk
to the tenant under almost all cash rent forms. In some cases, tenants may
be willing to accept that risk allocation, but may want some protection if
either input or product prices get so far away from averages that cash rent
payments become extremely dicult. By the same token, landlords may
want to take advantage of some “upside risk” when times are exceptionally
good. us, both parties may want to introduce some exibility into the
lease by providing for a baseline rate of cash rent that is adjusted by some
formula based on either input costs, product prices, the productivity of the
land, or even some combination of all elements. A number of these methods
are discussed in the NCFMEC publications referenced at the end of this
chapter. To keep this discussion relatively brief, any adjustments need to
have very clear triggers and calculations that can be objectively determined
by both parties. For example, if one variable is the price of a commodity,
the lease should be very clear about both when that price is determined
(for example, at a set date, when harvest is commenced, when harvest
is completed, etc.) and how that price is determined (by local elevator
cash price, by USDA market report, by nearby futures contract price,
etc.). Consider also that it may be inequitable for only one party to have
the benet of exibility—a tenant may be uncomfortable signing a lease
wherein the landlord gets the advantage of upside risk, but the tenant bears
all downside risk. Further, the more variable a lease becomes, the more
potential tax implications are triggered, and the more the lease looks like a
share lease. At some tipping point, a share lease may be more desirable.
i.
Combining the Methods to Calculate a Fair Cash Rent
is discussion examined a number of methods used to calculate a cash
rent amount. Which method is the right one? e answer might be one,
20 | CHAPTER 3: Setting Payments for Your Lease
more, or all of them. Neither landlord nor tenant may have the time or
resources to pull together the information needed to calculate a rental rate
under all the methods but calculating two or more methods might help
both parties get some dierent perspectives on what a fair rental amount
could be. Additionally, calculating the rent under dierent methods
can trigger some important insights—if all of the methods used arrive
at roughly similar amounts, it is a strong suggestion that a rent amount
in that range is fair to the parties. If one or more methods are sharply
dierent, there may be cause to examine why those dierences arise, as
they may indicate something about the market or the land that justies a
dierent lease rate.
Figure 3-8: Comparison of Calculation Methods (Source: NCFMEC-01)
Example Farm Your Farm
Cash Rent Market Approach
$ 200.00 $
Landowner's cost or desired return (Worksheet 1)
$ 205.00 $
Landowner's Adjusted Net-share Rent (Worksheet 2)
$ 1 8. $
Operator's Net Return to Land (Worksheet 3)
$ 21.24 $
Percent of Land Value (Worksheet 4)
$ 200.00 $
Percent of Gross Revenue (Worksheet 5)
$ 225.85 $
Dollar per Bushel (Worksheet 6)
$ 204.00 $
Fixed Bushel Rent (Worksheet 7)
$ 252.00 $
Discussing the calculation methods can not only help landlord and tenant
arrive at a mutually-agreeable rental rate but can also help them discuss the
risk factors faced by both, which can lead to a better rental agreement itself.
2. Setting Shares under a Share Rental Agreement
At a fundamental level, share leases focus on sharing both the costs operating
the agricultural land and the prots from its production. is means both
upside and downside risk are shared by the parties as well. But how does one
set the appropriate shares to be paid and received by the landlord and tenant?
e North Central Farm Management Extension Committee has proposed
ve principles to help set shares:
1. Variable expenses that increase yields should be share in the same
percentage as the crop is shared. e principles of agricultural economics
demonstrate that using this principle will make sure the incentives for
both the landlord and the tenant will guide them to use the most ecient
levels of inputs. Conversely, not following this principle will create
incentives for one party to use too much of an input to capture more
revenue while shiing costs to the other party.
2. Share arrangements should be adjusted to reect the eect new
technologies have on relative costs contributed by both parties. New
technologies can cause substitutions of inputs, which can shi the
economics of the lease arrangement. For example, when a farm is shiing
from conventional tillage to a low- or no-till system, chemical weed
CHAPTER 3: Setting Payments for Your Lease | 21
control may be used as a substitute for mechanical weed control through
cultivation. So, should the cost of chemical weed control be paid by the
landlord, the tenant, or shared? Another example is seed (such as corn
seed) that is frequently bundled with other inputs such as herbicide,
insecticide, and perhaps even fertility products. If the seed product aects
the need for other inputs, who should pay for the seed? e answers to
these questions depend on the nature of the substitution.
• If the input is a yield-increasing input, the landowner and operator
should share the costs in the same proportion as the crop is shared,
as discussed in principle 1.
• If the input is a true substitution, the party responsible for the item
substituted in the original lease should pay for the input.
• If the input is both yield-increasing and a substitute, the lease needs
to address this situation aer a discussion of how the cost should be
shared by the parties.
3. e landlord and tenant should share total returns in the same
proportion as they contribute resources. is principle sounds simple but
may be the most complex to implement. e parties have to discuss and
determine the value of what each is “bringing to the table,” so to speak. e
landlord is contributing the production asset, land, and the tenant is likely
contributing the majority of operating labor and machinery expenses.
Both contribute management and bear risk. In many cases, the operator’s
primary costs (labor and machinery) are largely the same, whether dealing
with high-quality or low-quality land, but other input costs may vary
considerably. For this reason, shares on high-quality land and/or crops with
high variable input costs tend to be more equal, whereas shares on lower-
quality land and/or crops with low variable input costs tend to place larger
share values with the tenant, as illustrated below.
Yield, bu/ac
Most productive land
Land Quality/Value
Least productive land
1/2 Landowner
YIELD
1/3 Landowner
1/4 Landowner
2/3 Operator
3/4 Operator1/2 Operator
Operating cost, $/ac
60
55
50
45
40
35
30
25
20
15
10
5
0
Figure 3-9: Eect of Land Quality and Farm Costs on Crop-Share Rental Arrangements
(Source: NCFMEC-02)
22 | CHAPTER 3: Setting Payments for Your Lease
4.
Tenants should be compensated at the termination of the lease for the
undepreciated balance of long-term investments they have made. In some
cases, the parties may need to invest in inputs whose lives could extend
beyond the life of the lease, such as perennial seeds (alfalfa, for example),
pH amendments to the soil such as lime, and tiling or other soil drainage. A
tenant will likely be unwilling to share in those costs if they are not assured of
having access to the land for the entirety of the inputs’ productive life. us, it
may be wise to include lease language that guarantees the tenant will receive
back the undepreciated share of their investment if their lease is terminated
before the end of the investment’s life.
5
. Good, open, honest communication should be maintained between the
landowner and tenant. Communication is vital in any productive lease
arrangement, but it is even more important in a share leasing arrangement
since the parties must share in many of the decisions made in the course of
agricultural operations on the leased land. Frequent communication between
the parties can do much to provide transparency and to make both parties feel
that their concerns have been acknowledged and understood by the other.
Subject to these two principles, the rst step in determining what shares would be
equitable for the leasing arrangement is to form a thorough crop budget for the
land in question. e items in the budget will do a great deal to show the value
to be contributed by each party, which in turn will help determine the equitable
balance of shares for the lease.
■
Land: e land in question should be valued at its fair market value in
agricultural use; non-agricultural uses (such as residential development or
recreational uses) should be ignored since they are not relevant to the crop
enterprise for the purposes of the budget.
■
Interest on land: As discussed above, the usual value placed on land interest
(“opportunity cost”) for the purposes of lease budgeting is the rent-to-value
ratio for the area. One way of determining a land cost for the purposes of the
crop budget is to multiply the land value by the rent-to-value ratio.
■
Cash rent on land: Cash rent on land can also be a valid measure for the value
of the land contributed to the lease. Here, cash rent represents the cost that
would be incurred if the parties had to lease the land on a cash basis.
■
Real estate taxes: Real estate taxes can be a carrying cost of land, but be careful
not to include this value twice, since it is likely imputed to the values for cash
rental rates or on interest on land.
■
Land development: e average cost per year for lime, conservation practices,
and other improvements are another land cost. Use caution with these costs
to avoid double-counting just as with real estate taxes, though, as they too are
oen included in cash rental rates.
■
Crop machinery: e machinery charges should be the average value of a good
line of machinery needed to farm the land in question, which is not necessarily
the same as the value of new machinery.
■
Depreciation: Use a market rate of depreciation for machinery (oen 8 to 12
percent of the average value annually), not a tax-based depreciation rate tax rates
are oen far higher and will result in an over-charge of the machinery cost.
CHAPTER 3: Setting Payments for Your Lease | 23
■
Machinery repairs, taxes, and insurance: Research data suggests annual
repairs average between 5 to 8 percent of the machinery’s original value. Taxes
and insurance costs can be obtained from actual costs in farm records.
■
Machinery interest: e prevailing local interest rate for machinery loans (or
operating capital loans) can be used to determine the opportunity cost for
machinery).
■
Custom rates: Rates for activities that the parties intend to hire out, such
as fertilizer application or harvesting, can be entered using bids from local
providers.
■
Irrigation equipment, depreciation, repairs, taxes, insurance, and interest:
ese costs for irrigation systems can be determined and calculated in much
the same fashion as machinery costs, as discussed above.
■
Labor: Labor may be contributed solely by the tenant or may be joint between
the tenant and landlord. However, the contribution of signicant labor by
the landlord can make the share lease look much more like a joint venture
or partnership, and that may not be the desired legal outcome of the parties.
When valuing labor, use prevailing wage rates for comparable agricultural
labor in the area. Note that the value contributed by the management skills of
the tenant may make them far more valuable than the average farm laborer in
the area, but that value is captured separately.
■
Management: e management contributions of the landlord and tenant can
vary signicantly depending on their operational experience. In most cases,
management charges may simply be a function of the bargaining power of the
parties. ere are a number of ways this can be valued, but two possible rules of
thumb are:
• One rule is that management should be valued at 1 to 2.5 percent of the
average capital managed in the business, measured as the market value of
the land, machinery, and irrigation equipment. is rule is probably more
stable since it will not uctuate as much as the next rule on a year-to-year
basis.
• Another guide can be the management fees charged by professional farm
managers. ese managers commonly charge between 5 to 10 percent of
adjusted gross receipts.
Once these costs have been compiled and a budget for the production of the crop
has been estimated, the parties can use one of two methods to determine the
appropriate shares for the landlord and tenant.
3. The Contribution Approach
In the contribution approach, the percentage of overall costs contributed by
each party are calculated, as well as those costs that are shared by some pre-
determined proportion. e remaining costs—which should be the “yield-
increasing inputs” as discussed above—and the income should be shared in
the same proportions. Consider the following example using a corn-soybean
rotation:
24 | CHAPTER 3: Setting Payments for Your Lease
Figure 3-10: Example Crop Budget Worksheet (Source: NCFMEC-02)
Crop(s): Corn and soybeans
Acres: Approximately 156 llable acres
Farm: NE 1/4 of Brown Place
Comment: Average costs/acre for c-sb rotaon (share ferlizer, chemicals, and
crop insurance)
Line Value
a
Annual
Rate
Annual
cost
a
Contributor cost
a
Landlord Tenant
1. Land
b
$0
×
4.00% $0.00
1a. Real-estate tax
×
0.50% $0.00
1b. Land maintenance
×
0.00% $0.00
1c. Cash rent (in lieu of lines 1-1c)
$225.00 $225.00
2. Crop machinery
$250
2a. Depreciation
×
9.00% $22.50 $22.50
2b. Interest
×
. 0 0 % $1. 50 $1.50
2c. Repairs
×
6.00% $15.00 $15.00
2d. Taxes and insurance
×
0.50% $1.25 $1.25
2e. Custom rates (in lieu of lines 2a-2d)
3. Irrigation equipment
$0
×
3a. Depreciation
×
5.00% $0.00
3b. Interest
×
. 0 0 % $0.00
3c. Repairs
×
1.00% $0.00
3d. Taxes and insurance
×
0.50% $0.00
4. Labor (hours and $/hour)
2.00
×
$15.00 $0.00 $0.00
5. Management
$5,000
×
1.00% $50.00 $20.00 $0.00
6. Seed
Enter charges
only for non-yield
increasing items
(those inputs not shared in
the same percentage as
the crop).
$5.00 $5.00
7. Fertilizer
8. Herbicides
9. Insecticides/fungicides
10. Crop insurance
11. Fuel and oil
$18.00 $18.00
12. Irrigation pumping expense
13. Custom machinery hire
14. Drying
15. Hauling
16.
Other miscellaneous
$10.00 $2.50 $.50
17.
Other
18. TOTAL SPECIFIED COSTS (lines 1 through 17)
$464.25 $24.50 $216.5
19. Percent of Specied Costs (percent of total costs to each party)
100.0% 5.% 46.%
Adjustments to Reach Desired Share
20.
Cash transfer beeen pares to
achieve desired split
Add items previously
shared or include a cash
transfer between parties
to obtain desired shares.
$0.00 –$15.50 $15.50
21.
22.
23.
24. ADJUSTED TOTAL (lines 19 + lines 20 through 23)
$464.25 $22.00 $22.25
25.
Percent Crop Share Desired (percent of total costs to each party)
100.0% 50.0% 50.0%
a
Value and annual coat can either be total for farm/eld or average per acre.
b
Land contribution should be either land value × interest rate or cash rent
CHAPTER 3: Setting Payments for Your Lease | 25
In the example, the costs contributed by the landlord equal $247.50 per acre
or 53.3 percent of the total costs, and the costs contributed by the tenant
are $216.75 or 46.7 percent of the total costs. Note also that the worksheet
has assumed that costs for fertilizer, herbicides, and insecticides/fungicides
have not been included since the landlord and tenant intend to share those
costs between themselves. e shares calculated suggest something close to a
50/50 share arrangement. With this approach, the budget has led the way to
suggested shares.
4. The Desired-share Approach
Conversely, the desired share approach works backward from a desired share
arrangement. For example, with the same corn-soybean rotation, the parties
may want to target a 50/50 share arrangement. In such a case, they would
simply adjust their contributions so that the end result is a 50/50 share of the
expenses. is approach is much less common, but may be desirable based on
the circumstances of the parties.
D. Pasture Lease Rates
e calculation of pasture lease rates can borrow from a number of the principles
discussed above of leases primarily involving cropland. As with the methods
above, some homework is involved in collecting information on the price of land,
an applicable interest rate for the land, land taxes, land development costs (such
as conservation practices) the costs of facilities such as pens, loading docks, etc.
(and the depreciation, interest, repairs, and taxes on the same). Any labor and
management costs on the part of the landlord should also be included.
Another important piece of information is the desired stocking rate for the land.
e long-term productivity of the land is dependent upon maintaining a proper
stocking rate and not “over-mining” forage species or depleting soil nutrients.
Understanding how many animal units can be grazed on the property can help
in setting guidelines for the lease in terms of stocking rate; it can also help in
selecting the method of rent payment. For example, setting pasture rent on a
per-acre basis or share-of-gain basis creates incentives for the tenant to over-stock
the property. us, restrictions on stocking rates, as well as properly calculated
rent terms, are important. Stocking rates can be expressed as an average stocking
number (taking into account the fact that herd numbers may change over the
course of the lease) or can be based on animal-days or animal-unit days.
26 | CHAPTER 3: Setting Payments for Your Lease
Figure 3-11: Landowner Cost Estimate for Pasture Leasing (Source: NCFMEC-03)
Land and Facility Investments
Agricultural
Value Acres Useful life
Land value
$
240,000 160
Fences
$
10,000
25
yrs
Corrals
$
0
25
yrs
Other Investments
$
0
25
yrs
Stocking Rate (acres/head or animal unit)
4
Item Valuation Rate
Annual
Charge
Land Charges
Interest
$
240,000 1
% $
2,400
Land Taxes
$
240,000 0.5
% $
1,200
Annual Land Development Costs
$
0
Facility Charges
Depreciation
$
400
Interest
$
10,000 5
% $
250
Repairs
$
10,000 1.0
% $
50
Taxes
$
10,000 0.5
% $
25
Insurance
$
10,000 0
% $
0
Other Contributions
Fertilizer
$
Labor and Management
$
Total Pasture Ownership Charges
$
4,25
Landowner's Contribution ($/head or animal unit)
$
108.1
Landowner's Contribution ($/acre)
$
2. 0
e livestock owner must also estimate their net returns from grazing operations
on the land. A helpful start to this process is accessing livestock enterprise
budgets from your Cooperative Extension Service. Generally, these budgets will
estimate costs on a per-head basis, which is likely the most useful format since
marketing revenues will also be calculated on a per-head basis. e estimated
market value of the animal less the non-land costs of production equals the
livestock owner’s net returns to pasture, as illustrated in Figure 3-12.
CHAPTER 3: Setting Payments for Your Lease | 27
As you can see from this example, the contributions by the landowner are
greater than the returns to grazing on the part of the livestock owner. us, the
landowner will likely want a higher rate of rent than the livestock owner is willing
to pay. is means that the parties will have to negotiate, with one or both parties
taking a lower rate of return (or otherwise, both parties would walk away from the
leasing opportunity. Below are some examples of how a compromise can be found.
1. Fixed Per-acre or Per-head Rent
As with crop leases, a simple xed per-acre or per-head rental amount could
be charged. Given the example above, the landowner would likely want at
least $27 per acre, while the livestock owner would like to pay approximately
$15 per acre. e parties would have to negotiate for an amount somewhere
between the two values. If a xed per-acre rent is used, negotiated limits on
stocking rates are important to include in the lease, as discussed above. is
arrangement shis risk away from the landowner and to the livestock owner.
2. Fixed Charge per Pound of Gain
Livestock production faces two major risks—price risk in the amount
received for the animal at market, and the gain of the animal (production
risk). Weight gain is a function of the animal’s inherent productivity (oen
dictated by the animal’s genetics and health) and the productivity of the
pastureland. e productivity risk associated with land (although it is
also tied to the productivity of the animal) can be shied back toward the
landowner through a xed charge per pound of gain. For example, the lease
could specify a cost of $0.45 per pound of gain. Since this arrangement does
shi risk to the landowner, they may insist on a higher rate to oset this risk.
Figure 3-12: Livestock Owner Cost Estimate (Source: NCFMEC-03)
Weight
(lbs./animal)
Valves
($/cwt)
Value
($/animal)
Final Value of Animal
800
$
110.00 880.00
Initial Value of Animal
580
$
120.00 66.00
Value of Gain
184.00
Livestock Owner's Contribution Units Rate
Cost
($/animal)
Time on pasture (months/year)
4
Interest
6.5
% $
15.08
Taxes, vet, insurance, miscellaneous
$
18.50
Marketing, hauling
% $
1. 05
Death loss
1
%
6.6
Supplemental Feed
$
.00
Labor
1.5
$
11.00
$
16.50
Management
$
10.00
Livestock Owner's Contribution ($/head)
$
12.0
Livestock Operating Cost and Initial Value (4/head)
$
81.0
Net Returns to Grazing ($/head)
$
60.1
Stocking Rate (acres/head)
4
$
Livestock Owner Net Returns to Pasture ($/acre)
$
15.2
28 | CHAPTER 3: Setting Payments for Your Lease
3. Share of Gain
One potential method of distributing the income from the grazing operation
is to value the contributions made by the landlord and livestock owner to
determine the shares of that income.
Figure 3-13: Calculating Share of Gain (Source: NCFMEC-03)
Weight
(lbs./animal)
Valves
($/cwt)
Value
($/animal)
Value of Gain ($/head from Worksheet 2)
$
184.00
Estimated Contribution
($/head from Worksheets 1 and 2) $
108.1
$
12.0
$
21.22
Percent contribution
4
%
5
%
100
%
Net Return Allocation ($/head)
$
86.05
$
. 5
Stocking Rate (acres/head or animal unit)
4.00
Implied Cash Rental Rate ($/acre)
$
21.51
In the example used here, the landowner is contributing approximately 47
percent of the cost of production, and the livestock owner is contributing
approximately 53 percent. e landowner and livestock owner can agree to
share this proportion of the proceeds when the livestock are sold. Under this
arrangement, the actual rental is not known until the end of the lease when
the nal value of gain is known (not unlike in a crop share lease).
E. Conclusions
It is clear from this discussion that there are numerous factors involved in
determining an equitable rental rate for agricultural land. e more information
that is available to both parties, the greater their ability to have a productive
conversation about the contributions that both parties will be making to what
is hoped to be a protable agricultural enterprise. As with other lease terms, the
conversation about rental rates has tremendous value in and of itself to help the
parties identify issues before they become problems.
For more information:
“Fixed and Flexible Cash Rental Arrangements for your Farm,” North Central Farm
Management Extension Committee Publication NCFMEC-01. http://aglease101.org/
DocLib/docs/NCFMEC-01.pdf
“Crop Share Rental Arrangements for Your Farm,” North Central Farm Management
Extension Committee Publication NCFMEC-02. http://aglease101.org/DocLib/docs/
NCFMEC-02.pdf
“Pasture Rental Agreements for your Farm,” North Central Farm Management
Extension Committee Publication NCFMEC-03. http://aglease101.org/DocLib/docs/
NCFMEC-03.pdf
CHAPTER 4: When can a Landowner/Lessee be Liable for Injuries to a Third Party? | 29
CHAPTER 4:
When can a Landowner/Lessee
be Liable for Injuries to a Third Party?
Landowner liability is an important issue in a variety of contexts, including leasing.
Not only should landowners be aware of their potential liability during the lease term,
landowners leasing land for recreational activities like hunting or shing should also
be aware of state statutes that oer limitations on liability if certain conditions are
met.
A. Common Legal Claims
Because laws dier by state, it is important to understand the law regarding common
legal claims for the state in which property is located.
1. Texas
When a person is injured on the property of another, there are generally two
legal claims that can be made: Premises Liability or Negligent Act. Because
each claim requires vastly dierent elements to be proven, it is important to
understand when each claim applies.
■
Premises Liability
A premises liability claim arises when a person is injured due to a
condition on the land itself. For example, if a person falls into a hole, that
would be a premises liability claim.
A plainti must prove the following: (1) the defendant had actual or
constructive knowledge of some condition on the premises (requirement
depends on the category of person injured); (2) the condition posed an
unreasonable risk of harm; (3) the defendant did not exercise reasonable
care to reduce or eliminate the risk; and (4) the owner’s failure proximately
caused the plainti’s injuries.
■
Negligent Act
A negligent act occurs where there was an “ongoing activity” at the time
when the plainti was injured. For example, in one foundational Texas
case, a court found that a plainti injured by a box being dropped on his
head while at Wal-Mart had a negligent act claim.
Negligent act claims are the same as a traditional negligence claim. A
plainti must prove the following elements: (1) the defendant owed a duty
to the plainti, (2) the defendant breached that duty, (3) the defendant’s
action caused the plainti’s injury, and (4) the plainti’s damages.
2. Oklahoma
Oklahoma follows rules fairly similar to those of Texas with respect to premises
and negligent act liability. To prove a case of either kind, Oklahoma requires
a showing that (1) the defendant landowner had a duty to the person injured
(and that duty is generally dened by the relationship of the landowner to the
injured person, as discussed below), (2) the landowner breached that duty, (3)
the injured party sustained some form of damages, and (4) that the damages
sustained resulted from the breach of the duty owed to that party by the
landlord.
1
As with Texas, premises liability in Oklahoma stems from a condition
on the land itself, while a “negligent act” would refer to an action or failure to
act by the landlord or some other party with a legal connection to the landlord.
B. General Landowner Liability
e rules applicable to landowner liability also dier by state. ese rules can be
rather complicated, so it is important to carefully evaluate how the duties imposed on
landowners might apply to each individual operation.
1. Texas
When dealing with a premises liability claim, the question that arises is
whether the landowner breached the duty owed to the plainti. e duty
owed to a plainti depends upon which of the three legal categories a plainti
is categorized. Dierent duties exist for each category.
■
Trespasser
A person who enters the property of another without permission or legal
right to do so falls under the category of trespasser. e landowner owes
the lowest duty of care to a trespasser. A landowner’s only obligation to
a trespasser is not to intentionally injure the trespasser or to injure the
trespasser by gross negligence. ere is no requirement that dangerous
conditions be made safe or that warnings be given.
Gross negligence involves an act or omission involving an extreme degree
of risk, of which the defendant had actual awareness, but proceeded in
30 | CHAPTER 4: When can a Landowner/Lessee be Liable for Injuries to a Third Party?
1
See, e.g., Travelers Ins. Co. v. Taliaferro, 54 P.2d 1069 (Okla. 1935).
conscious indierence to the rights, safety, and welfare of others. is is a
very high standard that is dicult for a plainti to prove.
■
Licensee
A person who enters the land with permission for his or her own
benet is a licensee. e most common example is a social guest or a
salesman. Landowners must warn or make safe any condition posing an
unreasonable risk of harm that is actually known to the landowner and is
not similarly known by the plainti.
• Actual Knowledge: A plainti must show that the landowner had
actual knowledge of the unreasonably dangerous condition; the fact
that a landowner could or should have known is insucient. Actual
knowledge can be shown in a number of ways, including evidence that
the landowner has seen or been told of the condition, proof of prior
incidents, proof that the landowner created the condition, and the fact
that the landowner attempted to remedy or prevent the condition.
• Plainti Did Not Have Similar Knowledge: A landowner does not have
to warn or make safe a dangerous condition that is actually known to the
licensee. Oentimes, similar knowledge of the licensee is proven where
the dangerous condition was visible to the licensee.
• Duty to Warn or Make Safe: Where a landowner has actual or
constructive knowledge of a condition creating an unreasonable risk, he
or she has a duty to use reasonable care to either warn the invitee or to
make the condition safe. ese are alternatives, of which a landowner
need only satisfy one.
■
Invitee
An invitee is dened as a person who enters the land with the owner’s
knowledge and for the mutual benet of both parties is an invitee.
Examples include business patrons, owner’s employees, mailmen, and
meter readers.
Landowners owe the greatest duty to an invitee. A landowner must warn
or make safe any condition posing an unreasonable risk of which the
landowner has actual or constructive knowledge.
• Actual or Constructive Knowledge: A landowner is responsible not
only for conditions of which he or she has actual knowledge, but also
those of which he or she is deemed to have constructive knowledge. is
means that the landowner could have discovered the condition with a
reasonable inspection, even if the landowner failed to inspect. Let’s take
a classic slip and fall case in a grocery store. If a plainti slipped on a
grape that had been on the oor for only 5 minutes, the grocery store
likely would not be found to have constructive knowledge, because it
would not be reasonable to expect them to inspect the entire store every
5 minutes. If, on the other hand, a customer slipped on a grape that had
been on the oor for 5 hours, constructive knowledge would be more
likely to exist.
CHAPTER 4: When can a Landowner/Lessee be Liable for Injuries to a Third Party? | 31
• Unreasonable Risk: Not all conditions create an unreasonable risk of
harm. Liability is imposed only where a plainti can show that this
unreasonable risk exists. ere are certain conditions that Texas courts
have found not to be unreasonable as a matter of law, including icy
bridges during cold weather, mud accumulation on a concrete slab,
naturally occurring ice accumulating without assistance or involvement
of unnatural contact, and dirt in its natural state.
• Duty to Warn or Make Safe: is requirement is identical to that
element of a licensee–the landowner may either warn the licensee or
make the condition safe.
2. Oklahoma
Much like Texas, Oklahoma denes a landowner’s duty to a party based upon
the classication of that party. Oklahoma uses three basic classications in
this system: trespasser, licensee, and invitee. Most of these classications are
summarized in the case of Pickens v. Tulsa Metro. Ministry, 951 P.2d 1079,
1083-84 (Okla. 1997)
1. Trespasser
“To a trespasser, a landowner owes in the common law status-based
classication system only a duty to avoid injuring him willfully or
wantonly.” Put another way, a landowner has no duty to a trespasser except
to avoid intentionally causing him or her an injury.
2. Licensee
“To a licensee, an owner owes a duty to exercise reasonable care to disclose
to him the existence of dangerous defects known to the owner, but unlikely
to be discovered by the licensee. is duty extends to conditions and
instrumentalities, which are in the nature of hidden dangers, traps, snares,
and the like.” As in Texas, a person on the property as a social guest
(someone on the property for a non-commercial purpose) or someone on
the property for their economic benet (such as a salesman) is classied as
a licensee. Such parties need only be warned of known, hidden dangers.
is means the landowner is not obligated to make an inspection of the
property to discover any dangers of which he or she was not already aware.
3. Invitee
“To an invitee, an owner owes the additional duty of exercising reasonable
care to keep the premises in a reasonably safe condition for the reception
for the visitor. Even vis-à-vis an invitee, to whom a landowner owes the
highest duty in this trichotomous classication system, the law does not
require that the landowner protect the invitee against dangers, which are
so apparent and readily observable that one could reasonably expect them
to be discovered… A hidden danger within this rule of liability need not
be totally or partially obscured from vision or withdrawn from sight; the
phrase is used for a condition presenting a deceptively innocent appearance
32 | CHAPTER 4: When can a Landowner/Lessee be Liable for Injuries to a Third Party?
of safety ‘which cloaks a reality of danger.’” In Oklahoma, much like
Texas, an “invitee” is someone on the premises for the economic benet
of the landowner, such as a business customer (the liability for parties
such as lease hunters, who could be argued to be on the premises for
the economic benet of the landowner, is discussed later). For invitees,
Oklahoma requires the landowner to make inspections of the property on
a reasonably regular basis to discover any potentially hidden hazards and
to either warn parties that might come on the property of the hazards or
to make those hazards safe by either eliminating them or blocking access
to them.
C. Attractive Nuisance Doctrine
Another important legal doctrine that could impact a landowner’s liability is known
as the attractive nuisance doctrine. e purpose of the doctrine is to oer additional
legal protection for children injured by extremely dangerous conditions as they are
not old enough to appreciate the serious risks. Although not commonly successful,
the doctrine is sometimes used by plaintis’ attorneys.
1. Texas
Under Texas law, the attractive nuisance doctrine comes into play when the
trespasser is a young child and the following elements are met:
■
Defendant knew or should have known there was an articial condition
on the land and children were likely to trespass. Note here that the
doctrine applies only to articial conditions, not to natural ones. Articial
conditions to which the doctrine has been applied include open caliche
pits, billboards, large irrigation pipes, and cattle dipping vats.
■
Defendant knew or should have known the articial condition posed an
unreasonable risk of injury or death to children.
■
Plainti did not realize the risk involved with the condition because of his
or her age. is is a case-by-case determination that takes into account
the child’s mental capacity, whether the child is unusually bright of slow,
and age. Although there is no set age, the majority of cases applying the
doctrine involve children 12 years of age or younger.
■
e utility of the defendant maintaining the condition and burden of
eliminating the danger were slight compared to the risk to the children.
is element is a fact-specic balancing test.
■
e defendant’s failure to exercise reasonable care to eliminate the danger
or otherwise protect the plainti caused the plainti’s injury.
2. Oklahoma
As in Texas, the rule that landowners owe no duty of care to trespassers is
modied by the “attractive nuisance” doctrine in Oklahoma. e attractive
nuisance doctrine in Oklahoma largely follows the same elements as in
CHAPTER 4: When can a Landowner/Lessee be Liable for Injuries to a Third Party? | 33
Texas.
2
Although there is no set age below which the attractive nuisance
doctrine applies in Oklahoma, one case has noted that the doctrine is
presumed not to apply to anyone 14 years of age or older.
3
D. Landowner Liability During Lease Term
Another important question that frequently arises is whether, and under what
circumstances, a landowner can be liable for injuries occurring on the land
during a lease term.
1. Texas
In Texas, the general rule is that a landowner is not liable to the tenant or
others on the land for physical harm caused by any dangerous condition that
existed at the time the lessee took possession of the land.
As with most laws, however, there are several exceptions to this rule. A
landowner may be liable for injuries to the tenant or another in the following
circumstances:
■
e landowner fails to disclose to the tenant a dangerous condition which
involves an unreasonable risk of harm if the tenant does not know or have
reason to know of the condition, and the landowner does know or have
reason to know of the condition and should realize the risk and expect the
tenant would not discover the condition or realize the risk. is exception
basically provides that if a landowner knows of or conceals a latent defect
when he or she leases the property to a tenant, the landowner may still be
held liable for injuries on the property.
■
e landowner leases land for a purpose involving admission of the public
who knows or should know of a condition creating an unreasonable risk of
injury to the public and has reason to expect the lessee will admit people
before the land is made safe and fails to exercise reasonable care to remedy
the condition or otherwise protect the public. is exception refers to
situations where a person leases land, knowing that the public will be
admitted. For example, if a landowner leases his roping arena to a group
to hold a public rodeo, that situation would fall under this exception. It is
important for such landowner to ensure there are no conditions creating
unreasonable risk.
■
e landowner contracts to make repairs. If a landowner agrees in the lease
itself to make repairs, he or she will be held liable for failure to do so.
■
e landowner makes negligent repairs. Both of the exceptions related to
repairs essentially provide that if the landowner agrees to make repairs and
fails to make them, or if a landowner negligently makes such repairs, he or
she can be held liable. is makes sense from a logical standpoint, as the
liability here is not based merely on owning the land, but instead on the
negligent acts of the landowner in making or contracting to make repairs.
34 | CHAPTER 4: When can a Landowner/Lessee be Liable for Injuries to a Third Party?
2
See Keck v. Woodring, 208 P.2d 1133 (Okla. 1948).
3
Id.
■
e landowner retains part of the leased premises in his or control but allows
the tenant to use the area. is issue oen arises in cases dealing with the
common areas (such as lobbies or stairways) in apartment buildings. But it
also raises an important point about agricultural leases. Generally, when a
party leases land to another, the tenant has the exclusive right of possession
to the property during the term of the lease, and the landowner has no
right to enter the property. If, however, a landowner was to reserve the
right to enter the property for any reason, would that reservation subject
the landowner to potential liability? In 2004, the Texas Supreme Court
held that the answer to this question was no. Merely retaining the right to
enter a leased property, alone, is not sucient to deem the property in the
landowner’s “control” such that this exception would apply.
2. Oklahoma
As in Texas, the general rule in Oklahoma states when a landlord transfers
the control of the premises to a tenant, the landlord has no liability to an
injured third party;
4
also, as with Texas, there are exceptions to this rule.
■
e property is leased for residential use. Oklahoma specically overruled
the previous rule with respect to residential properties and found that
landlords have an obligation to maintain the leased property in reasonably
safe condition, even if the area where an injury occurred was exclusively
within the tenant’s control or use.
5
In the case of announcing this rule, the
exception seemed to be specically targeted at residential leases, though; it
seems unlikely this would be the rule for agricultural land leases.
■
e property is leased for public purposes, and the landlord knows of an
unsafe condition. An exception to the general rule is found when the
landlord leases the property for public purposes (that is, when the public
may enter on to the property) and at the time the lease is entered there
is a condition on the property that the landlord knows of rendering the
premises unsafe, then the landlord may be liable for injuries to a third
party.
6
■
e landlord completes repairs in a negligent fashion. As with Texas,
Oklahoma imposes liability on a landlord for negligence in making repairs
or improvements to the property.
7
E. Recreational Use Statutes
All 50 states oer statutory-limited liability under recreational use statutes. e
basic premise behind such statutes is that legislatures want to encourage private
landowners to open up their property and allow persons to come and engage in
recreational activities. In order to do so, legislatures have passed statutes limiting
the instances where such landowners may be held liable if a plainti is injured
CHAPTER 4: When can a Landowner/Lessee be Liable for Injuries to a Third Party? | 35
4
See Strader-Faiazi v. Edmond Fourth of July Festivals, 28 P.3d 1161 (Okla. 2001).
5
See Miller v. David Grace, Inc., 212 P.3d 1223 (Okla. 2009).
6
See Strader-Faiazi v. Edmond Fourth of July Festivals, 28 P.3d 1161 (Okla. 2001).
7
See Continental Oil Co. v. Ryan, 392 P.2d 492 (Okla. 1963), Buck v. Miller, 198 Okla. 617 (Okla. 1947).
during a recreational activity. e full text of the Texas, Oklahoma, and Arkansas
Recreational Use Statutes may be found in Appendix II. A compilation of statutes
by state may be found at the National Agricultural Law Center Reading Room
(http://nationalaglawcenter.org/state-compilations/recreational-use/).
1. Texas
8
Essentially, where the statute applies, the landowner, lessee, or occupier owes
the plainti the same duty as a trespasser–meaning that the landowner,
lessee, or occupier may not intentionally injure or act in gross negligence. As
explained by the statute, the statute does not apply to acts of gross negligence,
bad faith, or malicious intent. No additional duties (such as those owed to
invitees or licensees) apply. e following elements must be met in order for
the Recreational Use Statute to apply.
■
Defendant is the owner, lessee, or occupier of agricultural land or “real
property other than agricultural land.”
First, the statute oers protection not only to landowners but also to lessees
and occupiers of land.
Next, as you can see, essentially, the statute applies to all real property.
e level of protection, however, is the greatest for agricultural land.
For example, for agricultural land, the statute applies to social guests,
whereas it does not for non-agricultural land. Additionally, the liability
cap available if sucient insurance is held applies only to agricultural
land. Finally, for agricultural land, the attractive nuisance doctrine is
inapplicable for anyone over 16 years of age.
Agricultural land is dened as land “suitable for” use in the production
of plants and fruits grown for human or animal consumption, or plants
grown for the production of bers, oriculture, viticulture, horticulture,
or planting seed; domestic or native farm or ranch animals kept for use
or prot; or forestry and the growing of trees to render those trees into
lumber, ber or other items used for industrial, commercial, or personal
consumption.
■
e plainti enters the property for a recreational purpose.
Recreation is broadly dened as including “any activity related to enjoying
the outdoors.” is includes hunting, shing, swimming, boating,
camping, the use of ATVs, water skiing, biking, and hiking. Court
decisions have also found swinging on a swing set, golng, and playing
sand volleyball to constitute recreation. e courts have found this not to
include outdoor weddings and spectating at sporting events.
■
e plainti meets one of the three monetary options:
• e landowner, lessee, or occupier charges no fee to the plainti.
• e fee charged by the landowner is less than 20 times the amount of
ad valorem taxes paid by the landowner last year. is language sounds
36 | CHAPTER 4: When can a Landowner/Lessee be Liable for Injuries to a Third Party?
8
Tex. Civ. Practice & Remedies Code § 75.001 et seq.
more complex than it really is. A landowner just needs to add up the
total income from recreational uses for the last calendar year. Next, the
landowner would add up the total paid on ad valorem taxes for all his
or her property (both where recreation occurred and all other property
owned by the landowner in Texas) last year. So long as the amount
received for recreation is not twenty times greater than the amount paid
for taxes, the landowner is protected by this prong of the statute.
• e landowner, lessee, or occupier of agricultural land maintains
insurance coverage as dened by statute. Note, initially, that this prong
of the test is available only to agricultural landowners, lessees, and
occupiers. e minimum coverage amount is dened by statute as
500,000 for each person, 1 million for each single occurrence of bodily
injury or death, and $100,000 for each single occurrence of injury or
destruction of property.
An added benet is available to agricultural landowners, lessees, or
occupiers who meet this “adequate insurance” requirement. e statute
provides a cap for damages equal to the insurance coverage that the
plainti can recover. at this means is that an agricultural landowner,
lessee, or occupier maintaining “adequate insurance” would not be
required to pay over the insurance coverage to a plainti.
2. Oklahoma
Oklahoma’s public recreational use statute resembles that of Texas in many
ways but also poses some important dierences. Perhaps most importantly,
it specically states that it does not apply to land that is used primarily for
farming or ranching purposes, but rather that the Oklahoma Limitation of
Liability for Farming and Ranching Land Act governs such land.
9
Assuming
the land in question is not primarily used for farming or ranching purposes,
the “owner” of the land is regarded as (1) not extending any assurance that
the land is safe for any purpose, (2) not incurring any duty of care toward
a person who enters or uses the land, and (3) not assuming any liability or
responsibility for any injury to persons or property caused by the act or
omission of a person who enters or uses the land. In eect, much like the
Texas statute, the Oklahoma statute essentially gives owners the same legal
status with respect to recreational users as to trespassers. However, the
Oklahoma statute only applies so long as the following conditions hold:
■
e defendant is the “owner” of the land. Contrary to the usual
understanding of “owner,” the statute denes owner as “the possessor of
a fee interest, a tenant, lessee, occupant, or person in control of the land.”
us, under the right circumstances, anyone with legal possession of the
property could be regarded as an owner under the statute.
■
e owner provides public access to the land for “outdoor recreational
purposes” at no charge. “Charge” is dened by the statute as “the admission
price or fee asked in return for invitation or permission to enter or go upon
the land.” It should be noted that the statute says the liability protections
CHAPTER 4: When can a Landowner/Lessee be Liable for Injuries to a Third Party? | 37
9
76 Okla. Stat. § 10.1(H).
do not apply if a charge is made for outdoor recreational purposes or
if a charge is “usually made.” Several examples of recreational use are
provided in the statute: “’Outdoor recreational purposes’ includes any of
the following or any combination thereof: hunting, shing, swimming,
boating, camping, picnicking, hiking, pleasure driving, jogging, cycling,
other sporting events and activities, nature study, water skiing, jet skiing,
winter sports, viewing or enjoying historical, archaeological, scenic, or
scientic sites, and aviation at non-public-use airports.”
■
e owner conducts “any commercial or other activity for prot directly
related to the use” on any part of the land. e statute does not dene what
the phrase “related to the use” means, nor has any case interpreting 76
OKLA. STAT. §10.1 interpreted the phrase, but it could be read to mean
that the owner does not have the liability protection of the statute on any
portion of the property if the owner charges for any recreational use on
another portion of the property. However, the safer interpretation seems to
be that no for-prot activity of any kind is conducted on any of the owner’s
land connected to the recreational property in question.
F. Agritourism Statutes
Another source of statutory-limited liability comes from agritourism statutes.
Over half the states in the US have enacted these statutes, including Texas and
Oklahoma. e full text of the Texas, Oklahoma, and Arkansas Agritourism
Statutes may be found in Appendix III. A compilation of statutes by state
may be found at the National Agricultural Law Center Reading Room (http://
nationalaglawcenter.org/state-compilations/agritourism/).
1. Texas
10
e Texas Agritourism Act provides that an "agritourism entity" is not liable
to any person for injury or damages to an "agritourism participant" if: (1) the
required signage is posted; or (2) a written agreement containing required
language is obtained.
■
Denitions
• e act is aimed at protecting persons injured while participating in an
"agritourism activity." By denition, an agritourism activity is an activity
on agricultural land for recreational or educational purposes of the
participants, regardless of compensation.
e requirement that the property involved be "agricultural land"
means that it must be land suitable for use in the production of fruit or
crops grown for human or animal consumption, or plants grown for
production of bers, oriculture, viticulture, horticulture, or planting
seed, or suitable for domestic or native farm or ranch animals to be kept
for use or prot. is is a very broad denition--requiring only that
land be "suitable for" this wide range of agriculturally related activities.
38 | CHAPTER 4: When can a Landowner/Lessee be Liable for Injuries to a Third Party?
10
Tex. Civ. Practice & Remedies Code § 75A.001 et seq.
Importantly, however, it does not expressly include forestry land, as does
the Recreational Use Statute.
e requirement is identical to that included in the Recreational Use
statute. A "recreational purpose" is dened as including hunting,
shing, swimming, boating, camping, picnicking, hiking, pleasure
driving (including ATVs), nature study, cave exploration, water sports,
biking, disc golf, walking dogs, radio control ying, and other activities
associated with enjoying nature or the outdoors. Again, this is an
extremely broad denition.
So, for example, if a plainti was on a defendant's ranch land to hunt
deer, that would meet the denition of an "agritourism activity" required
for the statute to apply.
• e Act oers protection to "agritourism entities." is is dened as a
person engaged in the business or providing an agritourism activity,
without regard to compensation. For example, a farmer or rancher who
allowed persons to enter their property for recreational or educational
purposes would meet this denition.
• e Act applies to "agritourism participants." is term is dened as
an individual engaged in an agritourism activity. is means that any
person on agricultural land for a recreational or educational purpose
meets this requirement. Specically excluded from this denition,
however, are employees of the agritourism entity. Assume a ranch owner
allows a neighbor to come over to sh and the neighbor is injured. at
neighbor would be an agritourism participant. If, however, it was an
employee of the ranch who was injured while shing, the statute would
not apply.
• e Act applies to "agritourism participant injures." is term is dened
as "an injury sustained by an agritourism participant, including bodily
injury, emotional distress, death, property damage, or any other loss
arising from the person's participation in an agritourism activity." Again,
this is a broad-reaching denition that will allow limited liability for
most damage claims.
■
Requirements for limited liability.
If the above requirements are satised and the Act applies, an agritourism
entity is not liable for any agritourism participant injuries if one of the
following two options are met: (1) required signage is posted; or (2) a
release including required language is obtained.
• Required signage. e rst option to qualify for limited liability is for
a landowner to post warning signs. Under the statute, the signs must
be clearly visible on or near any premises where an agritourism activity
occurs. e sign must contain the following language: WARNING:
UNDER TEXAS LAW (CHAPTER 75A, CIVIL PRACTICE AND
REMEDIES CODE), AN AGRITOURISM ENTITY IS NOT LIABLE
FOR ANY INJURY TO OR DEATH OF AN AGRITOURISM
PARTICIPANT RESULTING FROM AN AGRITOURISM ACTIVITY.
CHAPTER 4: When can a Landowner/Lessee be Liable for Injuries to a Third Party? | 39
• Required release language. e alternative option is for the agritourism
entity to obtain a signed written agreement from participants. e
agreement must be (1) signed before participation in an agritourism
activity; (2) be signed by the participant or the participant's guardian if
he or she is a minor; (3) be separate from any other agreement between
the participant and entity except a dierent warning, consent, or
assumption of risk, (4) be printed in at least 10-point bold type; and (5)
contain the following language: AGREEMENT AND WARNING: I
UNDERSTAND AND ACKNOWLEDGE THAT AN AGRITOURISM
ENTITY IS NOT LIABLE FOR ANY INJURY TO OR DEATH OF AN
AGRITOURISM PARTICIPANT RESULTING FROM AGRITOURISM
ACTIVITIES. I UNDERSTAND THAT I HAVE ACCEPTED ALL RISK
OF INJURY, DEATH, PROPERTY DAMAGE, AND OTHER LOSS
THAT MAY RESULT FROM AGRITOURISM ACTIVITIES.
■
Exceptions to limited liability
Importantly, the limitation on liability oered by this statute is not
unlimited. Numerous exceptions apply.
• As noted above, the statute expressly states it does not apply if an
employee of the entity is injured.
• e protections do not apply if the injury was caused by the entity's
"negligence evidencing a disregard for the safety of the agritourism
participant."
• e protections do not apply if the injury is caused by a dangerous
condition that the entity had actual knowledge or reasonably should
have known on the land, facilities, or equipment used in the activity.
• No limited liability exists if the injury is caused by the dangerous
propensity of a particular animal used in the activity not disclosed to
the participant of which the entity has actual knowledge or reasonably
should have known.
• Protections do not apply if the injury is caused by the entity's failure to
adequately train an employee involved in an agritourism activity.
• No limited liability exists for injuries intentionally caused by the entity.
2. Oklahoma
e Oklahoma Agritourism Activities Liability Limitations Act (2
OKLA. STAT. §§ 5-14 through 5-17) provides protection to “agritourism
professionals” from the “inherent risks of agritourism activities.” Naturally,
understanding the statute’s protections requires a step-by-step examination
of each of these denitions.
■
Agritourism activity: e statute denes “agritourism activity as “any
activity carried out on a farm or ranch that allows members of the general
40 | CHAPTER 4: When can a Landowner/Lessee be Liable for Injuries to a Third Party?
public, for recreational, entertainment, or educational purposes, to view
or enjoy rural activities, including farming, ranching, historic, cultural,
harvest-your-own activities, or natural activities and attractions. An
activity is an agritourism activity whether or not the participant paid to
participate in the activity.” Note this last phrase indicates that, in contrast
with the public use statute discussed above, participation fees or other
charges can be imposed under the agritourism statute, and the owner can
still have the protections of the statute.
■
Agritourism Professional: “Agritourism professional” is dened as
“any person who is engaged in the business of providing one or more
agritourism activities, whether or not for compensation and whose
agritourism activity is registered with the Oklahoma Department of
Agriculture, Food, and Forestry.” To register an Oklahoma Agritourism
business, contact the Oklahoma Department of Agriculture, Food,
and Forestry’s (ODAFF) Market Development sta at (405) 522-5652.
Regulations for the registration process can be found in the Oklahoma
Administrative Code at OKLA. ADMIN. CODE § 35:40-17-3. Prior to
registration, ODAFF must make several determinations:
• Is the facility in compliance with all federal, state, and local regulations
for health, safety, sanitation, and zoning?
• Does the facility comply with all Oklahoma Tax Commission
regulations?
• Does the facility carry liability insurance?
• Does the facility post and adhere to regular business hours?
• Does the facility maintain its facilities in good repair?
• Additional requirements are imposed for hunting facilities, “country-
stay” facilities, and wineries.
■
Inherent risks of agritourism activities: “Inherent risks of agritourism
activities” are denes as “those dangers or conditions that are an integral
part of an agritourism activity including certain hazards, surface and
subsurface conditions, natural conditions of land, vegetation, and
waters, the behavior of wild or domestic animals, and ordinary dangers
of structures or equipment ordinarily used in farming and ranching
operations. Inherent risks of agritourism activity also include the potential
of a participant to act in a negligent manner that may contribute to injury
to the participant or others, including failing to follow instructions given
by the agritourism professional or failing to exercise reasonable caution
while engaging in the agritourism activity.”
In addition to the satisfaction of the denitions above, the protections of the Act
are only available if the following warning is posted at the facility:
CHAPTER 4: When can a Landowner/Lessee be Liable for Injuries to a Third Party? | 41
WARNING
Under Oklahoma law, there is no liability for an injury to or death of a
participant in an agritourism activity conducted at this agritourism location if
such injury or death results from the inherent risks of the agritourism activity.
Inherent risks of agritourism activities include, among others, risks of injury
inherent to land, equipment, and animals, as well as the potential for you to
act in a negligent manner that may contribute to your injury or death. You
are assuming the risk of participating in this agritourism activity.
e warning must be posted in a clearly visible location at the entrance to the
agritourism location, and also at the site of the agritourism activity. Per the
statute, “the warning notice shall consist of a sign in black letters, with each letter
to be a minimum of one (1) inch in height.” Additionally, “every written contract
entered into by an agritourism professional for the providing of professional
services, instruction, or the rental of equipment to a participant, whether or not
the contract involves agritourism activities on or o the location or at the site
of the agritourism activity, shall contain in clearly readable print the warning
notice.”
ere are two critical exceptions to the protections provided by the Act.
• No liability protection is available if the agritourism professional “commits
an act or omission that constitutes negligence or willful or wanton disregard
for the safety of the participant, and that act or omission proximately causes
injury, damage, or death to the participant.”
• e agritourism professional cannot use the liability protection of the Act if he
or she “has actual knowledge or reasonably should have known of a dangerous
condition on the land, facilities, or equipment used in the activity or the
dangerous propensity of a particular animal used in such activity and does not
make the danger known to the participant, and the danger proximately causes
injury, damage, or death to the participant.”
ese exceptions mean that agritourism professionals are still held to traditional
negligence standards. Nevertheless, the Act can still provide important liability
protections for injuries and damages that do not occur as a result of individual
negligence.
Finally, it is important to note that the language of the Oklahoma Agritourism
Activities Liability Limitations Act states that if all the requirements of the Act
satised, “no participant or participant’s representative” can maintain a legal
action to recover for an injury. is is important, as “participant’s representative”
includes a minor’s guardian. In some cases, a guardian cannot waive liability for
injuries, but this statute provides an exception to that rule.
G. Farm Animal Liability Acts
Another potential source of limited liability are statutes aimed at limiting liability
where injuries occur involving farm animals and/or equine animals. Currently,
all states except for California, Maryland, Nevada, and New York have enacted
42 | CHAPTER 4: When can a Landowner/Lessee be Liable for Injuries to a Third Party?
this type of statute. e full text of the Texas, Oklahoma, and Arkansas Acts may
be located in Appendix IV.
1. Texas
11
e Texas Farm Animal Liability Act provides that certain defendants are
not liable for property damage, personal injury, or death if each of the Act’s
requirements are satised.
■
Animals to which the Act applies.
In 2011, the Texas Legislature passed several amendments to the Act. Most
signicantly, the Act was expanded to apply to all farm animals, not just
equines. A “farm animal” is dened as including an equine animal (horse,
pony, mule, donkey, or hinny), bovine animal, sheep, goat, pig, hog, ratite
(ostrich, rhea, emu), and chicken or other fowl.
■
Persons to whom the protection is given.
e limited liability applies to "any person", including the following listed
categories:
(1) Farm animal professionals (persons engaged for compensation in
instructing a participant or renting to a participant a farm animal
for the purpose of riding, driving, or being a passenger; renting
equipment or tack to participants; providing medical care to a farm
animal; or providing farrier services);
(2) Farm animal activity sponsors (persons who sponsor, organize or
provide facilities for farm animal activities or operators, instructors,
or promoters for facilities where farm animal activities are held);
(3) Livestock producers (person who owns, breeds, raises, or feeds
livestock animals);
(4) Livestock show sponsors (groups that sanction livestock shows); and
(5) Livestock show participants (person who registers for and is
allowed to compete in a livestock show by showing an animal on a
competitive basis, or a person who assists the show participant).
■
Plaintis to whom the Act applies.
e Act applies to all “participants” which is dened as “a person who
engages in a farm animal activity without regard to whether the person
is an amateur or professional or whether the person pays for the activity
or participates in the activity for free” and a person who registers for
and is allowed to compete in a livestock show or a person assisting the
competitor.
In 2020, the Texas Supreme Court held that the Act does not apply as a
defense when the injured party is a rancher or ranch hand. e Court
CHAPTER 4: When can a Landowner/Lessee be Liable for Injuries to a Third Party? | 43
11
Tex. Civ. Practice & Remedies Code § 87.001 et seq.
based this on language in the Act indicating it was intended only to apply
to "shows, rides, exhibitions, competitions, and the like." is, the Court
opined, means that "the categories listed as examples do not suggest that
ranchers should also be included."
12
■
Activities to which the Act applies.
e Act applies to all “farm animal activities” which includes shows,
fairs, performances, rodeos, or events involving farm animals; training or
teaching activities involving farm animals; boarding farm animals; daily
care of farm animals; riding, inspecting, evaluating, hauling, loading, or
unloading a farm animal belonging to another; informal farm animal
activities including rides or hunts; shoeing horses; providing medical
treatment to animals; and rodeos and ropings.
Persons are engaged in farm animal activities if they are riding, handling,
training, driving, loading or unloading, assisting in the medical treatment
of, being a passenger on, or assisting a participant or sponsor with a farm
animal.
e Act does not apply to spectators at farm animal activities unless the
spectator is in an unauthorized location in the immediate proximity of the
farm animal activity.
■
Causes of injury to which the Act applies.
e Act’s limited liability protections apply to any “property damage,
injury, or death resulting from the dangers or conditions that are an
inherent risk of a farm animal activity or the showing of an animal on a
competitive basis at a livestock show.” Further, the Act oers examples of
the types of injuries that would be covered: (1) propensity of a farm animal
to behave in a way that may result in personal injury or death to persons
around it; (2) unpredictability of farm animal’s reaction to sound, sudden
movement, or unfamiliar object, person, or other animal; (3) with respect
to equine animals, certain land conditions and hazards including surface
and subsurface conditions; (4) a collision with another animal or object;
and (5) the potential of a participant to act in a negligent manner that may
contribute to the injury of the participant or another.
■
Exceptions to the Act
ere are injuries that are expressly not covered by the Act, meaning that
there is no limited liability oered if the injuries are caused by any of these
situations:
(1) Injury was caused by faulty tack or equipment provided by defendant
and defendant knew or should have known it was faulty;
(2) Defendant provided the farm animal to the participant and did not
make reasonable eort to determine the ability of the participant to
engage safely in the farm animal activity;
44 | CHAPTER 4: When can a Landowner/Lessee be Liable for Injuries to a Third Party?
12
Waak v. Zuiniga, 603 S.W.3d 103 (Tex. 2020).
(3) Injury was caused by a dangerous latent condition of the land,
and the defendant knew of the condition and did not warn the
participant;
(4) Defendant acted with willful or wanton disregard for the safety of
the participant;
(5) Defendant intentionally caused the injury;
(6) Defendant allowed or invited a non-competitor to participate in an
activity connected with a livestock show, and the injury resulted
from that activity.
■
Required signage and contractual language
e Act requires a farm animal professional who manages or controls a
stable, corral, or arena where farm animal activities are conducted to post
a sign clearly visible on or near the stable, corral, or arena containing the
following language:
WARNING: UNDER TEXAS LAW (CHAPTER 87, CIVIL PRACTICE
& REMEDIES CODE) A FARM ANIMAL PROFESSIONAL IS NOT
LIABLE FOR AN INJURY TO OR THE DEATH OF A PARTICIPANT
IN THE FARM ANIMAL ACTIVITIES RESULTING FROM THE
INHERENT RISKS OF FARM ANIMAL ACTIVITIES.
Additionally, this language must be included in every written contract the
farm animal professional enters into with a participant for professional
services, instruction, or the rental of tack.
For livestock shows, sponsors who manage or control a stable, barn,
corral, or arena where the show is conducted must place a sign in a
clearly visible location near the stable, barn, corral, or arena containing
the following language: WARNING: UNDER TEXAS LAW (CHAPTER
87, CIVIL PRACTICE & REMEDIES CODE) A LIVESTOCK SHOW
SPONSOR IS NOT LIABLE FOR AN INJURY TO OR THE DEATH OF
A PARTICIPANT IN A LIVESTOCK SHOW RESULTING FROM THE
INHERENT RISKS OF LIVESTOCK SHOW ACTIVITIES.
2. Oklahoma
e Oklahoma Livestock Activities Liability Limitation Act (OLALLA),
found at OKLA. STAT. §§ 50.1 – 50.4 provides “a livestock activity sponsor,
a participant or a livestock professional acting in good faith and pursuant
to the standards of the livestock industry shall not be liable for injuries to
any person engaged in livestock activities when such injuries result from the
inherent risks of livestock activities.” Again, though, taking advantage of
those protections requires walking through the following denitions.
■
"Livestock" means any cattle, bison, hog, sheep, goat, equine livestock,
including but not limited to animals of the families bovidae, cervidae, and
antilocapridae or birds of the ratite group;
CHAPTER 4: When can a Landowner/Lessee be Liable for Injuries to a Third Party? | 45
■
"Livestock activity" includes but is not limited to:
• livestock shows, fairs, livestock sales, competitions, performances,
or parades that involve any or all breeds of livestock and any of the
livestock disciplines, including, but not limited to, rodeos, auctions,
driving, pulling, judging, cutting and showing,
• livestock training or teaching activities or both such training and
teaching activities,
• boarding or pasturing livestock,
• inspecting or evaluating livestock belonging to another, whether or not
the owner has received some monetary consideration or other thing of
value for the use of the livestock or is permitting a prospective purchaser
of the livestock to inspect or evaluate the livestock,
• drives, rides, trips, hunts or other livestock activities of any type however
informal or impromptu that are sponsored by a livestock activity
sponsor,
• placing or replacing horseshoes on an equine, or otherwise preparing
livestock for show, and
• agritourism activities involving the viewing of, handling of, riding of,
showing of, or other interactive activities with livestock;
■
"Livestock activity sponsor" means an individual, group, club, partnership
or corporation, whether or not the sponsor is operating for prot or
nonprot, which sponsors, organizes, or provides the facilities for, a
livestock activity, including but not limited to: livestock clubs, 4-H
clubs, FFA chapters, school and college-sponsored classes, programs
and activities, therapeutic riding programs, and operators, instructors,
and promoters of livestock facilities, including, but not limited to, barns,
stables, clubhouses, ponyride strings, fairs and arenas at which the activity
is held;
■
"Livestock professional" means a person engaged for compensation in:
• instructing a participant or renting to a participant livestock for the
purpose of engaging in livestock activity, or
• renting equipment or tack to a participant;
■
"Participant" means any person, whether amateur or professional, who
engages in a livestock activity, whether or not a fee is paid to participate in
the livestock activity.
■
"Engages in a livestock activity" includes training, racing, showing, riding,
or assisting in medical treatment of, or driving livestock, or engaging
in any agritourism activity involving livestock or on a location where
livestock are displayed or raised, and any person assisting a participant,
livestock activity sponsor or livestock professional. e term "engages in a
livestock activity" does not include being a spectator at a livestock activity,
46 | CHAPTER 4: When can a Landowner/Lessee be Liable for Injuries to a Third Party?
except in cases where the spectator places himself or herself in immediate
proximity to livestock activity;
■
"Inherent risks of livestock activities" means those dangers or conditions
which are an integral part of livestock activities, including but not limited
to:
• the propensity of livestock to behave in ways that may result in injury to
persons on or around them,
• the unpredictability of livestock's reaction to such things as sounds,
sudden movement and unfamiliar objects, persons or other animals,
• certain hazards such as surface and subsurface conditions unknown to
the livestock activity sponsor,
• collisions with other livestock or objects, and
• the potential of tack to become dislodged or move in ways that may
result in injury to persons on or around livestock activities;
■
"Agritourism activity" includes, but is not limited to, any activity carried
out on a farm or ranch that allows members of the general public, for
recreational, entertainment, or educational purposes, to view or enjoy
rural activities, including farming, ranching, historic, cultural, harvest-
your-own activities, or natural activities and attractions. An activity is an
agritourism activity whether or not the participant pays to participate in
the activity;
While the OLALLA provides important liability protections, it also contains
a number of exceptions. Liability protection is not provided to livestock
activity sponsors, participants, or livestock professionals if that party:
• commits an act or omission that constitutes willful or wanton disregard
for the safety of any person engaged in livestock activities, and that act
or omission caused the injury,
• intentionally injures a person engaged in livestock activities,
• provided the equipment or tack, which was faulty, and such equipment
or tack was faulty to the extent that it did cause the injury. e
provisions of this subparagraph shall not apply to livestock activities
sponsored by youth organizations when youth participants share
equipment or tack between themselves,
• provided the livestock and failed to make a reasonable eort to
determine the ability of the participant to manage the particular
livestock based upon the participant's representations of such
participant's ability. Provided, however, a participant in a livestock
show, livestock sale, or rodeo shall be presumed to be competent in the
handling of livestock if an entry form is required for the activity and
signed by the participant, or
• owns, leases, rents, or otherwise is in lawful possession and control
of the land or facilities upon which the participant sustained injuries
CHAPTER 4: When can a Landowner/Lessee be Liable for Injuries to a Third Party? | 47
48 | CHAPTER 4: When can a Landowner/Lessee be Liable for Injuries to a Third Party?
because of a dangerous condition which was known to the livestock
activity sponsor, livestock professional, or person and not made known
to the participant.
Further, the statute also provides that it does not provide protection for
products liabilities claims (that is, it does not limit liability if the livestock
activity sponsor, livestock professional, or participant would have been liable
for the injury under products liability laws) or the livestock activity resulted
in the death of a person and that death was caused by the inherent risks of
livestock activities.
Given these exemptions, parties involved in livestock activities should
continue to engage in thorough inspections of their facilities and equipment,
as well as engaging their participants to make sure they understand the risks
of livestock activities and to assess their ability to safely participate in those
activities. An additional precaution would be the execution of a liability
waiver for the activity; the OLALLA provides that waivers covering the risks
of livestock activities are enforceable.
13
Previous versions of the OLALLA required the posting of a sign in a clearly
visible location on or near barns, stables, corrals or arenas where the livestock
activities took place, with the sign text to read as follows:
WARNING
Under Oklahoma Law, a livestock professional or livestock activities
sponsor is not liable for an injury to a participant in livestock activities
resulting from the inherent risks of livestock activities, pursuant to the
Oklahoma Livestock Activities Liability Limitation Act
While the statutory language requiring such signs was eliminated in the
most recent revision of the Act, posting such signs is still prudent to remind
participants of the risks involved in their activity.
13
76 Okla. Stat. § 50.4.
CHAPTER 5: Drafting a Valid Liability Waiver | 49
CHAPTER 5:
Drafting a Valid Liability Waiver
Liability waivers are commonly used in a variety of situations. Questions arise over
whether such waivers are valid and enforceable. As with every legal issue, the facts
will govern the validity of such waivers, generally speaking, if correctly written, such
waivers can and will be enforced by courts. Importantly, however, courts in many
states (including Texas and Oklahoma) generally disfavor liability releases and will
interpret them narrowly against the released party in the event ambiguity exists.
us, it is critical that landowners work with licensed attorneys in their jurisdiction
to dra carefully thought out, unambiguous waiver language.
A. Texas Law
To be enforceable in Texas, a release must meet the requirements of fair notice,
which include (1) satisfying the express negligence doctrine; and (2) being
conspicuous. Additionally, a number of undecided legal issues exist of which
parties should be aware.
1. Express Negligence Doctrine
e express negligence doctrine requires that in order for a release to be valid,
the releasing party’s intent must be expressed in unambiguous terms within
the language of the release. e purpose of this requirement is to ensure that
parties understand specically which claims they are releasing when signing
a waiver.
In order to satisfy this doctrine, a release should expressly state the legal
claims to which it applies, such as negligence, gross negligence, and strict
liability. For example, a release that said, “Party A releases Party B for all
losses related to the use of the premises for hunting deer” would likely not
be enforceable. Instead, a clause should be more specic, stating that “Party
A releases Party B for all claims of negligence, gross negligence, and strict
50 | CHAPTER 5: Drafting a Valid Liability Waiver
liability related to the use of the premises for hunting deer” would be much
more likely to satisfy the doctrine.
Additionally, the enforceability of the release may also hinge upon when it was
signed versus when the injury occurred. For example, if a release was signed, but
an injury did not occur for months or years later, a plainti could argue that he
or she did not intend to release liability for all time by signing the release so long
ago. is could allow the plainti’s counsel to argue lack of express intent to
waive the claims at issue, thereby potentially invalidating the release.
Finally, the release should clearly state the activity to which it applies. is detail
will help to undercut a plainti’s argument that he or she did not intend to
release claims for their specic injury. For example, a release that waives claims
for “all activities on the property” may be more problematic than a release that
waives all claims for “all injuries incurred while hunting deer on the property.”
2. Conspicuousness
Next, under Texas law, a release must be conspicuous. Texas had adopted the
denition of conspicuous set out by the Uniform Commercial Code, Section
1.201(10), which states that a clause is conspicuous “when it is so written that
a reasonable person against whom it is to operate ought to have noticed it.”
e UCC goes on to list several examples of conspicuous terms, including a
heading and/or text in capitals equal to or greater in size than surrounding
text; contrasting type, font, or color to the surrounding text; and placing
the language in a larger type than the surrounding font. Adopting these
principles, the Texas Supreme Court has explained that “language in capital
headings, language in contrasting type or color, and language in an extremely
short document, such as a telegram, is conspicuous.”
Numerous Texas cases have considered this issue, and the results are
extremely fact-specic. For example, in Dresser Indus., Inc. v. Page Petroleum,
Inc., 853 S.W.2d 505 (Tex. 1993), the court found release language non-
conspicuous when the language was located on the back of a work order in
a series of numbered paragraphs without headings or contrasting type in a
lengthy contract. Similarly, in Safeway Scaold Co. v. Safeway Steel Prod, Inc.,
570 S.W.2d 225 (Tex. App. Houston [1st Dist.] 1978), the court held that the
language failed to meet the conspicuous requirement where it was small text in
light type on the back of a rental form, surrounded by unrelated terms. On the
other hand, a release provision titled “Liquidated Damages and Indemnity”
and printed in all capital letters was found to be conspicuous in Arthur’s
Garage, Inc. v. Racal-Chubb Sec. Systems Inc., 997 S.W.2d 803 (Tex. App. Dallas
1999). Likewise, in Quintana v. Crosst Dallas, LLC, 347 S.W.3d 445 (Tex. App.
Dallas 2011), the court found a release valid where it was only two pages long,
it used the word “release,” and the text was typed in a bolder, larger font.
3. Undecided Issues
Importantly, there are several issues related to liability releases that remain
undecided. First, the Texas Supreme Court has not yet ruled on whether a
pre-injury liability waiver can waive claims for gross negligence. Nearly all
CHAPTER 5: Drafting a Valid Liability Waiver | 51
appellate level courts considering this issue in Texas have held that releases
may not waive claims for gross negligence as doing so would be against
public policy. See, e.g., Smith v. Golden Triangle Raceway, 708 S.W.2d 574 (Tex.
App. Beaumont 1986) (holding that release of a defendant’s gross negligence
is invalid as against public policy). Conversely, the San Antonio Court of
Appeals reached the opposite conclusion in Newman v. Tropical Visions, Inc.,
891 S.W.2d 713 (Tex. App. San Antonio 1994). ere, the court found that the
plainti eectively waived her claims for both negligence and gross negligence.
Additionally, the Texas Supreme Court has not ruled on whether a liability
release signed by a parent on behalf of a minor child is enforceable. At
least one Texas appellate court has held that releases signed by a parent or
guardian on behalf of a minor child are not enforceable. See Munoz v. II Jaz
Inc., 863 S.W.2d 207 (Tex. App. Houston 1993). e rationale behind this
decision is that Texas law seeks to be especially protective of children and that
parents should not be able to waive a child’s personal injury claims.
B. Oklahoma Law
Oklahoma law imposes a three-part test in order to analyze the validity of a liability
waiver (referred to in Oklahoma case law as an “exculpatory clause.”)
1
Release
language is enforceable only if: (1) the language evidences a clear and unambiguous
intent to exonerate the would-be defendant from liability for the sought-to-be-
recovered damages; (2) there was no vast dierence in bargaining power existed at
the time the contract was signed; and (3) enforcement of the clause would not be
injurious to public health, public morals, or condence in the administration of law,
or undermine the security of individual rights vis-à-vis personal safety or private
property as to violate public policy. Let’s review each of these requirements.
1. Clear and Unambiguous Intent
In analyzing this requirement, courts seek to ensure that the releasing party
understood the document that he or she was signing. Important factors
include clarity of the language, use of words such as “release from liability”
and “covenant not to sue.” e requirement of initialing through a document
and a signature at the conclusion stating that the party understood the
release and agreed to be bound by its terms also appears to be an important
consideration for Oklahoma courts.
2. No Vast Dierence in Bargaining Power
In considering the balance of bargaining power, courts consider the
importance of the subject matter to the physical or economic wellbeing of
the injured party and the amount of free choice the party had when electing
alternative services.
2
For example, a plainti injured sky diving did not
need to do so for economic wellbeing and would have had other options for
training and skydiving services.
1
Schmidt v. United States, 912 P.2d 871 (Okla. 1996).
2
Schmidt, 912 P.2d at 874.
52 | CHAPTER 5: Drafting a Valid Liability Waiver
3. Enforcement Is Not Against Public Policy
Finally, Oklahoma courts seek to determine if enforcing such releases would
be against public policy. is generally depends on the activity at issue. For
example, courts have found that enforcing releases against persons injured
while participating in extreme sports was not against public policy.
4. Decided Issues
Unlike the law in Texas, Oklahoma has answered both the questions of
whether a party may release claims for gross negligence and whether a parent
may release claims of a minor. Both were decided in the negative. “e
clause will never avail to relieve a party from liability for intentional, willful
or fraudulent acts or gross, wanton negligence.”
3
is is based on a strong
legislative policy to exempt persons from their own willful conduct causing
injury to another person.
Additionally, in 2015, an Oklahoma federal court decided that a valid release
signed by a parent on behalf of a minor was sucient to waive the claims
of the parents, but did not suce to relieve the claims of the minor child.
4
Although the Oklahoma Supreme Court has not yet addressed this issue,
the Oklahoma federal court opines that the likely outcome would be for the
Court to reject allowing a waiver to be enforced.
C. Conclusions
Because of the diculty of this issue and the importance of ensuring releases are
adequately draed, this handbook does not include sample release documents.
Instead, it is highly recommended that landowners consult with an attorney
licensed in the jurisdiction to dra a valid liability waiver. Additionally, in order
to receive some of the statutory limited liability protections discussed in Chapter
4, certain language may need to be included in a lease agreement and/or liability
waiver. Be sure to carefully analyze the need for such language with an attorney.
3
Schmidt, 912 P.2d at 874.
4
Wethington v. Swainson, No. 5:2014cv00899 (W.D. Okla. 2015).
CHAPTER 6: Grazing Lease Checklist | 53
CHAPTER 6:
Grazing Lease Checklist
As previously discussed in Chapter 1, leasing land to another person for grazing
purposes can benet both the landowner ("lessor") and the tenant ("lessee") by allowing
an additional source of income for the landowner and by permitting the lessee to run
livestock on land without incurring the long-term debt associated with purchasing
property.
Although it has been common throughout rural America for business to be done
between neighbors on nothing more than a handshake, it is advisable for all
agricultural leases to be put into writing. is ensures that the leases are enforceable,
memorialize the parties’ understanding, and helps to protect both parties’ rights.
e following items are intended to provide a checklist of many of the most common
terms found in grazing leases. is list is certainly not exhaustive, and it is likely that
not all of these terms are necessary in every lease. is list is not a substitute for legal
advice. All parties—lessors or lessees—should consult with their own attorney when
entering into a grazing lease to ensure that the lease is complete, legally binding, and
protects their interest.
■
Names of the parties: e lease should include the name and address of the
parties, both the landowner and the lessee.
■
Duration of lease: e length of the lease should be specied with particularity
and may range from a matter of weeks to several years. It is important to note
that leases of certain durations may be required to be in writing in order to be
enforceable. For example, pursuant to the Statute of Frauds, many states will
require a lease of real property lasting for more than 1 year to be in writing.
See Chapter 2 for more information. Generally, grazing leases are classied
either as a “tenancy for a term of years” or a “periodic tenancy.” A tenancy for
term of years simply refers to any set lease term (whether months or years)
that terminates upon the conclusion of the term. Conversely, under a periodic
tenancy, the lease will automatically renew at the end of the initial term unless a
specic notice of the intent not to renew is given by either party. In this instance,
54 | CHAPTER 6: Grazing Lease Checklist
it is important to determine the amount of notice that will be required. It is
likely in the best interest of both the landowner and tenant to require a lengthy
notice period so that in the event the lease will not be renewed, the landowner
has time to secure a new tenant and the lessee has time to nd alternative
arrangements for his or her livestock. It is advisable that notice be given in
writing.
■
Description of the land: e land need be described so that both parties (and
a judge or jury if there ever were to be a dispute over the lease) can understand
exactly what land was being leased. is can be done by legal metes-and-bounds
descriptions, a photograph or diagram showing the specic location, or simply
by words if a specic description can be conveyed. Further, if there are any areas
that are to be excluded from the lease, this limitation must be included in detail
in the lease agreement. For example, if there is an apple orchard in the back
corner of the property and the landowner does not want the lessee’s cattle in that
area, this must be addressed in the lease.
■
Stocking limitations: A grazing lease should set forth stocking limitations
that address the number of head, breed, and species of animal permitted. For
example, the stocking rate may dier if the lessee intends to run 1,000-pound
Angus cattle on the land versus if he or she intends to run 1,600-pound
Charolais cattle on the land. Similarly, the weight of stocker calves on the
property may well change the stocking limitations needed. A landowner may
want to address this issue and specify the breed or size of cattle permitted. e
following chart from the Natural Resource Conservation Service
1
is useful in
calculating animal units for various species.
Kind of Animal
Body
Weight
Pounds
Daily Ave
Intake
% of BW
Annual
Forage Intake
Pounds
AU per
Head
Head
per AU
(Rounded)
Beef Cattle (Cow)* 1000 2.6 9490 1 1
Horse 1100 3.0 12045 1.27 1
Domestic Sheep (Ewe) 130 3.5 1661 0.18 6
Spanish Goat (Nanny) 90 4.5 1478 0.16 6
Boer x Spanish Goat (Nanny) 125 4.0 1825 0.19 5
Angora Goat (Nanny) 70 4.5 1150 0.12 8
■
Price: e price for grazing leases varies based upon a number of factors,
including the number of acres of land, the available forage, the number of
livestock that may be grazed per acre, the type of livestock to be grazed, etc.
Price may be based upon any formula that the parties desire, although most
commonly, grazing leases are priced either per acre, per head, or per animal
unit. Additionally, although less common in grazing leases than farming leases,
the parties could agree to a sort of “crop share” lease based upon a percentage of
the calf crop sold. For more information on this topic, refer to Chapter 3.
■
Payment method: Payments may be made in any manner agreed upon by
the parties. Frequently, payments are set up in a month-to-month format. A
1
Chart developed by Steve Nelle and Stan Reinke, NRCS with input from literature and other specialists
from TCE and TPWD.
CHAPTER 6: Grazing Lease Checklist | 55
landowner should consider including details on exactly how and when rent is
due and including penalties and interest for late payments.
■
Failure to pay: In addition to imposing penalties and interest on late payments,
a landowner may want to provide that once the total amount owed in late
payments, interest, and fees reaches a certain amount, the landowner has
the right to terminate the lease. Further, landowners should be aware of any
statutory lien rights available to unpaid landowners in their state, including
understanding any action that must be taken by the landowner for such rights to
be enforced.
■
Security deposit: A landowner may want to consider requiring a security
deposit to cover any damage caused to the property, improvements, fences,
crops, or livestock while the lessee is in possession of the property.
■
Access to land: e lease should provide how the lessee is to access the property,
including designating the points at which the lessee may enter the property,
any gates that the lessee may utilize, and the roads on the property the lessee is
permitted to use.
■
Use of vehicles or ATVs: e lease should state whether the lessee is permitted
to use vehicles or ATVs on the property and, if so, whether there are any areas
where such vehicles are prohibited.
■
Requirement gates be kept closed: A landowner may wish to require that all
gates be kept closed at all times. Additionally, if other livestock is present or in
adjacent pastures, a landowner may also include a requirement that the lessee is
liable for the death or injury of any livestock or damages to a third party caused
by any livestock that escape due to a gate being le open by the lessee or his
employees.
■
Use and repair of facilities on property: e lease should discuss the right
of the lessee to use any facilities on the property, including corrals, buildings,
barns, and houses. If any repairs are necessary, the lease should describe which
party will be responsible for undertaking repairs and paying for both parts and
labor.
■
Inspection of fences: It is important that a lease address which party will be
responsible for inspecting and repairing fences, particularly where the leased
property abuts a highway. e lease should set forth which party will make these
inspections and the frequency at which they should be made.
■
Right to erect improvements on property: e lease should address whether
the lessee has the right to erect any improvements on the property during
the lease. Generally, permanent improvements will stay on the land aer the
termination of the lease. Consequently, the landowner may want to have an
input on the location and building specications for any such improvements.
Some leases require the lessee to obtain written permission from the landowner
before taking any such action. In order to avoid confusion or conict, the lease
should specify whether the lessee has the right to remove any improvements at
the end of the lease and set a deadline for such removal.
■
Landowner’s rights to the property: Unless reserved, the landowner grants
exclusive possession of the property to the lessee, meaning that the landowner
56 | CHAPTER 6: Grazing Lease Checklist
may not enter the property. e landowner may want to reserve the right to
enter the property for various reasons during the lease, including to care for
crops and to inspect the premises. Importantly, a landowner should discuss this
issue with his or her attorney to determine if the right to inspection might be
outweighed by liability concerns that such a right might impose. Further, if the
landowner wants to retain rights as to the property, including the right to hunt,
this should be expressly set forth in the lease agreement.
■
Other surface uses: ere may be other surface users of the property during the
lease term. Examples include oil and gas companies who may have a mineral
estate lease, hunters that may have a hunting lease with the landowner, and the
landowner himself. e lease should expressly identify all such surface users
so the lessee is aware of these uses and should require that the lessee will act
in good faith to accommodate and cooperate with these other surface owners.
With regard to a potential mineral lessee, it is important to understand the law
in your state regarding mineral rights versus surface rights and how this could
potentially impact a grazing lessee. For example, under Texas law, a mineral
owner has the right to use as much of the surface estate as is reasonably necessary
to produce oil and gas. is may mean an oil rig shows up in the middle of a
leased pasture. A lessee may wish to include a provision allowing the lessee to
terminate the lease in the event oil or gas production occurs on the property.
■
Care of livestock: Under some lease agreements, a landlord may not only oer
grazing land but may also agree to provide care for the livestock. In this event, it
is extremely important that the landowner and lessee be specic with regard to
their expectations for care. For example, requiring “adequate hay” is insucient
as it is almost a certainty that the landlord’s denition of “adequate” diers from
the livestock owner’s denition of the same term. In order to avoid this type of
dispute, a lease should spell out the expectations of the landowner providing care
of livestock, including the type and amount of hay and feed to be provided, the
type of mineral that should be available, the frequency with which the livestock
should be checked by the landowner, etc. Finally, an interesting term found in
some of these types of leases provides an incentive for a landowner who provides
superior care for the livestock. For example, the lease might provide that if calves
reach a certain average daily gain or a set weaning weight goal, the landowner
receives a bonus from the lessee. Similarly, there could be a provision if the
landowner is set to care for rst-calf heifers that would include a bonus if there
was a low death loss percentage. is type of incentive may help to ensure better
care for livestock.
■
Proof of vaccination: Some leases require that the lessee provide the landowner
with a health certicate declaring that cattle have received certain vaccinations,
such as blackleg shots for calves or Bang’s vaccinations for cows and bulls.
■
Breachy livestock: Many grazing leases involving cattle include a provision
whereby any animal that is known to be “breachy” (i.e., frequently escaping the
pasture by jumping or breaking through fences), must be removed from the
premises.
■
Disaster contingencies: e parties should consider how disasters such as
drought or re may impact the landlord/lessee relationship. In the event that all
or some of the grazing land is destroyed, how will a determination regarding
CHAPTER 6: Grazing Lease Checklist | 57
the lease be made? Who will determine if it is necessary to lower the number of
livestock permitted to be on the property, or whether it is necessary to terminate
the lease all together? Parties may want to consider agreeing on a neutral third
party, such as a county extension agent, or another livestock operator in the
area, to help with this determination. In the event that the lease is limited or
canceled, the lease agreement should address whether a refund of any pre-paid
rent will be made.
■
Transferability: e lease should address the rights of the parties as to
assignment or sublease. May the lessee sublease or assign his rights to a third
party without the landowner’s permission? What happens to the lease if the
landowner dies or sells the property? e parties may want to provide a clause
stating that the lease shall be binding upon heirs or assigns, or, conversely, that
the lease shall terminate upon the death of either of the parties. Laws vary by
state on this issue, so it is important to know the law in your state and address
this in the lease agreement.
■
Lease does not create a partnership: Unless the landowner and lessee intend to
create a partnership, the lease should expressly state that it does not do so. is
provision is important because, generally, one partner is liable for the obligations
and debts of the other partner. Although this type of provision, alone, will not
prevent a partnership from being created in all circumstances, it does provide
evidence that the parties did not intend to create a partnership arrangement.
■
Eect of breach: Many leases include a clause stating that the violation of any
term, covenant, or condition of the lease agreement by the lessee allows for the
landowner, at his option, to terminate the lease upon notice to the lessee. is
provision allows the landowner the option of terminating the lease of any term
is violated, rather than merely having the right to sue the lessee for damages. If
included, this clause should address the type of notice required to the lessee and
whether any refund of payment or security deposit will be available.
■
Damages to property: e lease should prohibit damage to the property
and require the lessee to repair or pay for any damage caused, including the
destruction of crops, death or injury to livestock, harm to fences, gates or
improvements, and trash or other debris le on the premises.
■
Liquidated damages: A lease may provide for certain liquidated damages,
which essentially mean contractually agreed upon damage amounts. ese
damages are oen used in situations where the calculation of actual damages
might be dicult. Instead, the parties agree upfront to a set amount of damages
for certain actions.
■
Attorney’s Fees: Generally, a successful litigant is not entitled to recover his
or her attorney fees from the other party absent a contractual agreement or
a statute so authorizing. A landowner should consider including a provision
providing that if the landowner is successful in a dispute (whether in arbitration
or in court) with the lessee, the lessee will be responsible for the landowner’s
reasonable costs and attorney’s fees. e lessee will likely request a reciprocal
clause requiring payment of his or her attorney fees if the lessee is successful.
■
Lessee Insurance: A landowner may require the lessee to acquire liability
insurance that will be maintained throughout the lease term. If so, the
58 | CHAPTER 6: Grazing Lease Checklist
landowner should also require that the lessee include the landowner as an
“additional insured.” is should oer insurance coverage to the landowner
pursuant to the lessee’s policy in the event of a claim made by a third party
against the lessee and landowner. e landowner may also want to require a
specic minimum level of coverage.
■
Liability and Indemnication: A landowner should consider including liability
and indemnication clauses in case the landowner is sued as a result of the
lessee’s conduct. ese terms simply provide that the landowner is not liable
for any action or inaction of the lessee, his agents, or employees and that, in the
event the landowner is sued for the lessee’s actions or inactions, the lessee will
hold the landowner harmless as to any attorney’s fees or judgment.
■
Choice of law: A choice of law provision in a lease allows the parties to
determine which state’s law will govern the lease in the event of a dispute.
Generally, choice of law clauses are enforced by a court so long as they are not
against public policy and are reasonably related to the contract. Because many
laws vary by state and a choice of law provision could signicantly impact rights
under a lease, a landowner should consult with an attorney with regard to this
provision to determine the potential options available and to determine which
would be most advantageous to the landowner.
■
Forum clause: A forum clause provides that a dispute over a lease will be heard
in a particular location or court. For example, a lease could require that any
dispute over the lease be led in the county where the land is located. is clause
may be important for a landowner by requiring suit to be led in his or her
county, particularly if the lessee lives some distance away.
■
Dispute resolution: A landowner should consider the inclusion of a dispute
resolution clause. e purpose of these types of clauses is to limit the time and
expenses of a court action in the event of a dispute. ere are two primary types
of dispute resolution: arbitration and mediation. In arbitration, a third-party
arbitrator (usually an attorney) will hear evidence and render a decision. If the
arbitration is “binding,” that judgment is nal on the parties absent evidence
of fraud by the arbitrator. Mediation, on the other hand, involves a neutral
third party who will work with the landowner and lessee to attempt to reach
a mutually-acceptable resolution. If both parties refuse to agree to settle, the
case will then proceed on to court. A dispute resolution clause should identify
how the arbitrator or mediator will be selected. It is important to understand
the dierence between these options and determine which option is best in
consultation with an attorney.
■
Condentiality clause: e landowner may want to consider using a
condentiality clause if there is any information that he or she does not want to
be made public. For example, a landowner may not want the fee charged to one
party disclosed if the landowner intends to charge an increased fee to another
party or in the future.
It is impossible to create a lease form, or even a list of possible issues, that addresses
every potential problem that may arise from a hunting lease. It is advised to carefully
consider the facts of your particular situation and seek counsel from an attorney in your
jurisdiction before entering into any contractual agreement.
CHAPTER 7: Sample Grazing Lease | 59
CHAPTER 7:
Sample Grazing Lease
is sample lease is a compilation of clauses from many existing leases that are
available online. It is important that parties carefully read and understand what is
covered in any lease form because the language in the written document will generally
resolve disputes that arise under the lease. is document is intended for educational
purposes only and should not be used as a legal form without modication by
competent counsel to t the parties’ circumstances.
1. Parties. is lease is entered into this _____ day of _________________ , 20 ____
between ___________________ of ___________________(“Lessor”) and
___________________ of ___________________ (“Lessee.”).
2. Term of Lease. e term of this lease shall be _________, commencing on the
_____ day of ______________ and ending on the _____ day of _______________ .
e lease shall continue in eect from year to year thereaer unless written
notice of termination is given by either party to the other at least _____ days
prior to the expiration of the lease or end of any year of continuation.
3. Property Description. e Lessor hereby leases to the lessee, for the purpose
of grazing livestock only, the Leased Premises identied by legal description:
_________ , consisting of approximately ______ acres, situated in _____________
County, _____ . A map depicting the Leased Premises is included as Exhibit A.
4. Payment. e Lessee agrees to pay $_________/acre for use of the Leased
Premises during the lease term. is payment shall be made by cash or check
on or before the commencement of the Lease.
5. Security Deposit. e Lessee agrees to provide the Lessor a security deposit
of $_________ to cover any damage to crops, improvements, fences, etc. on the
Leased Premises during the Term of the Lease. Upon termination, Lessor shall
return this security deposit to the Lessee within 5 days or provide a written
description of why any amount of the deposit is being withheld.
60 | CHAPTER 7: Sample Grazing Lease
6. Stocking Limitation. No more than _________ animal units may be kept on
the Leased Premises at any time. Violation of this provision shall constitute
grounds for termination of the lease unless the Lessee obtains written consent
from the Lessor. Each 1,000 pounds of average weight (average) for the pasture
period shall constitute 1 animal unit.
7. Transfer of Property. If the Lessor should sell or otherwise transfer title to the
Lease Premises during the Term of the Lease, such action will be done subject
to the provisions of this lease agreement.
8. Use of vehicles. e Lessee is permitted to utilize vehicles and ATVs on the
property but shall do so reasonably so as not to damage grass or crops on the
Leased Premises.
9. Gates. e Lessee agrees to keep gates on the Leased Premises closed at all
times.
10. Repair and Upkeep of Fences. e parties agree that if any repairs to fences
are necessary during the Term of the Lease, the Lessor shall provide the
materials, and the Lessee shall provide the labor to complete such repairs. e
Lessee agrees to reasonably inspect perimeter fences and notify the Lessor if
such repairs are necessary.
11. Repair and Upkeep of Windmills and Pumps. e parties agree that if any
repairs to windmills, pumps, or other water sources are necessary during the
Term of the Lease, the Lessor shall pay for materials, and the Lessee shall pay
for labor. is does not include the costs of drilling a new well on the Leased
Premises.
12. Right to Erect Improvements. e parties agree that before erecting any
permanent improvements on the property, the Lessee will obtain written
consent from the Lessor.
13. Landowner’s Right to Enter Property. e Lessor reserves the right to enter
the property during the lease period. e Lessor agrees to provide ___________
notice to the Lessee and accommodate and not interfere with any activities of
the Lessee.
14.
Rights of Mineral Owners. e Lessee understands that a third party owns the
mineral rights beneath the property and, as such, may have rights to utilize the
surface of the property. Lessee agrees not to interfere with such rights. If mineral
production commences on the property, the Lessee has the right to terminate this
lease agreement with
____________
notice. If such termination occurs, Lessee
will receive a pro-rata refund of the lease paid for the calendar year.
15. Proof of vaccination. Lessee agrees to provide Landowner with a health
certicate declaring the cattle have received _______________ vaccinations.
16. Breachy Livestock. Lessee agrees not to pasture livestock known to be breachy.
Should any animal be found outside the pasture at least ____ times, the Lessor
may request its removal.
17. Lessee Insurance. Lessee shall maintain liability insurance of at least
$_________ throughout the Term of the Lease. e Lessee shall list the Lessor
as an additional insured on the policy.
CHAPTER 7: Sample Grazing Lease | 61
18. Lessor Release and Indemnication. Lessor hereby releases, indemnies,
defends, and holds harmless and agrees to reimburse Lessee from any liability,
costs (including reasonable attorney's fees and costs including expert fees),
expenses, payments or claims resulting in acts or omissions of the Lessor, his
employees, agents, assigns, or heirs.
19. Lessee Release and Indemnication. Lessee hereby releases, indemnies,
defends, and holds harmless and agrees to reimburse Lessor from any liability,
costs (including reasonable attorney's fees and costs including expert fees),
expenses, payments or claims resulting in acts or omissions of the Lessee, his
employees, agents, assigns, or heirs.
20. Sublease or Assignment of Lease. Lessee may not assign or sublease the
Leased Premises without written permission of the Lessor.
21. Lease Does Not Create a Partnership. is lease agreement does not create a
partnership between Lessor and Lessee. Both parties agree they will not pledge
credit of the other party for any purpose. Neither party shall be liable for the
debts or obligations of the other party.
22. Right to Terminate. In the event a breach occurs, the non-breaching party
has the right to immediately terminate the lease agreement. Notice of such
termination must be provided in writing. If the lease is terminated by the
Lessor, the Lessee shall be entitled to a pro-rata refund of rent paid for the
current calendar year.
23. Dispute Resolution. In the event a dispute arises related to this Lease, the
parties agree to attend mediation prior to ling any litigation in court. e
parties shall select a mutually agreeable mediator or, if the parties are unable
to agree, __________________ shall appoint a neutral mediator.
24. Choice of Law. Any disputes arising under or related to this lease agreement
shall be construed under the laws of __________________.
25. Forum Clause: Any disputes arising under or related to this lease agreement
shall be heard in the _______________ court in ____________________ , ______.
26. Attorney’s Fees: In the event of any litigation (including arbitration) arising
from or related to this Agreement, or the services provided under this
Agreement, the prevailing party shall be entitled to recover from the non-
prevailing party all reasonable costs incurred including sta time, court costs,
attorneys’ fees, and all other related expenses incurred in such litigation. In
the event of a no-adjudicative settlement of litigation between the parties or
a resolution of a dispute by arbitration, the term “prevailing party” shall be
determined by that process.
Signed this _________ day of __________________________ , 20____ .
_________________________ ____________________________________________
Lessor
_________________________ ____________________________________________
Lessee
CHAPTER 8: Hunting Lease Checklist | 63
CHAPTER 8:
Hunting Lease Checklist
Besides renting out property for agricultural production, landowners may also have
the ability to rent out their land for hunting, shing, hiking and other recreational
purposes. Depending on the species available, the right to hunt or sh on the property
may be more valuable than the rental value earned through agricultural activities!
As a landowner, you may wish to evaluate your property’s potential for a recreational
lease. Some landowners may be in the position to not only rent out their property for
agricultural purposes but also for recreational purposes at the same time.
Evaluating your willingness to enter into a hunting lease will be the rst step to take.
Hunting leases are not a viable option for every landowner, so deciding what you are
comfortable with will be critical before considering any form of leasing arrangement.
Once you decide you are interested in leasing your property for recreational purposes,
the rest of this chapter will focus on factors to consider before entering into a lease
agreement. Lease agreements, whether agricultural or hunting, are extremely exible
before the lease is executed; however, it can be very dicult to amend a lease later
on without the consent of all lease parties. Because of this reality, it is important for
both the landlord and the tenant to carefully negotiate the scope of the lease before
entering into the agreement.
ere are numerous examples of sample hunting and shing leases that can be found
on the internet. It is important to note that since no two pieces of property (or owners
for that matter) are identical, it is impossible to dra one lease form that will t every
possible leasing situation. is can be further complicated by various state laws. For
example, in Arkansas, any oral agricultural lease does not include the right to hunt
and sh on the property unless permission is specically granted in writing. See Ark.
Code Ann. § 18-16-113. e landowners in that situation can either use the hunting
rights themselves, or they can lease them to a third party without any input from the
agricultural tenant.
e following items are intended to provide a checklist of many of the most common
terms found in hunting leases. is list is certainly not exhaustive, and it is likely that
64 | CHAPTER 8: Hunting Lease Checklist
not all of these terms are necessary for every lease. is list is not a substitute for legal
advice. All parties—lessors or lessees—should consult with their own attorney when
entering into a livestock lease to ensure that the lease is complete, legally binding, and
protects their interest.
■
Names of the parties: e lease should include the name and address of the
parties, both the landowner and the lessee. Additionally, if the lessee intends to
allow others to hunt on the property with him, it may be wise to require each
of those parties to sign the lease as well so that they will be bound by its terms.
■
Duration of lease: e duration of the lease may be from a matter of days to
several years. e length of the lease should be specied with particularity. It
is important to note that certain leases may be required to be in writing to be
enforceable. For example, pursuant to the Statute of Frauds, many states will
require a lease of real property lasting for more than 1 year to be in writing.
Another important consideration is whether the lease will automatically renew
for the next year and what type of notice may be required by either party to
terminate the lease.
■
Description of the land: e land need be described so that both parties (and
a judge or jury if there ever were to be a dispute over the lease) can understand
exactly where the lessee had permission to hunt. is can be done by legal
metes-and-bounds descriptions, a photograph or diagram showing the specic
location, or simply by words if a specic description can be conveyed.
■
Price: e price for a hunting lease varies greatly based on numerous factors,
including the duration of the lease, the species of animals to be hunted, the
hunting method allowed, and the number of acres available. Leases may
require payment per animal, per acre, per year, per person, or any hybrid of
these. Most leases require payment in full be received before hunting season
begins. If using an installment payment scheme (i.e., monthly payments), the
landowner may want to impose a penalty for late payments.
■
Payment method: Payments may be made in any manner agreed upon by
the parties. Frequently, payments are set up either as one lump sum before
hunting season, or a landowner may require a partial payment upfront and the
remainder on the rst day of the lease.
■
Security deposit: A landowner may want to consider requiring a security
deposit to cover any damage caused to the property, improvements, fences,
crops, or livestock while the lessee is on the property.
■
Access to land: e lease should provide how the lessee is to access the
property, including designating the points at which the lessee may enter the
property, any gates that the lessee may utilize, and the roads on the property
the lessee is permitted to use.
■
Use of vehicles or ATVs: e lease should state whether the lessee is permitted
to use vehicles or ATVs on the property and, if so, whether there are any areas
where such vehicles are prohibited.
■
Requirement gates be kept closed: A landowner will likely require that all
gates be kept closed at all times, particularly if there are livestock on the
CHAPTER 8: Hunting Lease Checklist | 65
property. A landowner may also include a requirement that the lessee is liable
for the death or injury of any livestock or damages to a third party caused by
any livestock that escape due to a gate being le open by the lessee.
■
Use of facilities on property: e lease should discuss the right of the lessee to
use any facilities on the property, including deer blinds, tree stands, camping
areas, bunkhouses, barns or sheds.
■
Hunting methods permitted: e lease should specify the type of hunting
method allowed. is includes both the type of weapon that may be used (rie,
shotgun, bow, etc.) as well as other considerations, such as whether the lessee
may use dogs during the hunt.
■
Any requirements or limitations on hunting: If there are to be any
limitations or requirements imposed on the lessee (i.e., each hunter may
harvest only one trophy buck, or each hunter must harvest one doe before
taking a buck) these should be expressly outlined in the lease.
■
Cleaning and disposal of animal carcass: e landowner may wish to specify
a limited area where any animal may be cleaned on the property and make
certain requirements for the disposal of the carcass.
■
Information provided to landowner aer kill: A landowner may require
the lessee to provide certain information about the animals killed. is could
include photographs and measurements for use in advertising purposes.
■
Number of hunters permitted on property: e lease should specify the
maximum number of hunters allowed to be on the property at any one time
and/or a total number of hunters allowed during the lease. is provision
serves to ensure the safety of the hunters on the land and the number
permitted will depend on the size and geography of the property.
■
Guests of lessee: e lease should address whether the lessee is permitted
to bring guests onto the property. It may be wise to require that any guest
be approved in writing by the landowner and be required to sign a liability
release and indemnication agreement (discussed below). Additionally, if
any minors are to be present with the lessee, it is important that the lease
requires the minors to be under direct adult supervision at all times, the adult
supervisors shall be fully responsible for the safety of the children, and the
adult supervisors will be liable for any injury and indemnify the landowner.
■
Right to erect improvements on property: e lease should address whether
the lessee has the right to erect any improvements on the property, including
deer blinds, feeders, or tree stands. Some leases require the lessee to obtain
written permission from the landowner before taking any such action.
Further, the lease should specify whether the lessee has the right to remove the
improvements at the end of the lease and set a deadline for such removal.
■
Requirement that lessee abides by all federal and state laws: e lease
should require the lessee and any other hunters to have a valid hunting license
covering the species identied in the lease. Further, the lease should require
compliance with all other state and federal hunting laws, such that if the lessee
were to break the law, he would also breach the contract.
66 | CHAPTER 8: Hunting Lease Checklist
■
Safety practices: e lease should outline safe hunting practices that should be
honored, such as maintaining safe gun practices, not shooting in the direction
of people, livestock or buildings, not shooting across property lines, not using
alcohol or drugs, and using care to prevent res on the property.
■
Damages to property: e lease should prohibit damage to the property
and require the lessee to repair or pay for any damage caused, including the
destruction of crops, death or injury to livestock, harm to fences, gates or
improvements, and trash or other debris le on the premises.
■
Landowner’s right to hunt on property: e lease should specify whether the
landowner and his family have permission to hunt on the property during the
term of the lease, or if the lease grants exclusive hunting rights to the lessee
only.
■
Other surface uses: ere are likely to be other surface users of the property
during the lease term. Examples include oil and gas companies who may have
a mineral estate lease, farmers or ranchers who may have leased the property
for raising crops and livestock, and the landowner himself. e lease should
expressly identify all such surface users so the lessee is aware of these uses
and should require that the lessee will act in good faith to accommodate and
cooperate with these other surface owners. Because the law regarding surface
estate versus mineral estate rights diers by state, it is important to understand
the law in your state and the impact it may have on the rights of a hunting
lessee.
■
Transferability: e lease should address the rights of the parties as to
assignment or sublease. May the lessee sublease or assign his rights to a
third party without the landowner’s permission? What happens to the lease
if the landowner dies or sells the property? Laws vary by state on this issue,
so it is important to know the law in your state and address this in the lease
agreement.
■
No Warranty of Success: A landowner may want to include a lease provision
stating he or she is not making any promise or warranty that the lessee will be
successful in killing any animal during the lease term.
■
Cancellation Clause: Many hunting leases include a clause stating that
the violation of any term, covenant, or condition of the lease agreement
by the lessee allows for the landowner, at his option, to terminate the lease
upon notice to the lessee. is provision allows the landowner the option of
terminating the lease of any term is violated, rather than merely having the
right to sue the lessee for damages. If included, this clause should address the
type of notice required to the lessee and whether any refund of payment or
security deposit will be available.
■
Lessee Insurance: A landowner may require the lessee to acquire liability
insurance before hunting on the property and require such insurance be
maintained throughout the lease term. If so, the landowner should also require
that the lessee include the landowner as an “additional insured.” is should
oer insurance coverage to the landowner pursuant to the lessee’s policy in the
event of a claim made by a third party against the lessee and landowner. e
landowner may also want to require a specic minimum level of coverage.
CHAPTER 8: Hunting Lease Checklist | 67
■
Release of Liability and Indemnication: A landowner should require
the lessee to agree to a release of liability. If there are to be guests with the
lessee, a similar document should be required signed by each of them. e
legal requirements for a valid waiver of liability and the scope of such wavier
vary by state, so it is important to understand the requirements for this
release to be eective. For example, states may require any such release to be
conspicuously written or contain specic language. In addition to the liability
release, the lease should provide that the lessee will indemnify and hold the
landowner harmless from any claim, demand, loss, damage, attorney fees,
and cost resulting from any such claim. It is important to discuss this type of
clause with your attorney to ensure that the clause includes all of the required
information to be valid in your state.
■
Choice of law: A choice of law provision in a lease allows the parties to
determine which state’s law will govern the lease in the event of a dispute.
Generally, choice of law clauses are enforced by a court so long as they are not
against public policy and are reasonably related to the contract. Because many
laws vary by state and a choice of law provision could signicantly impact
rights under a lease, a landowner should consult with an attorney about this
provision to determine the potential options available and to determine which
would be most advantageous to the landowner.
■
Forum clause: A forum clause provides that a dispute over a lease will be
heard in a particular location or court. For example, a lease could require that
any dispute over the lease be led in the county where the land is located. is
clause may be important for a landowner by requiring suit to be led in his or
her county, particularly if the lessee lives some distance away.
■
Dispute resolution: A landowner should consider the inclusion of a dispute
resolution clause. e purpose of these types of clauses is to limit the time and
expenses of a court action in the event of a dispute. ere are two primary
types of dispute resolution: arbitration and mediation. In arbitration, a third-
party arbitrator (usually an attorney) will hear evidence and render a decision.
If the arbitration is “binding,” that judgment is nal on the parties absent
evidence of fraud by the arbitrator. Mediation, on the other hand, involves a
neutral third party who will work with the landowner and lessee to attempt to
reach a mutually-acceptable resolution. If both parties refuse to agree to settle,
the case will then proceed on to court. A dispute resolution clause should
identify how the arbitrator or mediator will be selected. It is important to
understand the dierence between these options and determine which option
is best in consultation with an attorney.
■
Liquidated damages: A lease may provide for certain liquidated damages,
which essentially mean contractually agreed upon damage amounts. ese
damages are oen used in situations where the calculation of actual damages
might be dicult. Instead, the parties agree upfront to a set amount of
damages for certain actions.
■
Attorney’s Fees: Generally, a successful litigant is not entitled to recover his
or her attorney fees from the other party absent a contractual agreement or
a statute so authorizing. A landowner should consider including a provision
providing that if the landowner is successful in a dispute (whether in
68 | CHAPTER 8: Hunting Lease Checklist
arbitration or in court) with the lessee, the lessee will be responsible for the
landowner’s reasonable costs and attorney’s fees. e lessee will likely request
a reciprocal clause requiring payment of his or her attorney fees if the lessee is
successful.
■
Condentiality clause: e landowner may want to consider using a
condentiality clause if there is any information that he or she does not want
to be made public. For example, a landowner may not want the fee charged
to one party disclosed if the landowner intends to charge an increased fee to
another party in the future.
■
Statutory Provisions: In addition to draing a thorough lease, it is critical for
landowners to be aware of any recreational land use or agritourism statutes
in their state that might aect their rights and liability. Many states have
these types of statutes to add additional legal protections for landowners. For
example, in Texas, there is a recreational guest statute that limits the liability
of landowners to hunters on agricultural land of certain requirements are
met. See Tex. Civ. Practice & Remedies Code Chapter 75. It is critical that
landowners consult with an attorney in their state to determine if these types
of statutes exist and to ensure that the requirements necessary to fall within
the statutory protections are met.
■
Payment: Every lease agreement should address payment. e payment
amount is typically negotiated as a rst step in any lease agreement, but one
payment issue is oen le out. When is the payment due? It is important to
receive payment before the tenant has used the property for their intended
purpose. If you lease out your property for deer season then it may be a good
idea to require full payment on the lease before the season opens. If you try
and collect payment aer the hunting season and the tenant refuses to pay
then litigation may be the only alternative.
It is impossible to create a lease form, or even a list of possible issues, that addresses
every potential problem that may arise from a hunting lease. It is advised to carefully
consider the facts of your particular situation and seek counsel from an attorney in
your jurisdiction before entering into any contractual agreement.
CHAPTER 9: Sample Hunting Lease | 69
CHAPTER 9:
Sample Hunting Lease
is sample lease is a compilation of clauses from many existing hunting leases that
are available online. It is important that parties carefully read and understand what is
covered in any lease form because the language in the written document will generally
resolve disputes that arise under the lease. is document is intended for educational
purposes only and should not be used as a legal form without modication by
competent counsel to t the parties’ circumstances.
is Hunting Lease (referred to as “ Lease” hereaer) is entered into as of the
___________ day of _____________________, 20____ between _______ _______________
(hereinaer referred to as “Lessor”) and the following individual or group of
individuals, _________ _________________ ___________ ___________ ___________
___________ __________ (hereinaer singularly or collectively referred to as “Lessee”).
Subject to the terms and conditions set forth in this Agreement, Lessor does hereby
grant to Lessee the exclusive right to access and hunt on the Leased Premises
described below:
Insert legal description here
A map of the leased premises is attached to the end of the Lease.
THIS LEASE IS SUBJECT TO THE FOLLOWING TERMS AND CONDITIONS:
1. e term of this Agreement shall run from ___________ to ___________
commencing at 12:01 a.m. on the beginning date and terminating at 11:59
p.m. on the ending date. is Agreement automatically will be renewed on an
annual basis unless written notice is delivered on or before ___________ (date).
2. Lessee shall pay as annual rent for the lands leased the sum of ___________
Dollars (or $___________ per acre) to be paid on or before ___________ (date).
Additionally, lessee shall provide a security deposit of $___________, which
70 | CHAPTER 9: Sample Hunting Lease
will be returned by ___________ on __ ____________________, 20______,
provided that there is no damage to the Leased Premises.
3. Lessee, collectively, shall be entitled, under this agreement, to kill and remove
from the Leased Premises the following numbers of animals and no more,
except as expressly indicated in this lease and subject, however, to all state and
federal game laws governing bag limit and possession:
_____ buck deer
_____ doe deer
_____ quail
_____ rabbits
_____ squirrels
_____ turkeys
_____ bear
Nuisance species such as coyote, crows and feral hogs may be taken at any
time as the law allows. e Lessor does not warrant or guarantee that the
Lessee will see or harvest any such animals.
4. Any animals harvested shall be cleaned and disposed of in the designated
cleaning area, identied on the map attached to the end of this Lease.
5. Lessee shall not assign this Lease or sublet the Leased Premises without the
express written consent of Lessor.
6. No commercial hunting, shing or guide activities may occur on the property
by any Lessee or Lessee's guest(s).
7. e Lessee agrees to limit the number of guest(s) in order to protect game
populations. Each Lessee may designate _____ guest(s) to use the Lease when
the Lessee is physically present in the Leased Premises. e names of the
designated guest(s) must be provided in writing to the Lessor before the guests
can hunt on the property. e Lessee is responsible for the actions of the
guest(s).
8. Lessee agrees to help protect said lands from trespass by posting signage and
reporting trespassers to the Lessor. Lessee will also make an eort to put out,
suppress or report any wildres that may occur on the property.
9. Lessee and guest(s) shall at all times obey all state and federal laws and
regulations and Lessee shall be responsible for the conduct of Lessee’s guest(s).
Lessee and guest(s) shall also obey all hunting laws and restrictions and shall
be responsible for any violation of said hunting laws or regulations by said
Lessee or guest(s).
10. While on the Leased Premises, the Lessee shall: observe the rules of safe gun
handling; never shoot in the direction of any people, buildings, or livestock;
leave all gates as the Lessee's nds them; use proper care in crossing fences;
and not use alcohol or drugs.
CHAPTER 9: Sample Hunting Lease | 71
11. Hunting and shooting are prohibited within 75 yards of any dwelling on the
Leased Premises or dwellings on neighboring property.
12. Lessee understands and agrees that the Lease Premises is not leased for
agricultural purposes and takes subject to the rights of persons holding this
interest. Lessee further takes subject to the right of any oil, gas, and mineral
leases presently in existence on the lease premises or that may be executed
during the term of this Lease.
13. e Lessor, along with Lessor's agents or employees, reserves the full, free,
and absolute right and authority, to go on and over the Leased Premises for
any purpose or purposes, including, but not limited to, planting, cutting,
removing, protecting, caring for and dealing with any part of the Leased
Premises.
14. Lessee shall take the proper care of the lease property, buildings, and all other
improvements located thereon, and shall be liable for Lessor for any damage
caused to domestic livestock, fences, or other property of Lessor due to the
activities of Lessee or their guests exercising privileges under this Lease. Lessee
shall also be responsible for any actions damaging the livestock, fences, or
property of the neighbors of the Leased Premises.
15. Vehicles are to be parked in designated areas only. Trucks or automobiles must
remain on established roads and in the designated parking areas. ATVs and
Recreational Vehicles are prohibited from being used on the property at all
times.
16. Lessee agrees to allow no trash on the premises, to remove all material refuse
and litter that Lessee or Lessee's guests deposit. Failure to do so will result in
loss of the lessee’s security deposit.
17. Lessee or designated parties are permitted to construct deer blinds and put
up tree stands on the Leased Premises. However, no deer blind shall be built
or erected in a manner that damages any of the trees located on the Leased
Premises. Lessee shall be required to remove blinds and tree stands upon the
termination of this Lease.
18. Lessee further covenant that they have inspected the described property and
have found the premises to be in an acceptable condition and hereby waive
any right to complain or to recover from Lessor in the future relating to the
condition of the lease property or any improvement located thereon.
19. Lessee agree to protect, defend, indemnify, and hold Lessor harmless from
any and all liability, claims, demands, causes of action of every kind without
limit and regardless to the cause of the harm to any person or property on the
Leased Premises or for any actions on the Leased Premises that cause harm to
any person or property outside of the Leased Premises.
20. Lessee shall provide proof of a general liability insurance policy, with the
Lessor named as co-insured, in the amount of $________ with a company
licensed and approved to do business in this state.
21. Terms of the lease are to be interpreted according to the laws of the State of
_______________ without regard to conict of law provisions.
72 | CHAPTER 9: Sample Hunting Lease
22. Lessee agrees that if a dispute arises under the Lease then the _____ County
Court in the State of ___________________ will have jurisdiction. Lessee
agree to submit to the personal jurisdiction of the courts located in the
___________________ County Court in the State of _______________________.
23. If any provision or clause of this Lease is found to be unenforceable, then the
balance of this Lease shall be interpreted and enforced as if the unenforceable
provision or clause had never been a part hereof.
24. If Lessee defaults in the performance of any of the covenant or conditions
listed in the Lease, then such breach shall cause immediate termination of this
lease and forfeiture to Lessor of all rentals prepaid.
25. In the event a dispute arises out of, or in connection, with this Lease and the
rights of the parties thereof, the prevailing party in a mediation, arbitration, or
litigation matter may recover not only actual damages and costs but reasonable
attorney’s fees expended in the matter as well.
26. is Lease contains the entire understanding and agreement between the
parties. All prior agreements and discussions between the parties have no
further force and eect. is Lease may not be changed, amended or modied
except by a writing properly executed by all parties to the Lease.
In witness whereof, the parties below have set their hands this the __________ day of
____________________________ , 20_____ .
Lessee: ______________ _____ _____ _____ ____________ DATE: _____ _____ _____ _____
Lessor: ______________ _____ _____ _________________ DA TE: _____ _____ _____ _____
CHAPTER 10: Livestock Lease Checklist | 73
CHAPTER 10:
Livestock Lease Checklist
Note: is chapter was adapted from “Some Terms for Bull Leases” by Cari Rincker,
Rincker Law, PLLC.
As discussed in Chapter 1, leasing of livestock can be benecial both to the owner of
the animal (“lessor”) and to the producer wishing the lease the animal (“lessee”). e
following terms should be considered when negotiating and draing a livestock lease
agreement. Like many other agricultural leases, historically, livestock leases have been
oral in nature. It is, however, important to reduce agreements to writing to protect the
rights of both parties.
e following items are intended to provide a checklist of many of the most common
terms found in livestock leases. is list is written as though the animal at issue is a
bull but could certainly be adopted for cows and other species as well.
is list is certainly not exhaustive, and it is likely that not all of these terms are
necessary for every lease. is list is not a substitute for legal advice. All parties—
lessors or lessees—should consult with their own attorney when entering into a
livestock lease to ensure that the lease is complete, legally binding, and protects their
interest.
■
Names of the parties: e lease should include the name and address of the
parties, both the animal owner (“lessor”) and the person leasing the animal
(“lessee”).
■
Term: e term of the breeding season should be listed (e.g., March 1 to June
30, July 1 to September 1).
■
Number of Bulls: Note the number of bulls leased from the lessor plus any
other bulls leased from other cattlemen during the breeding season.
■
Payment: e lease should note the amount owed, due date, payment
instructions, type of payment accepts, interest, and/or penalties for late
payments. Additionally, both parties should be aware of statutory lien rights
74 | CHAPTER 10: Livestock Lease Checklist
available to livestock owners who are not properly paid. For example, in Texas,
the Stock Breeder’s Lien provides that the owner of a stallion, jack, bull, or
boar conned to be bred for prot has a preference lien on the ospring of
the animal in the amount number of charges for breeding services. See Tex.
Property Code § 70.201.
■
Security Deposit: In some cases, the bull owner may request a deposit be
made on the bull that will be returned upon the safe return of the animal to
his/her farm or ranch.
■
Bull Owner Representations: e lessee may request that certain
representations be made such as bull health, body condition score, fertility,
breed registration, pedigree, structural soundness, libido, genetic DNA
markers, strength with Expected Progeny Dierences (“EPD’s”). If genetic
DNA markers are relied upon by the lessor, there should be a clause indicating
that the bull owner is not liable if the genetic testing company made a mistake.
■
Lessee Representations on Cow Herd: e lessor may request certain
representations be made such as herd health, fertility (especially if there is a
penalty for low conception rates), and number of cows that the bull(s).
■
Health: It might be appropriate to add more detail about the health of the bull
and the cow herd of the lessee, including health certication from a licensed
veterinarian or special tests that need to be performed.
■
Delivery of Bull to Cow Herd: Who will pick-up and/or drop-o the bull(s)
and payment for the same? Will there be a penalty for late pick-up or drop
o aer the breeding season? How will the bulls be transported? Who will be
liable if the bull is injured during transport?
■
Movement of Bull from Lessee’s Farm: Will the lessee farmer or rancher be
allowed to move the bull during the lease term?
■
Death, Injury, or Illness of the Bull: Who will be liable for the death or injury
of the bull (i) before the lease date, (ii) during transportation, or (iii) during
the breeding season term? e bull owner should also be promptly notied in
these instances, including if the bull is missing. Some leases include provisions
requiring a necropsy be conducted in the event the bull dies while in the
possession of the lessee.
■
Injuries to People: e lease should discuss potential liability (and
indemnication) from an injury to a family member, farm employee, farm
visitor or child from the bull. Along these lines, a lessor and lessee may want
to discuss compliance with the applicable farm animal liability statute as an
added layer of potential protection.
■
Insurance: Will either party be required to carry insurance? Consider the type
of insurance, the level of required coverage, and whether the other party will
be a co-holder, additional insured, or not included under the policy terms.
■
Performance: e lessee may wish to be compensated if the bull has a breeding
rate under a predetermined level. If this provision is added, it is important that
the lessor include a provision relating to conditions such as drought, weather
extremes, or decient grazing that may aect the bull’s performance.
CHAPTER 10: Livestock Lease Checklist | 75
■
Management: e lessee should promise to use good management practices,
such as proper animal handling techniques. e more objective and
measurable these standards can be written, the better.
■
Feed and Nutrition: e lessee may be required to provide the bull(s)
with adequate feed and dietary supplements. Any special feed or nutrition
requirements should be memorialized. e lease should include specic
requirements such as the type of hay to be fed, the amount of hay or feed per
day or week, and any required supplements that should be available. e bull(s)
should not be allowed to be returned to the owner in a state of malnutrition.
In this instance, the lease should explain what the lessee’s responsibility or
liability would be (e.g., payment for veterinary expenses and or feed during the
recovery period).
■
Right of Inspection: Will the bull owner have the right to inspect the bull
during the breeding term at the lessee’s farm or ranch? Without such provision
being expressly included, the lessor may not have that right.
■
Ownership of Bull: e lease should specically state that the title and
registration papers, if applicable, will remain with the bull owner to prevent a
later dispute about ownership.
■
Option to Purchase: On that note, the lease may provide an option for the
lessee to purchase the bull at the end of the term at a mutually agreed upon
price. Perhaps the lessee is only given the option of rst refusal to purchase the
bull for 30 days aer the termination of the lease.
■
Subleasing: A lessor may want to include a clause expressly prohibiting
subleasing of the bull without written consent from the owner. is will ensure
that the lessee does not allow another party to use the bull during the lease
term.
■
Title of Progeny: e lease should specically state that the lessee owns the
progeny sired by the bull and that no prots are to be shared from their sale.
Again, parties need to be aware of any lien statutes in the proper state that may
impact this issue.
■
Relationship of the Parties: e bull lease should specically state that
the parties are not forming a partnership or joint venture. is provision is
important because, generally, one partner is liable for the obligations and debts
of the other partner. Although this type of provision, alone, will not prevent a
partnership from being created in all circumstances, it does provide evidence
that the parties did not intend to create a partnership arrangement.
■
Termination: Terminate the lease with adequate notice and with certain
conditions. Parties should think carefully about the desired length of notice
before termination occurs. It is also prudent to require these terminations to
be made in writing.
■
Liquidated damages: A lease may provide for certain liquidated damages,
which essentially mean contractually agreed upon damage amounts. ese
damages are oen used in situations where the calculation of actual damages
might be dicult. Instead, the parties agree upfront to a set amount of
damages for certain actions.
76 | CHAPTER 10: Livestock Lease Checklist
■
Condentiality: In every contract between cattlemen, including bull leases,
the parties should ask themselves whether there is any information that they
may wish to remain secret (e.g., payment terms).
■
Choice of Law: A choice of law provision in a lease allows the parties to
determine which state’s law will govern the lease in the event of a dispute.
Generally, choice of law clauses are enforced by a court so long as they are
not against public policy and are reasonably related to the contract. Because
contract laws vary by state and a choice of law provision could signicantly
impact rights under a lease, parties should consult with an attorney about this
provision to determine the potential options available and to determine which
would be most advantageous.
■
Forum Clause: A forum clause provides that a dispute over a lease will be
heard in a particular location or court. For example, a lease could require that
any dispute over the lease be led in the county where the land is located. is
clause may be important for a landowner by requiring suit to be led in his or
her county, particularly if the lessee lives some distance away.
■
Dispute resolution: Parties should consider the inclusion of a dispute
resolution clause. e purpose of these types of clauses is to limit the time and
expenses of a court action in the event of a dispute. ere are two primary
types of dispute resolution: arbitration and mediation. In arbitration, a third-
party arbitrator (usually an attorney) will hear evidence and render a decision.
If the arbitration is “binding,” that judgment is nal on the parties absent
evidence of fraud by the arbitrator. Mediation, on the other hand, involves a
neutral third party who will work with the landowner and lessee to attempt to
reach a mutually-acceptable resolution. If both parties refuse to agree to settle,
the case will then proceed on to court. If included, a dispute resolution clause
should identify how the arbitrator or mediator will be selected. It is important
to understand the dierence between these options and determine which
option is best in consultation with an attorney. Additionally, in the event of an
emergency, the parties may wish to have a provision allowing them to proceed
directly to court.
■
Attorney’s Fees: Generally, a successful litigant is not entitled to recover his
or her attorney fees from the other party absent a contractual agreement or
a statute so authorizing. A landowner should consider including a provision
providing that if the landowner is successful in a dispute (whether in
arbitration or in court) with the lessee, the lessee will be responsible for the
landowner’s reasonable costs and attorney’s fees. e lessee will likely request
a reciprocal clause requiring payment of his or her attorney fees if the lessee is
successful.
CHAPTER 11: Sample Bull Lease | 77
CHAPTER 11:
Sample Bull Lease
is sample lease is a compilation of clauses from many existing leases that have been
collected by the authors. It is important that parties carefully read and understand
what is covered in any lease form because the language in the written document will
generally resolve disputes that arise under the lease. is document is intended for
educational purposes only and should not be used as a legal form without modication
by competent counsel to t the parties’ circumstances.
is lease entered into this _________ day of ____________________________ , 20_____,
between
__ _________ ______________________________ _ __ __ __ __ __ __ __ ___ ___ __ ___ ___ ___ ___ ___
Name Address
hereaer known as “the bull owner” or “lessor,” and
__ _________ ______________________________ _ __ __ __ __ __ __ __ ___ ___ __ ___ ___ ___ ___ ___
Name Address
hereaer known as “the breeder” or “lessee.”
Description of Bull(s)
e livestock owner hereby leases to the breeder, to use for breeding purposes, the
following bull(s): ____________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
consisting of ___________ head.
78 | CHAPTER 11: Sample Bull Lease
Description of Cows
Breeder agrees to utilize the bull(s) on the following cows/heifers:
Restriction on bull(s). e breeder shall not use the bull(s) that are covered by this
agreement during the period of the lease without express permission of the bull
owner on the following heifers or cows:
Payment: Breeder will pay to bull owner $_______ for use of the bull(s) on the date of
commencement of this lease. Breeder agrees to put up a security deposit of $________
that will be held until the return of the bull(s). In the event the bulls are in acceptable
condition, dened as being sound and at a ______ on a body condition score scale as
analyzed by the bull owner’s veterinarian, said deposit will be refunded in full within
5 days of the bull’s return.
Ownership of Calves: Any calves born as a result of this lease agreement shall be the
property of the breeder. is clause does not modify any statutory liens regarding the
rights of an unpaid breeder.
Bull Representations: Bull owner agrees to provide the breeder with the bull(s)
described above. Bull owner agrees the bull(s) possesses the following Expected
Progeny Dierences (EPDs): ________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
General Terms of Lease
A. Time period covered. e provisions of this agreement shall be in eect
commencing on the ______ day of ________________________ , 20______ . is
agreement will run for ______ days and will cease on _________________, 20______.
B. Delivery Options: Bull(s) is located at _______________________________________
• Locations and arrangements should be made by the breeder to pick up and
return bull(s) at the breeder’s expense.
• If delivery of the bull is required by the bull owner, the following conditions
will apply:
– $_________ per loaded mile for ______________________ gooseneck or
smaller,
– Commercial truck rate will be paid upon delivery.
• If the bull is injured or killed during transport, he is deemed to be in the
possession of the breeder, and the lease terms applicable to injury while in
possession of the breeder shall apply.
C. Return of Bull: Bull owner and breeder agree to return the bull(s) to the following
location__________________________________________________________________
__________________________________________________________________________
Bull owner and breeder agree return will be at the expense of the breeder. All
liability for death or injury during transport rests with the breeder.
CHAPTER 11: Sample Bull Lease | 79
D. Good Management Practices: Lessee agrees to utilize good management
practices, including but not limited to safe animal handling techniques.
Additionally, the bull(s) shall be oered _________ pounds of __________________
hay per week and have mineral available free choice.
E. Injury or Death: In the event bull(s) is injured so as to make unserviceable (to
include crippled, unsound, or sore-sheathed) in the future, or bull(s) dies or is lost
while in the care of the breeder, a payment of $_______ per injured, or lost, or dead
bull will be assessed and paid by the lessor to the lessee. is amount is over and
above any lease payment paid or due. If injured in the breeder’s care, the bull shall
be taken to a veterinarian, and the bull owner shall made aware within 24 hours.
If the bull is injured or killed, photographs and/or video shall be taken by the
breeder and provided to the bull’s owner within 1 week.
F. Injury to ird Parties: While the bull(s) is in the possession of the breeder,
including during transport, if he injures or causes damage to any person or
property, the bull owner shall not be held liable for the actions or inactions of the
breeder, his employees, agents, independent contractors, or assigns. Further, the
breeder shall indemnify and hold harmless the bull owner in the event an injury
or damage occurs.
G. Following Animal Welfare Laws: Breeder agrees to compile with all applicable
federal and state laws related to the transportation of animals and while the bull(s)
is in breeder’s care, including state animal welfare laws and the federal Twenty-
Eight Hour Law (49 U.S.C. § 80502).
H. Health: Bull owner agrees to deliver bulls(s) in good health and condition. is
specically includes the bull being returned sound and with a Body Condition
Score of at least __________. If bull(s) require veterinary care while in breeder’s
care, breeder will make bull owner aware within 24 hours. Breeder shall be
responsible for all veterinary expenses while bull(s) is in breeder’s care.
I. Fertility Tests: Bull owner agrees to provide fertility test upon delivery. A fertility
test does not warrant against poor condition of breeder’s herd, non-sucient feed,
grass, etc. Breeder must take the risk of all the natural conditions when putting
out the bull(s) with cows. Bull owner does not guarantee the percentage of bred
cattle at the end of the bull lease term.
J. No right to sublease: e bull owner does not convey to the breeder the right to
lease or sublet any part of the farm or cowherd or to assign the lease to any person
or persons whomsoever.
K. Binding on heirs: e provisions of this lease shall be binding upon the heirs,
executors, administrators, and successors of both the bull owner and the breeder
in like manner as upon the original parties, except as provided by mutual written
agreement.
L. Amendments and alterations: Amendments and alterations to this lease shall be
in writing and shall be signed by both the bull owner and the breeder.
80 | CHAPTER 11: Sample Bull Lease
M. No partnership intended: It is understood and agreed that this lease shall not be
deemed as nor be intended to give rise to a partnership relationship between the
bull owner and the breeder.
N. Record keeping: Breeder shall provide the following records on progeny born
from bull(s):
O. Termination: Breach by the breeder of any terms of this agreement shall be
grounds for immediate termination without refund, at the sold option of the
Lessor. Termination under this lease is eective only when put in writing and
delivered to the other party. Upon termination, the breeder shall deliver to the bull
owner all leased animals within ______ days.
P. Choice of Law: Any disputes arising under or related to this lease agreement shall
be construed under the laws of ______.
Q. Forum Clause: Any disputes arising under or related to this lease agreement shall
be heard in the ________________________ court in ___________________________,
__________.
R. Arbitration of Disputes: Any disputes between the parties as to their rights
or obligations under this lease that are not settled by mutual agreement aer
thorough discussion, shall be submitted for arbitration to a committee of three
disinterested persons, one selected by each party hereto and the third by the two
thus selected. e committee’s decision shall be accepted by both parties.
S. Attorney’s Fees: In the event of any litigation (including arbitration) arising from
or related to this Agreement, or the services provided under this Agreement,
the prevailing party shall be entitled to recover from the non-prevailing party
all reasonable costs incurred including sta time, court costs, attorneys fees,
and all other related expenses incurred in such litigation. In the event of a no-
adjudicative settlement of litigation between the parties or a resolution of a dispute
by arbitration, the term “prevailing party” shall be determined by that process.
Executed in duplicate on the date rst above written:
__ _________ ______________________________ _ __ __ __ __ __ __ __ ___ ___ __ ___ ___ ___ ___ ___
Bull Owner Breeder
APPENDIX I: Recreational Use Statutes | 81
APPENDIX I:
Recreational Use Statutes
Tex. Civ. Prac. & Rem. Code Ann. § 75.001 to § 75.004
Current through the end of the 2015 Regular Session.
§ 75.001. Denitions
In this chapter:
(1) Agricultural land” means land that is located in this state and that is suitable for:
(A) use in production of plants and fruits grown for human or animal
consumption, or plants grown for the production of bers, oriculture,
viticulture, horticulture, or planting seed;
(B) forestry and the growing of trees for the purpose of rendering those
trees into lumber, ber, or other items used for industrial, commercial, or
personal consumption; or
(C) domestic or native farm or ranch animals kept for use or prot.
(2) “Premises” includes land, roads, water, watercourse, private ways, and
buildings, structures, machinery, and equipment attached to or located on the
land, road, water, watercourse, or private way.
(3) “Recreation” means an activity such as:
(A) hunting;
(B) shing;
(C) swimming;
(D) boating;
(E) camping;
(F) picnicking;
(G) hiking;
(H) pleasure driving, including o-road motorcycling and o-road
automobile driving and the use of all-terrain vehicles and recreational
o-highway vehicles;
(I) nature study, including bird-watching;
(J) cave exploration;
(K) waterskiing and other water sports;
(L) any other activity associated with enjoying nature or the outdoors;
(M) bicycling and mountain biking;
(N) disc golf;
(O) on-leash and o-leash walking of dogs; or
(P) radio control ying and related activities.
(4) “Governmental unit” has the meaning assigned by Section 101.001.
82 | APPENDIX I: Recreational Use Statutes
§ 75.002. Liability Limited
(a) An owner, lessee, or occupant of agricultural land:
(1) does not owe a duty of care to a trespasser on the land; and
(2) is not liable for any injury to a trespasser on the land, except for
wilful or wanton acts or gross negligence by the owner, lessee, or other
occupant of agricultural land.
(b) If an owner, lessee, or occupant of agricultural land gives permission to
another or invites another to enter the premises for recreation, the owner, lessee,
or occupant, by giving the permission, does not:
(1) assure that the premises are safe for that purpose;
(2) owe to the person to whom permission is granted or to whom
the invitation is extended a greater degree of care than is owed to a
trespasser on the premises; or (3) assume responsibility or incur liability
for any injury to any individual or property caused by any act of the
person to whom permission is granted or to whom the invitation is
extended.
(c) If an owner, lessee, or occupant of real property other than agricultural land
gives permission to another to enter the premises for recreation, the owner,
lessee, or occupant, by giving the permission, does not:
(1) assure that the premises are safe for that purpose;
(2) owe to the person to whom permission is granted a greater degree of
care than is owed to a trespasser on the premises; or
(3) assume responsibility or incur liability for any injury to any
individual or property caused by any act of the person to whom
permission is granted.
(d) Subsections (a), (b), and (c) shall not limit the liability of an owner, lessee,
or occupant of real property who has been grossly negligent or has acted with
malicious intent or in bad faith.
(e) In this section, “recreation” means, in addition to its meaning under Section
75.001, the following activities only if the activities take place on premises
owned, operated, or maintained by a governmental unit for the purposes of
those activities:
(1) hockey and in-line hockey;
(2) skating, in-line skating, roller-skating, skateboarding, and roller
blading;
(3) soap box derby use; and
(4) paintball use.
(f) Notwithstanding Subsections (b) and (c), if a person enters premises owned,
operated, or maintained by a governmental unit and engages in recreation on
those premises, the governmental unit does not owe to the person a greater
degree of care than is owed to a trespasser on the premises.
(g) Any premises a governmental unit owns, operates, or maintains and
on which the recreational activities described in Subsections (e)(1)-(4) are
conducted shall post and maintain a clearly readable sign in a clearly visible
location on or near the premises. e sign shall contain the following warning
language:
APPENDIX I: Recreational Use Statutes | 83
WAR N I NG
TEXAS LAW (CHAPTER 75, CIVIL PRACTICE AND REMEDIES CODE)
LIMITS THE LIABILITY OF A GOVERNMENTAL UNIT FOR DAMAGES
ARISING DIRECTLY FROM HOCKEY, IN-LINE HOCKEY, SKATING,
IN-LINE SKATING, ROLLER-SKATING, SKATEBOARDING, ROLLER-
BLADING, PAINTBALL USE, OR SOAP BOX DERBY USE ON PREMISES
THAT THE GOVERNMENTAL UNIT OWNS, OPERATES, OR MAINTAINS
FOR THAT PURPOSE.
(h) An owner, lessee, or occupant of real property in this state is liable for
trespass as a result of migration or transport of any air contaminant, as dened
in Section 382.003(2), Health and Safety Code, other than odor, only upon a
showing of actual and substantial damages by a plainti in a civil action.
(i) Subsections (b) and (c) do not aect any liability of an owner, lessee, or
occupant of real property for an injury occurring outside the boundaries of
the real property caused by an activity described by Section 75.001(3)(P) that
originates within the boundaries of the real property.
§ 75.003. Application and Eect of Chapter
(a) is chapter does not relieve any owner, lessee, or occupant of real property
of any liability that would otherwise exist for deliberate, wilful, or malicious
injury to a person or to property.
(b) is chapter does not aect the doctrine of attractive nuisance, except:
(1) as provided by Section 75.0022(g) or 75.0025(c); and
(2) the doctrine of attractive nuisance may not be the basis for liability
of an owner, lessee, or occupant of agricultural land for any injury to a
trespasser over the age of 16 years.
(c) Except for a governmental unit, this chapter applies only to an owner, lessee,
or occupant of real property who:
(1) does not charge for entry to the premises;
(2) charges for entry to the premises, but whose total charges collected
in the previous calendar year for all recreational use of the entire
premises of the owner, lessee, or occupant are not more than 20 times
the total amount of ad valorem taxes imposed on the premises for the
previous calendar year; or
(3) has liability insurance coverage in eect on an act or omission
described by Section 75.004(a) and in the amounts equal to or greater
than those provided by that section.
(d) is chapter does not create any liability.
(e) Except as otherwise provided, this chapter applies to a governmental unit.
(f) is chapter does not waive sovereign immunity.
(g) To the extent that this chapter limits the liability of a governmental unit
under circumstances in which the governmental unit would be liable under
Chapter 101, this chapter controls.
84 | APPENDIX I: Recreational Use Statutes
(h) In the case of agricultural land, an owner, lessee, or occupant of real
property who does not charge for entry to the premises because the individuals
entering the premises for recreation are invited social guests satises the
requirement of Subsection (c)(1).
§ 75.004. Limitation on Monetary Damages for Private Landowners
(a) Subject to Subsection (b), the liability of an owner, lessee, or occupant of
agricultural land used for recreational purposes for an act or omission by the
owner, lessee, or occupant relating to the premises that results in damages
to a person who has entered the premises is limited to a maximum amount
of $500,000 for each person and $1 million for each single occurrence of
bodily injury or death and $100,000 for each single occurrence for injury to or
destruction of property. In the case of agricultural land, the total liability of an
owner, lessee, or occupant for a single occurrence is limited to $1 million, and
the liability also is subject to the limits for each single occurrence of bodily injury
or death and each single occurrence for injury to or destruction of property
stated in this subsection.
(b) is section applies only to an owner, lessee, or occupant of agricultural
land used for recreational purposes who has liability insurance coverage in
eect on an act or omission described by Subsection (a) and in the amounts
equal to or greater than those provided by Subsection (a). e coverage may be
provided under a contract of insurance or other plan of insurance authorized
by statute. e limit of liability insurance coverage applicable with respect to
agricultural land may be a combined single limit in the amount of $1 million
for each single occurrence.
(c) is section does not aect the liability of an insurer or insurance plan in an
action under Chapter 541, Insurance Code, or an action for bad faith conduct,
breach of duciary duty, or negligent failure to settle a claim.
(d) is section does not apply to a governmental unit.
§ 75.007. Trespassers
(a) In this section, “trespasser” means a person who enters the land of another
without any legal right, express or implied.
(b) An owner, lessee, or occupant of land does not owe a duty of care to a
trespasser on the land and is not liable for any injury to a trespasser on the land,
except that an owner, lessee, or occupant owes a duty to refrain from injuring a
trespasser wilfully, wantonly, or through gross negligence.
(c) Notwithstanding Subsection (b), an owner, lessee, or occupant of land may
be liable for injury to a child caused by a highly dangerous articial condition
on the land if:
(1) the place where the articial condition exists is one upon which the
owner, lessee, or occupant knew or reasonably should have known that
children were likely to trespass;
APPENDIX I: Recreational Use Statutes | 85
(2) the articial condition is one that the owner, lessee, or occupant
knew or reasonably should have known existed, and that the owner,
lessee, or occupant realized or should have realized involved an
unreasonable risk of death or serious bodily harm to such children;
(3) the injured child, because of the child's youth, did not discover
the condition or realize the risk involved in intermeddling with the
condition or coming within the area made dangerous by the condition;
(4) the utility to the owner, lessee, or occupant of maintaining the
articial condition and the burden of eliminating the danger were slight
as compared with the risk to the child involved; and
(5) the owner, lessee, or occupant failed to exercise reasonable care to
eliminate the danger or otherwise protect the child.
(d) An owner, lessee, or occupant of land whose actions are justied under
Subchapter C or D, Chapter 9, Penal Code, is not liable to a trespasser for
damages arising from those actions.
(e) is section does not aect Section 75.001, 75.002, 75.0021, 75.003, or 75.004
or create or increase the liability of any person.
86 | APPENDIX I: Recreational Use Statutes
States’ Recreational Use Statutes
STATE OF OKLAHOMA
76 Okl.St.Ann. § 10.1
Current through the Second Regular Session of the 55th Legislature (2016).
§ 10.1. Landowners encouraged to make land available to public for recreational
purposes--Limitation on liability--Denitions--Applicability of section to land
and attached roads, water and structures used primarily for farming or ranching
activities
A. 1. e purpose of this section is to encourage landowners to make land available
to the public for outdoor recreational purposes by limiting their liability to persons
entering upon and using such land and to third persons who may be damaged by the
acts or omissions of persons going upon these lands.
2. As used in this section:
a. “land” means real property, roads, water, watercourses, private ways,
buildings, structures, and machinery or equipment when attached to realty,
b. “outdoor recreational purposes” includes any of the following, or any
combination thereof: hunting, shing, swimming, boating, camping,
picnicking, hiking, pleasure driving, jogging, cycling, other sporting events
and activities, nature study, water skiing, jet skiing, winter sports, viewing or
enjoying historical, archaeological, scenic, or scientic sites, and aviation at
non-public-use airports,
c. “owner” means the possessor of a fee interest, a tenant, lessee, occupant, or
person in control of the land,
d. “charge” means the admission price or fee asked in return for invitation or
permission to enter or go upon the land. e term “charge” shall not include:
(1) a license or permit fee imposed by a governmental entity for the
purpose of regulating the use of land, a water or park area, or lake
reservation,
(2) hunting, shing, boating, and other license and permit fees,
(3) hunting or shing leases, or
(4) donations made at y-ins at non-public-use airports, and
e. “non-public-use airport” means an airport that is primarily used by the
owner with
access to the public as permitted by the owner.
B. An owner who provides the public with land for outdoor recreational purposes
owes no duty of care to keep the land safe for entry or use by others, or to give
warning to persons entering or using the land of any hazardous conditions,
structures, or activities.
C. 1. Except as otherwise provided by this section, an owner who provides the public
with land for outdoor recreational purposes shall not:
a. be presumed to extend any assurance that the land is safe for any purpose,
APPENDIX I: Recreational Use Statutes | 87
b. incur any duty of care toward a person who enters or uses the land, or
c. assume any liability or responsibility for any injury to persons or property
caused by the act or omission of a person who enters or uses the land.
2. is subsection applies whether the person entering or using the land is an invitee,
licensee, trespasser, or otherwise.
D. is section shall not apply if:
1. Any charge is made or is usually made for entering or using any part of the
land; or
2. Any commercial or other activity for prot directly related to the use is
conducted on any part of the land.
E. 1. An owner of land leased to the state or to other public entity for outdoor
recreational purposes owes no duty of care to keep the land safe for entry or use by
others, or to give warning to persons entering or using the land of any hazardous
conditions, structures, or activities. Any owner who leases or subleases land to the state
or other public entity for outdoor recreational purposes shall not:
a. be presumed to extend any assurance that the land is safe for any purpose,
b. incur any duty of care toward a person who enters or uses the leased land, or
c. become liable or responsible for any injury to persons or property caused by the
act or omission of a person who enters or uses the leased land.
2. is subsection applies whether the person entering or using the leased land is an
invitee, licensee, trespasser, or otherwise, notwithstanding any other section of law.
F. 1. Except as provided in this section, no person is relieved of liability which would
exist for want of ordinary care or for deliberate, willful, or malicious injury to persons
or property. e provisions shall not create or increase the liability of any person.
2. is section shall not relieve any owner of any liability for the operation and
maintenance of structures axed to real property by the owner for use by the general
public.
G. By entering or using land, no person shall be deemed to be acting as an employee
or agent of the owner whether the entry or use is with or without the knowledge or
consent of the owner.
H. e provisions of this section shall not apply to any land that is used primarily for
farming or ranching activities or to roads, water, watercourses, private ways, buildings,
structures, and machinery or equipment when attached to realty which is used
primarily for farming or ranching activities.
e Oklahoma Limitation of Liability for Farming and Ranching Land Act shall govern
such land.
88 | APPENDIX I: Recreational Use Statutes
States’ Recreational Use Statutes
STATE OF ARKANSAS
AR ST § 18-11-301 to § 18-11-307
Current through the 2015 Regular Session
§ 18-11-301. Purpose of subchapter
e purpose of this subchapter is to encourage owners of land to make land and
water areas available to the public for recreational purposes by limiting their liability
toward persons entering thereon for such purposes.
§ 18-11-302. Denitions
As used in this subchapter:
(1) “Aviation” means taking o, ying, or landing an airplane or aircra;
(2) “Charge” means an admission fee for permission to go upon or use the land,
but does not include:
(A) e sharing of game, sh, or other products of recreational use; or
(B) Contributions in kind, services, or cash paid to reduce or oset costs
and eliminate losses from recreational use;
(3) “Land” means land, roads, water, watercourses, airstrips, private ways and
buildings, structures, and machinery or equipment when attached to the realty;
(4) (A) “Malicious” means an intentional act of misconduct that the actor is
aware is likely to result in harm.
(B) “Malicious” does not mean negligent or reckless conduct;
(5) “Owner” means the possessor of a fee interest, a tenant, lessee, holder of a
conservation easement as dened in § 15-20-402, occupant, or person in control
of the premises;
(6) “Public” and “person” includes the Young Men's Christian Association,
Young Women's Christian Association, Boy Scouts of America, Girl
Scouts of the United States of America, Boys & Girls Clubs of America,
churches, religious organizations, fraternal organizations, and other similar
organizations; and
(7) “Recreational purpose” includes, but is not limited to, any of the following or
any combination thereof:
(A) Hunting;
(B) Fishing;
(C) Swimming;
APPENDIX I: Recreational Use Statutes | 89
(D) Boating;
(E) Camping;
(F) Picnicking;
(G) Hiking;
(H) Pleasure driving;
(I) Nature study;
(J) Water skiing;
(K) Winter sports;
(L) Spelunking;
(M) Aviation;
(N) Viewing or enjoying historical, archeological, scenic, or scientic
sites; and
(O) Any other activity undertaken for exercise, education, relaxation, or
pleasure on land owned by another.
§ 18-11-303. Construction of subchapter
Nothing in this subchapter shall be construed to:
(1) Create a duty of care or ground of liability for injury to persons or property;
or
(2) Relieve any person using the land of another for recreational purposes from
any obligation which he or she may have in the absence of this subchapter to
exercise care in his or her use of the land and in his or her activities thereon or
relieve any person from the legal consequences of failure to employ such care.
§ 18-11-304. Duty of care
Except as specically recognized by or provided in § 18-11-307, an owner of land owes
no duty of care to keep the premises safe for entry or use by others for recreational
purposes or to give any warning of a dangerous condition, use, structure, or activity
on the premises to persons entering for recreational purposes.
§ 18-11-305. Limitation on liability
Except as specically recognized by or provided in § 18-11-307, an owner of land
who, either directly or indirectly, invites or permits without charge any person to use
his or her property for recreational purposes does not thereby:
(1) Extend any assurance that the lands or premises are safe for any purpose;
(2) Confer upon the person the legal status of an invitee or licensee to whom a
duty of care is owed;
(3) Assume responsibility for or incur liability for any injury to person or
property caused by an act or omission of such persons; or
(4) Assume responsibility for or incur liability for injury to the person or
property caused by any natural or articial condition, structure, or personal
property on the land.
90 | APPENDIX I: Recreational Use Statutes
§ 18-11-306. Land leased to state
Unless otherwise agreed in writing, the provisions of §§ 18-11-304 and 18-11-305 are
applicable to the duties and liability of:
(1) An owner of land leased to the state or a political subdivision of the state for
recreational purposes;
(2) An owner of an interest in the real property burdened by a conservation
easement as dened in § 15-20-402; or
(3) A holder of a conservation easement as dened in § 15-20-402.
§ 18-11-307. Owner's liability
Nothing in this subchapter limits in any way liability which otherwise exists:
(1) For malicious, but not mere negligent, failure to guard or warn against an
ultra-hazardous condition, structure, personal property, use, or activity actually
known to the owner to be dangerous; and
(2) For injury suered in any case in which the owner of land charges the
person or persons who enter or go on the land for the recreational use thereof,
except that, in the case of land leased to the state, a subdivision thereof, or to a
third person, any consideration received by the owner for the lease shall not be
deemed a charge within the meaning of this section.
APPENDIX II: Agritourism Acts | 91
APPENDIX II:
Agritourism Acts
Texas
Limited Liability for Agritourism Activities
Tex. Civil Practice & Remedies Code § 75A.001 to § 75A.004 2
§ 75A.001. Denitions
In this chapter:
(1) “Agriculutral land” means land that is located in this state and that is
suitable for:
A. Use in production of plants and fruits grown for human or animal
consumption, or plants grown for the production of bers, oriculture,
viticulture, horticulture, or planting seed; or
B. Domestic or native farm or ranch animals kept for use or prot.
(2) “Agritourism activity” means an activity on agricultural land for
recreational or educational purposes of participants, without regard to
compensation.
(3) “Agritourism entity” means a person engaged in the business of providing an
agritourism activity, without regard to compensation, including a person who
displays exotic animals to the public on agricultural land.
(4) “Agritourism participant” means an individual, other than an employee of
an agritourism entity, who enages in an agritourism activity.
(5) “Agritourism participant injury” means an injury sustained by an
agritourism participant, including bodily injury, emotional distress, death,
property damage, or any other loss arising from the person’s participant in an
agritourism activity.
(6) “Premises” has the meaning assigned by Section 75.001. (See Appendix II).
(7) “Recreation” has the meaning assigned by Section 75.001. (See Appendix II).
§ 75A.002. Limited Liability
(a) Except as provided by Subsection (b), an agritourism entity is not liable to
any person for an agritourism participant injury or damages arising out of the
agritourism participant injury if:
92 | APPENDIX II: Agritourism Acts
(1) at the time of the agritourism activity from which the injury arises, the
warning prescribed by Section 75A.003 was posted in accordance with that
section; or
(2) the agritourism entity obtained in accordance with Section 75A.004 a
written agreement and warning statement from the agritourism participant
with respect to the agritourism activity from which the injury arises.
(b) is section does not limit liability for an injury:
(1) proximately caused by:
(A) the agritourism entity's negligence evidencing a disregard for the
safety of the agritourism participant;
(B) one of the following dangers, of which the agritourism entity had
actual knowledge or reasonably should have known:
(i) a dangerous condition on the land, facilities, or
equipment used in the activity; or
(ii) the dangerous propensity, that is not disclosed to the
agritourism participant, of a particular animal used in the
activity; or
(C) the agritourism entity's failure to train or improper training of an
employee of the agritourism entity actively involved in an agritourism
activity; or
(2) intentionally caused by the agritourism entity.
(c) A limitation on liability provided by this section to an agritourism entity is in
addition to other limitations of liability.
§ 75A.003. Posted Warning
For the purposes of liability under Section 75A.002(a)(1), an agritourism entity must
post and maintain a sign in a clearly visible location on or near any premises on
which an agritourism activity is conducted. e sign must contain the following
language:
WAR N I NG
UNDER TEXAS LAW (CHAPTER 75A, CIVIL PRACTICE AND REMEDIES
CODE), AN AGRITOURISM ENTITY IS NOT LIABLE FOR ANY INJURY TO
OR DEATH OF AN AGRITOURISM PARTICIPANT RESULTING FROM AN
AGRITOURISM ACTIVITY.
§ 75A.004. Signed Agreement and Warning
For the purposes of limitation of liability under Section 75A.002(a)(2), a written
agreement and warning statement is considered eective and enforceable if it:
(1) is signed before the agritourism participant participates in an agritourism
activity;
APPENDIX II: Agritourism Acts | 93
(2) is signed by the agritourism participant or, if the agritourism participant is a
minor, the agritourism participant’s parent, managing conservator, or guardian;
(3) is in a document separate from any other agreement between the
agritourism participant and the agritourism entity other than a dierent
warning, consent, or assumption of risk statement;
(4) is printed in not less than 10-point bold type; and
(5) contains the following language:
AGREEMENT AND WARNING
I UNDERSTAND AND ACKNOWLEDGE THAT AN AGRITOURISM ENTITY
IS NOT LIABLE FOR ANY INJURY TO OR DEATH OF AN AGRITOURISM
PARTICIPANT RESULTING FROM AGRITOURISM ACTIVITIES. I
UNDERSTAND THAT I HAVE ACCEPTED ALL RISK OF INJURY, DEATH,
PROPERTY DAMAGE, AND OTHER LOSS THAT MAY RESULT FROM
AGRITOURISM ACTIVITIES.
94 | APPENDIX II: Agritourism Acts
Oklahoma
Agritourism Activities Liability Limitations Act
Okla. Stat. tit. 2, § 5-14 to § 5-17
§ 5-14. Short title--Oklahoma Agritourism Activities Liability Limitations Act
is act shall be known and may be cited as the “Oklahoma Agritourism Activities
Liability Limitations Act”.
§ 5-15. Denitions
As used in the Oklahoma Agritourism Activities Liability Limitations Act:
1. “Agritourism activity” means any activity carried out on a farm or ranch
that allows members of the general public, for recreational, entertainment,
or educational purposes, to view or enjoy rural activities, including farming,
ranching, historic, cultural, harvest-your-own activities, or natural activities and
attractions. An activity is an agritourism activity whether or not the participant
paid to participate in the activity;
2. “Agritourism professional” means any person who is engaged in the business
of providing one or more agritourism activities, whether or not for compensation
and whose agritoruism activity is registered with the Oklahoma Department of
Agriculture, Food, and Forestry;
3. “Inherent risks of agritourism activity” means those dangers or conditions that
are an integral part of an agritourism activity including certain hazards, surface
and subsurface conditions, natural conditions of land, vegetation, and waters,
the behavior of wild or domestic animals, and ordinary dangers of structures or
equipment ordinarily used in farming and ranching operations. Inherent risks of
agritourism activity also include the potential of a participant to act in a negligent
manner that may contribute to injury to the participant or others, including failing
to follow instructions given by the agritourism professional or failing to exercise
reasonable caution while engaging in the agritourism activity; and
4. “Participant” means any person, other than the agritourism professional, who
engages in an agritourism activity.
§ 5-16. Liability of agritourism professionals and exceptions
A. Except as provided in subsection B of this section, an agritourism professional is
not liable for injury to or death of a participant resulting from the inherent risks of
agritourism activities, so long as the warning contained in Section 4 of this act is posted
as required and, except as provided in subsection B of this section, no participant
or participant's representative can maintain an action against or recover from an
agritourism professional for injury, loss, damage, or death of the participant resulting
APPENDIX II: Agritourism Acts | 95
exclusively from any of the inherent risks of agritourism activities. In any action for
damages against an agritourism professional for agritourism activity, the agritourism
professional must plead the armative defense of assumption of the risk of agritourism
activity by the participant.
B. Nothing in subsection A of this section prevents or limits the liability of an
agritourism professional if the agritourism professional does any one or more of the
following:
1. Commits an act or omission that constitutes negligence or willful or wanton
disregard for the safety of the participant, and that act or omission proximately
causes injury, damage, or death to the participant;
2. Has actual knowledge or reasonably should have known of a dangerous
condition on the land, facilities, or equipment used in the activity or the dangerous
propensity of a particular animal used in such activity and does not make the
danger known to the participant, and the danger proximately causes injury,
damage, or death to the participant.
C. Any limitation on legal liability aorded by this section to an agritourism professional
is in addition to any other limitations of legal liability otherwise provided by law.
§ 5-17. Notice of warning
A. Every agritourism professional shall post and maintain signs that contain the
warning notice specied in subsection B of this section. e sign shall be placed in a
clearly visible location at the entrance to the agritourism location and at the site of the
agritourism activity. e warning notice shall consist of a sign in black letters, with each
letter to be a minimum of one (1) inch in height. Every written contract entered into by
an agritourism professional for the providing of professional services, instruction, or the
rental of equipment to a participant, whether or not the contract involves agritourism
activities on or o the location or at the site of the agritourism activity, shall contain in
clearly readable print the warning notice specied in subsection B of this section.
B. e signs and contracts described in subsection A of this section must contain the
following notice of warning:
“WAR NI NG
Under Oklahoma law, there is no liability for an injury to or death of a participant in
an agritourism activity conducted at this agritourism location if such injury or death
results from the inherent risks of the agritourism activity. Inherent risks of agritourism
activities include, among others, risks of injury inherent to land, equipment, and
animals, as well a the potential for you to act in a negligent manner that may contribute
to your injury or death. You are assuming the risk of participating in this agritourism
activity.”
C. Failure to comply with the requirements concerning warning signs and notices
provided in this section shall prevent an agritourism professional from invoking the
privileges of immunity provided by the Oklahoma Agritourism Activities Liability
Limitations Act.
96 | APPENDIX II: Agritourism Acts
Arkansas
Agritourism Act
Ark. Code § 2-11-101 to § 2-11-107
§ 2-11-101. Title
is chapter shall be known and may be cited as the “Agritourism Act”.
§ 2-11-102. Legislative intent – Construction - Purpose
(a) It is the intent of this chapter to:
(1) Promote rural tourism and rural economic development by encouraging
owners or operators of farms, ranches, and other rural land or attractions,
including historic, cultural, and natural attractions, to invite members of the
public to view, observe, and participate in the operations and attractions for
educational, entertainment, or recreational purposes; and
(2) Encourage agritourism activities by limiting civil liability of those engaged
in agritourism or providing the activities of agritourism.
(b) is chapter shall be liberally construed to carry out the purposes described in
subsection (a) of this section.
§ 2-11-103. Denitions
As used in this chapter:
(1) “Agribusiness operation” means an agricultural, horticultural, viticultural,
forestry, dairy, livestock, poultry, bee, or any other farm, ranch, plantation, or
range business operation;
(2) (A) “Agritourism activity” means an interactive or passive activity carried
out with or without payment to an agritourism activity operator on a farm,
ranch, or agribusiness operation related to agriculture, food production, historic
traditions, or nature-watching conducted by an agritourism activity operator
for the education, entertainment, or recreation of participants.
(B) “Agritourism activity” includes without limitation:
(i) A farming or ranching activity;
(ii) e viewing of historic, cultural, or natural attractions;
(iii) A harvest-your-own activity;
(iv) Nature-watching; and
(v) An activity involving an animal exhibition at an
agricultural fair.
APPENDIX II: Agritourism Acts | 97
(C) “Agritourism activity” does not include:
(i) A roadside fruit and vegetable stand; or
(ii) An operation exclusively devoted to the sale of
merchandise or food at retail;
(3) “Agritourism activity operator” means an individual or entity that provides
the facilities and equipment necessary to participate in an agritourism activity;
(4) “Inherent risk” means dangers or conditions that are an integral part of an
agritourism activity, including without limitation:
(A) e propensity of a wild or domestic animal to behave in ways that
may result in injury, harm, or death to persons on or around the wild or
domestic animal;
(B) Hazards such as surface and subsurface conditions;
(C) Natural conditions of land, vegetation, and waters;
(D) Ordinary dangers of structures or equipment used in farming or
ranching operations; and
(E) e potential of a participant to act in a negligent way that may
contribute to injury to the participant or others, whether failing to
follow safety procedures or failing to act with reasonable caution while
engaging in the agritourism activity; and
(5) “Participant” is dened as a person, other than the agritourism activity
operator, who engages in an agritourism activity.
§ 2-11-104. Assumption of risk by participant
Except as provided in § 2-11-105, a participant assumes the inherent risk of an
agritourism activity by engaging in the agritourism activity.
§ 2-11-105. Liability of agritourism activity operator
is chapter shall not prevent or limit the liability of an agritourism activity operator
if the agritourism activity operator or an agent of the agritourism activity operator:
(1) Commits an act or omission of gross negligence concerning the safety of a
participant that proximately causes injury, damage, or death to the participant;
(2) Has actual knowledge of a dangerous condition on the land, facilities, or
equipment used in the activity or the dangerous propensity of a particular
animal used in the activity that proximately causes injury, damage, or death
to the participant and does not make the danger known to the participant that
proximately causes injury, damage, or death to the participant;
(3) Intentionally injures a participant; or
(4) Commits other acts, errors, or omissions that constitute willful or wanton
misconduct, gross negligence, or criminal conduct that proximately causes
injury, damage, or death.
98 | APPENDIX II: Agritourism Acts
§ 2-11-106. Limitation of liability
(a) An agritourism activity operator or participant is not liable for damages arising
from the personal injury or death of a participant if:
(1) e injury or death results from an inherent risk; and
(2) e warning contained in § 2-11-107 is posted.
(b) e limitation of liability provided by this section is in addition to any other
limitation of liability provided by law.
§ 2-11-107. Warning required
(a) At each agritourism activity, the agritourism activity operator shall post and
maintain signage in a clearly visible location at or near the main entrance to the
agritourism activity and in black letters at least one inch (1") in height containing the
following warning:
“WARNING -- Under Arkansas law, an agritourism activity operator is not liable
for the injury or death of a participant in an agritourism activity resulting from the
inherent risk of agritourism activities. Inherent risks include without limitation the
risk of animals, weather, land conditions, and the potential for you as a participant
to act in a negligent way that may contribute to your own injury or death. You are
assuming the risk of participating in this agritourism activity.”
(b) e agritourism activity operator shall include, in clearly visible print, the
warning contained in subsection (a) of this section in a written contract between the
agritourism activity operator and each participant.
(c) At each agritourism activity, the agritourism operator shall post and maintain
signage of a specic or known hazard in the particular area on or surrounding the
agritourism activity.
APPENDIX III: Farm Animal Liability Acts | 99
APPENDIX III:
Farm Animal Liability Acts
TEXAS
Liability Arising from Farm Animal Activities
or Livestock Shows
V.T.C.A., Civil Practice & Remedies Code § 87.001 to § 87.005
§ 87.001. Denitions
In this chapter:
(1) “Engages in a farm animal activity” means riding, handling, training,
driving, loading, unloading, assisting in the medical treatment of, being a
passenger on, or assisting a participant or sponsor with a farm animal. e term
includes management of a show involving farm animals. e term does not
include being a spectator at a farm animal activity unless the spectator is in an
unauthorized area and in immediate proximity to the farm animal activity.
(2) “Equine animal” means a horse, pony, mule, donkey, or hinny.
(2-a) “Farm animal” means:
(A) an equine animal;
(B) a bovine animal;
(C) a sheep or goat;
(D) a pig or hog;
(E) a ratite, including an ostrich, rhea, or emu; or
(F) a chicken or other fowl.
(3) “Farm animal activity” means:
(A) a farm animal show, fair, competition, performance, rodeo, event, or
parade that involves any farm animal;
(B) training or teaching activities involving a farm animal;
(C) boarding a farm animal, including daily care;
(D) riding, inspecting, evaluating, handling, loading, or unloading a
farm animal belonging to another, without regard to whether the owner
receives monetary consideration or other thing of value for the use of
the farm animal or permits a prospective purchaser of the farm animal
to ride, inspect, evaluate, handle, load, or unload the farm animal;
100 | APPENDIX III: Farm Animal Liability Acts
(E) informal farm animal activity, including a ride, trip, or hunt that is
sponsored by a farm animal activity sponsor;
(F) placing or replacing horseshoes on an equine animal;
(G) examining or administering medical treatment to a farm animal by
a veterinarian; or
(H) without regard to whether the participants are compensated, rodeos
and single event competitions, including team roping, calf roping, and
single steer roping.
(4) “Farm animal activity sponsor” means:
(A) a person or group who sponsors, organizes, or provides the facilities
for a farm animal activity, including facilities for a pony club, 4-H club,
hunt club, riding club, therapeutic riding program, or high school or
college class, program, or activity, without regard to whether the person
operates for prot; or
(B) an operator of, instructor at, or promoter for facilities, including a
stable, clubhouse, pony ride string, fair, or arena at which a farm animal
activity is held.
(5) “Farm animal professional” means a person engaged for compensation:
(A) to instruct a participant or rent to a participant a farm animal for
the purpose of riding, driving, or being a passenger on the farm animal;
(B) to rent equipment or tack to a participant;
(C) to examine or administer medical treatment to a farm animal as a
veterinarian; or
(D) to provide veterinarian or farrier services.
(6) “Livestock animal” means:
(A) an animal raised for human consumption; or
(B) a farm animal.
(6-a) “Livestock producer” means a person who owns, breeds, raises, or feeds
livestock animals.
(7) “Livestock show” means a nonprot event at which more than two species or
breeds of livestock animals are gathered for exhibition or competition.
(8) “Livestock show sponsor” means a recognized group or association that
organizes and sanctions a livestock show, including a political subdivision or
nonprot organization that is exempt from federal income tax under Section
501(a), Internal Revenue Code of 1986, as amended, by being listed as an exempt
organization in Section 501(c)(3) of that code.
(9) “Participant” means:
(A) with respect to a farm animal activity, a person who engages in
the activity, without regard to whether the person is an amateur or
APPENDIX III: Farm Animal Liability Acts | 101
professional or whether the person pays for the activity or participates
in the activity for free; and
(B) with respect to a livestock show, a person who registers for and is
allowed by a livestock show sponsor to compete in a livestock show by
showing an animal on a competitive basis, or a person who assists that
person.
§ 87.002. Applicability of Chapter
is chapter does not apply to an activity regulated by the Texas Racing Commission.
§ 87.003. Limitation on Liability
Except as provided by Section 87.004, any person, including a farm animal activity
sponsor, farm animal professional, livestock producer, livestock show participant, or
livestock show sponsor, is not liable for property damage or damages arising from
the personal injury or death of a participant in a farm animal activity or livestock
show if the property damage, injury, or death results from the dangers or conditions
that are an inherent risk of a farm animal activity or the showing of an animal on a
competitive basis in a livestock show, including:
(1) the propensity of a farm animal or livestock animal to behave in ways that
may result in personal injury or death to a person on or around it;
(2) the unpredictability of a farm animal's or livestock animal's reaction to
sound, a sudden movement, or an unfamiliar object, person, or other animal;
(3) with respect to farm animal activities involving equine animals, certain land
conditions and hazards, including surface and subsurface conditions;
(4) a collision with another animal or an object; or
(5) the potential of a participant to act in a negligent manner that may
contribute to injury to the participant or another, including failing to maintain
control over a farm animal or livestock animal or not acting within the
participant's ability.
§ 87.004. Exceptions to Limitation on Liability
A person, including a farm animal activity sponsor, farm animal professional,
livestock show participant, or livestock show sponsor, is liable for property damage or
damages arising from the personal injury or death caused by a participant in a farm
animal activity or livestock show if:
(1) the injury or death was caused by faulty equipment or tack used in the farm
animal activity or livestock show, the person provided the equipment or tack,
and the person knew or should have known that the equipment or tack was
faulty;
(2) the person provided the farm animal or livestock animal and the person
did not make a reasonable and prudent eort to determine the ability of the
102 | APPENDIX III: Farm Animal Liability Acts
participant to engage safely in the farm animal activity or livestock show and
determine the ability of the participant to safely manage the farm animal or
livestock animal, taking into account the participant's representations of ability;
(3) the injury or death was caused by a dangerous latent condition of land
for which warning signs, written notices, or verbal warnings were not
conspicuously posted or provided to the participant, and the land was owned,
leased, or otherwise under the control of the person at the time of the injury or
death and the person knew of the dangerous latent condition;
(4) the person committed an act or omission with wilful or wanton disregard
for the safety of the participant and that act or omission caused the injury;
(5) the person intentionally caused the property damage, injury, or death; or
(6) with respect to a livestock show, the injury or death occurred as a result
of an activity connected with the livestock show and the person invited or
otherwise allowed the injured or deceased person to participate in the activity
and the injured or deceased person was not a participant as dened by Section
87.001(9)(B).
§ 87.005. Warning Notice
(a) A farm animal professional shall post and maintain a sign that contains the
warning contained in Subsection (c) if the professional manages or controls a
stable, corral, or arena where the professional conducts a farm animal activity. e
professional must post the sign in a clearly visible location on or near the stable,
corral, or arena.
(b) A farm animal professional shall include the warning contained in Subsection
(c) in every written contract that the professional enters into with a participant for
professional services, instruction, or the rental of equipment or tack or a farm animal.
e warning must be included without regard to whether the contract involves farm
animal activities on or o the location or site of the business of the farm animal
professional. e warning must be clearly readable.
(c) e warning posted by a farm animal professional under this section must be as
follows:
WAR N I NG
UNDER TEXAS LAW (CHAPTER 87, CIVIL PRACTICE AND REMEDIES CODE),
A FARM ANIMAL PROFESSIONAL IS NOT LIABLE FOR AN INJURY TO OR
THE DEATH OF A PARTICIPANT IN FARM ANIMAL ACTIVITIES RESULTING
FROM THE INHERENT RISKS OF FARM ANIMAL ACTIVITIES.
(d) A livestock show sponsor shall post and maintain a sign that contains the warning
prescribed by Subsection (f) if the livestock show sponsor manages or controls a
stable, barn, corral, or arena at which the livestock show sponsor conducts a livestock
show. e livestock show sponsor must post the sign in a clearly visible location near
the stable, barn, corral, or arena.
APPENDIX III: Farm Animal Liability Acts | 103
(e) A livestock show sponsor shall include the warning prescribed by Subsection (f) in
every written contract that the sponsor enters into with a livestock show participant.
e warning must be clearly readable.
(f) e warning posted by a livestock show sponsor under this section must be as
follows:
WAR N I NG
UNDER TEXAS LAW (CHAPTER 87, CIVIL PRACTICE AND REMEDIES CODE),
A LIVESTOCK SHOW SPONSOR IS NOT LIABLE FOR AN INJURY TO OR THE
DEATH OF A PARTICIPANT IN A LIVESTOCK SHOW RESULTING FROM THE
INHERENT RISKS OF LIVESTOCK SHOW ACTIVITIES.
104 | APPENDIX III: Farm Animal Liability Acts
Oklahoma
Livestock Activities Liability Limitation Act
Okla. Stat. tit. 76, § 50.1 to § 50.4
§ 50.1. Short title--Legislative intent--Construction
A. is act shall be known and may be cited as the “Oklahoma Livestock Activities
Liability Limitation Act”.
B. 1. e Oklahoma Legislature recognizes that persons who engage in livestock
activities may incur injuries as a result of the risks involved in such activities even in
the absence of any fault or negligence on the part of persons or entities who sponsor,
participate or organize those activities.
2. e Oklahoma Legislature nds that the state and its citizens derive numerous
economic and personal benets from livestock activities.
3. It is, therefore, the intent of the Oklahoma Legislature to encourage livestock
activities by limiting the civil liability of livestock activities sponsors, participants
and livestock professionals involved in such activities.
C. e provisions of the Oklahoma Livestock Activities Liability Limitation Act shall not
be construed to conict or amend Sections 10 through 15.1 of Title 76 of the Oklahoma
Statutes.
§ 50.2. Denitions
As used in the Oklahoma Livestock Activities Liability Limitation Act:
1. “Engages in a livestock activity” includes training, racing, showing, riding,
or assisting in medical treatment of, or driving livestock, or engaging in any
agritourism activity involving livestock or on a location where livestock are
displayed or raised, and any person assisting a participant, livestock activity
sponsor or livestock professional. e term “engages in a livestock activity” does
not include being a spectator at a livestock activity, except in cases where the
spectator places himself or herself in immediate proximity to livestock activity;
2. “Agritourism activity” includes, but is not limited to, any activity carried out
on a farm or ranch that allows members of the general public, for recreational,
entertainment, or educational purposes, to view or enjoy rural activities, including
farming, ranching, historic, cultural, harvest-your-own activities, or natural
activities and attractions. An activity is an agritourism activity whether or not the
participant pays to participate in the activity;
3. “Livestock” means any cattle, bison, hog, sheep, goat, equine livestock, including
but not limited to animals of the families bovidae, cervidae and antilocapridae or
birds of the ratite group;
4. “Livestock activity” includes but is not limited to:
APPENDIX III: Farm Animal Liability Acts | 105
a. livestock shows, fairs, livestock sales, competitions, performances, or
parades that involve any or all breeds of livestock and any of the livestock
disciplines, including, but not limited to, rodeos, auctions, driving,
pulling, judging, cutting and showing,
b. livestock training or teaching activities or both such training and
teaching activities,
c. boarding or pasturing livestock,
d. inspecting or evaluating livestock belonging to another, whether or not
the owner has received some monetary consideration or other thing of
value for the use of the livestock or is permitting a prospective purchaser
of the livestock to inspect or evaluate the livestock,
e. drives, rides, trips, hunts or other livestock activities of any type
however informal or impromptu that are sponsored by a livestock activity
sponsor,
f. placing or replacing horseshoes on an equine, or otherwise preparing
livestock for show, and
g. agritourism activities involving the viewing of, handling of, riding of,
showing of, or other interactive activities with livestock;
5. “Livestock activity sponsor” means an individual, group, club, partnership or
corporation, whether or not the sponsor is operating for prot or nonprot, which
sponsors, organizes, or provides the facilities for, a livestock activity, including
but not limited to: livestock clubs, 4-H clubs, FFA chapters, school and college-
sponsored classes, programs and activities, therapeutic riding programs, and
operators, instructors, and promoters of livestock facilities, including, but not
limited to, barns, stables, clubhouses, ponyride strings, fairs and arenas at which
the activity is held;
6. “Livestock professional” means a person engaged for compensation in:
a. instructing a participant or renting to a participant livestock for the
purpose of engaging in livestock activity, or
b. renting equipment or tack to a participant;
7. “Inherent risks of livestock activities” means those dangers or conditions which
are an integral part of livestock activities, including but not limited to:
a. the propensity of livestock to behave in ways that may result in injury to
persons on or around them,
b. the unpredictability of livestock's reaction to such things as sounds,
sudden movement and unfamiliar objects, persons or other animals,
c. certain hazards such as surface and subsurface conditions unknown to
the livestock activity sponsor,
d. collisions with other livestock or objects, and
e. the potential of tack to become dislodged or move in ways that may
result in injury to persons on or around livestock activities; and
8. “Participant” means any person, whether amateur or professional, who engages
in a livestock activity, whether or not a fee is paid to participate in the livestock
activity.
106 | APPENDIX III: Farm Animal Liability Acts
§ 50.3. Scope of liability
A. Except as provided in subsection B of this section, a livestock activity sponsor, a
participant or a livestock professional acting in good faith and pursuant to the standards
of the livestock industry shall not be liable for injuries to any person engaged in livestock
activities when such injuries result from the inherent risks of livestock activities.
B. 1. e provisions of the Oklahoma Livestock Activities Liability Limitation Act shall
not apply to employees of the sponsor or livestock professional in the performance of
their duties who are covered by or subject to the provisions of the workers' compensation
laws of Title 85 of the Oklahoma Statutes.
2. Nothing in subsection A of this section shall prevent or limit the liability of a
livestock activity sponsor, a participant or a livestock professional, if the livestock
activity sponsor, a participant or livestock professional:
a. commits an act or omission that constitutes willful or wanton disregard
for the safety of any person engaged in livestock activities, and that act or
omission caused the injury,
b. intentionally injures a person engaged in livestock activities,
c. provided the equipment or tack, which was faulty, and such equipment
or tack was faulty to the extent that it did cause the injury. e provisions
of this subparagraph shall not apply to livestock activities sponsored by
youth organizations when youth participants share equipment or tack
between themselves,
d. provided the livestock and failed to make a reasonable eort to
determine the ability of the participant to manage the particular livestock
based upon the participant's representations of such participant's ability.
Provided, however, a participant in a livestock show, livestock sale, or
rodeo shall be presumed to be competent in the handling of livestock if an
entry form is required for the activity and signed by the participant, or
e. owns, leases, rents or otherwise is in lawful possession and control of the
land or facilities upon which the participant sustained injuries because of
a dangerous condition which was known to the livestock activity sponsor,
livestock professional or person and not made known to the participant.
3. Nothing in subsection A of this section shall prevent or limit the liability of a
livestock activity sponsor, a participant or a livestock professional:
a. under liability provisions as set forth in the products liability laws, or
b. for livestock activities which result in the death of any person engaged
in livestock activities from the inherent risks of livestock activities.
C. A sponsor shall not be held vicariously liable for the acts or omission of a participant
or a livestock professional.
§ 50.4. Waiver of liability
Two or more persons may agree, in writing, to extend the waiver of liability pursuant
to the provisions of the Oklahoma Livestock Activities Liability Limitation Act. Such
waiver shall be valid and binding by its terms.
APPENDIX III: Farm Animal Liability Acts | 107
Arkansas
Equine and Livestock Activity Statute
A.C.A. § 16-120-201 to § 16-120-202
§ 16-120-201. Denitions
As used in this subchapter, unless the context otherwise requires:
(1) “Equine” means a horse, pony, mule, donkey, or hinny;
(2) “Equine activity” means:
(A) Equine shows, fairs, competitions, performances, or parades that
involve any or all breeds of equines and any of the equine disciplines,
including without limitation dressage, hunter and jumper horse shows,
grand prix jumping, threeday events, combined training, rodeos,
pulling, cutting, polo, steeplechasing, endurance trail riding and
western games, and hunting;
(B) Equine training and teaching activities;
(C) Boarding equines;
(D) Riding, inspecting, or evaluating an equine belonging to another
person regardless of whether the owner receives monetary consideration
or other thing of value for the use of the equine or is permitting a
prospective purchaser of the equine to ride, inspect, or evaluate the
equine; and
(E) Rides, hunts, or other equine activities, however informal or
impromptu;
(3) “Equine activity sponsor” means an individual or legal entity that sponsors,
organizes, or provides facilities for an equine activity;
(4) “Livestock” means swine, bovine, sheep, and goats;
(5) “Livestock activity” means the following:
(A) Grazing, herding, feeding, branding, milking, or other activity that
involves the care or maintenance of livestock;
(B) A livestock show, fair, competition, or auction;
(C) A livestock training or teaching activity;
(D) Boarding livestock; and
(E) Inspecting or evaluating livestock;
(6) “Livestock facility” means a property or facility at which a livestock activity
is held;
108 | APPENDIX III: Farm Animal Liability Acts
(7) “Livestock owner” means a person who owns livestock that is involved in a
livestock activity;
(8) “Livestock sponsor” means an individual or legal entity that sponsors,
organizes, or provides facilities for a livestock activity; and
(9) “Participant” means a person, whether amateur or professional, who engages
in an equine activity or a livestock activity regardless of whether a fee is paid to
participate in the equine activity or livestock activity.
§ 16-120-202. Liability
(a)(1) Except as provided in subdivision (a)(2) of this section, an equine activity
sponsor, an employee of an equine activity sponsor, a livestock sponsor,
an employee of a livestock sponsor, a livestock owner, a livestock facility,
or a livestock auction market is not liable for an injury to or the death of a
participant resulting from the inherent risks of an equine activity or a livestock
activity.
(2) Subdivision (a)(1) of this section does not prevent or limit the liability of an
equine activity sponsor, an employee of an equine activity sponsor, a livestock
sponsor, an employee of a livestock sponsor, a livestock owner, a livestock
facility, or a livestock auction market that:
(A) Provides the equipment or tack and knows or should know that
the equipment or tack is faulty to the extent that the equipment or tack
caused injury;
(B) With respect to an equine activity sponsor, an employee of a
equine activity sponsor, a livestock activity sponsor, or an employee of
a livestock activity sponsor, provides the equine or livestock and fails
to make reasonable and prudent eorts to determine the ability of a
participant to engage safely in an equine activity or a livestock activity
or to determine the ability of a participant to engage safely in an equine
activity or a livestock activity and to safely manage the particular
equine or livestock based on the participant's representation of his or
her ability;
(C) Owns, leases, rents, or otherwise is in lawful possession and control
of the facility upon which a participant sustains an injury because of a
dangerous latent condition that is known or should have been known to
the equine activity sponsor, an employee of the equine activity sponsor,
the livestock activity sponsor, an employee of the livestock activity
sponsor, the livestock facility, or the livestock auction market and for
which warning signs had not been conspicuously posted;
(D) Commits an act or omission that :
(i) Constitutes willful or wanton disregard for the safety of
a participant; and
(ii) Causes an injury; or
(E) Intentionally injures a participant.
APPENDIX III: Farm Animal Liability Acts | 109
(3) Subdivision (a)(1) of this section does not prevent or limit the liability of an
equine activity sponsor, an employee of an equine activity sponsor, a livestock
activity sponsor, an employee of a livestock activity sponsor, a livestock owner, a
livestock facility, or a livestock auction market under products liability laws.
(b)(1)(A) An equine activity sponsor or a livestock activity sponsor shall
post and maintain signs that contain the warning notice specied in
subdivision (b)(2) of this section.
(B) e signs required under subdivision (b)(1)(A) of this section shall
be placed in a clearly visible location on or near stables, corrals, or
arenas where the equine activity sponsor or livestock activity sponsor
conducts an equine activity or livestock activity.
(C) e warning notice specied in subdivision (b)(2) of this section
shall appear on the sign in black letters with each letter to be a
minimum of one inch (1") in height.
(2) e signs described in subdivision (b)(1) of this section shall contain
the following warning notice:
“WA R NI NG
Under Arkansas law, an equine activity sponsor, livestock activity sponsor,
livestock owner, livestock facility, and livestock auction market are not liable
for an injury to or the death of a participant in equine activities or livestock
activities resulting from the inherent risk of equine activities or livestock
activities.”
(c) e immunity provided under this section does not apply to
thoroughbred horse racing as authorized and regulated in the Arkansas
Horse Racing Law, § 23-110-101 et seq.
Texas A&M AgriLife Extension provides equal opportunities in its programs and employment to all persons, regardless of race,
color, sex, religion, national origin, disability, age, genetic information, veteran status, sexual orientation, or gender identity.
The Texas A&M University System, U.S. Department of Agriculture, and the County Commissioners Courts of Texas Cooperating.
Texas A&M AgriLife Extension Service
AgriLifeExtension.tamu.edu
