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MN | To make a flex rent contract "fair", the base rent really should be the tax bill. That is really the true cost of the ground. You would beat the base (well, unless you're in Nebraska??) if you take a percentage of crop at an average price of the year, and the top end it pretty much wide open. Also, the base should adjust depending on area because taxes= rates change for whatever reason. Maybe I am thinking wrong but it makes the most sense to me. If the LL wants a higher base rent, you need to find out why they want a flex in the first place. Just so they don't miss out on the big bucks if the stars align? I say if there is a high base rent ("high" is up to you and the average rents in your area to determine) there should also be a ceiling placed on the bonus.
I guess the other factor you may run into, especially if the base was set in the $5 corn period, is what happens if the base is too high? Or if it is set today, what happens in 2 years if the LL feels the base is too low? It all comes back to share cropping being the most fair way of doing things. But it is up to you and your LL to agree on something that you feel is fair.. Easier said then done for some. | |
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Flex Rent
