Commercial leases involving the lease of croplands may have various options for the minimum/additional rent clause.
An option a few landowners in the agriculture industry may take advantage of is flex rent. It is based on a formula that includes a base rent and weighting additional rent based on varying yield and crop prices. This means agricultural landowners may charge additional rent depending on how much crop the land produces (and sells for). On the other hand, lower crop prices can result in a reduced cash rent price.
Takeaway:
- Drafters of a commercial lease for cropland should consider all the options to their party and the fluctuations in the crop market when drafting the rent agreement.