Q: What are the rules for terminating an oral year-to-year farm lease? How much notice must be given and how should the notice be given?
A: First, the law will look at the arrangement between the parties to see if the terms can be determined. If so, the terms of the lease will prevail.
For example, Sam has been leasing Joe’s land for the last 10 years, on a year-to-year basis. There is no written lease. Every year Sam and Joe get together in mid-March to discuss renewal of the lease, rental payment, cropping and other issues.
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Both have acknowledged to other people that the lease ends in March, and if “we don’t renew, there is no lease.” There are even witnesses who have heard Sam say at these meetings, “Joe, I offer to rent my land to you again for this year” and Joe saying “I agree to the terms. We have a deal.”
Based on this evidence, a court might find that the parties accept that the lease must be renewed every year in March. Hence, it would be open to one of the parties to refuse to renew the lease in mid-March.
The 2003 New Brunswick case of Vautour vs. Parker illustrates how a court handles oral leases. The Parker family owned the land in question for three generations and in the 1940s began leasing lakeshore land to cottagers.
There were no written lease agreements. Vautour, who had leased his lot for 29 years, sought to sell his cottage and lease interest, but the Parkers refused to allowthe lease to be taken over by the new purchaser. Vautour went to court.
In order to determine the rights of the parties, the court listened to evidence from not only the parties to the case, but also from other people who leased land, in order to determine the terms of the lease.
The court determined that: the leases were for year-to-year with rent paid at the beginning of each cottage season; the landlord retained the right to veto a prospective purchaser; and the landlord had refused to renew leases on several other occasions because the tenant’s family was noisy, left a mess or was late paying rent. The court found that based on past actions, the landlord retained the right to refuse a transfer to a tenant deemed unacceptable.
Notice needed
What if, after listening to the parties, it is not possible to determine all the terms of the lease? In such a situation, the general rule is that a lease can be terminated at the end of the year by six months notice. Assuming that the lease ends at the end of March, notice would haveto be given before the end of September.
In an old Alberta case involving an oral farm lease, a notice given on May 15 to terminate the lease on Dec. 1 was found to be inadequate.
The court found the lease had nothing allowing early termination. Further, there was not a clear six month notice.
If no notice is given, then the assumption is that the lease will continue for the next year on the same terms. Notice must be clear that the lease is being terminated. It should either be delivered to the other party or sent by mail with signature requested.
Given that it is often difficult to determine the anniversary date of an oral lease, notice should be given well in advance to ensure there are six clear months.
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.
