Q: Recently a bachelor member of our family, S, died. In his will he indicated his land should first be offered for sale to a favoured niece, T. However, W is farming the land and said he does so under a lease agreement with another two years to run. The family has not been able to find any lease agreement nor has W produced such an agreement. T is not willing to buy the land as long as this supposed lease is in place. Can there indeed be a lease without papers? We have already talked to lawyers and are looking for an easy solution.
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A: As a landowner you can lease your land and then sell it, subject to the lease. For example, Able is the owner of section 18 and leases this to Jake for two years but then sells the land to Myrna. She takes the land subject to the lease and becomes Jake’s landlord.
In your scenario, T could buy the land subject to W’s lease. The fact that there is a lease in place may influence the final purchase price. Similarly, one can gift land by will. Again, if the land is leased the beneficiary takes over the responsibilities and rights that the owner had as landlord.
While I recommend that tenants should register their leases to protect themselves, in Saskatchewan, Alberta and Manitoba, leases of three years or less are protected as long as the land is being farmed, even if not registered against the title.
Oral leases have been held to be valid in numerous court cases. The court will look to see if the parties are acting as if a lease is in place. Thus W farming the land and S accepting rent payments would be evidence that there is a lease in place.
In my view, if the terms of the oral lease can’t be established, then we would look to common farming practices to determine the length of the lease. Again, in my opinion, a year to year lease – that is a one year lease that is assumed to continue for the next year – is a common farm leasing arrangement on the Prairies.
Such leases can be terminated by notice given six months before the anniversary date of the lease. Determining the anniversary date of an oral lease can be difficult. What did the parties intend? Did they intend the lease to start when it was negotiated, when it became possible to start farming or when the tenant actually started to work the land? Unfortunately, without a written lease such disputes often come down to a judge deciding which side is the most credible.
In the situation you raise, the executors of the estate will have to determine what course of action to take. If T is not interested in the land, they could offer it to someone else, subject to the lease. They could give proper notice to the tenant that the lease will not be renewed when it expires. Finally, they could seek a court order to determine the validity of the so-called lease. Unfortunately, there is no quick and easy way to determine the rights of parties. Our court system has been set up precisely to deal with questions like this.
Don Purich is a former practising lawyer who is now involved in publishing, teaching and writing about legal issues. His columns are intended as general advice only. Individuals are encouraged to seek other opinions and/or personal counsel when dealing with legal matters.
