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S MN | As much as some of us like to do things on a handshake deal... I really would advise getting things down on paper. Life happens, landlords or tenants pass away unexpectedly etc. There should be an agreed upon prorated dollar amount that is "expensed" from the tile improvement over the course of "x" amount of years (IE: $40/acre per year off of agreed upon normal rent etc...- or increase if landlord pays) . If the tenant is removed for any reason, there needs to be documentation of previous agreement if tenant pays for improvement. Several years ago it was more sensible (tax code) for the tenant to pay for tile (179) vs the land owner (bonus if cash rent- differs on shares). I believe that may still be the case. I would start with making sure you have an adequate outlet (IE: 1/2" drainage coefficient) before investing your or the landlords dollars- then go from there. If it is going to cost $1000/acre or more to make the improvement you want to ensure that both parties agree to the mutual benefit, but that the permanent benefit stays with the land. Kind of a walking on egg shells deal, but some of us have the T-shirts from handshake deals. The drainage coefficient is a huge factor that many land owners and tenants don't understand or even think about... If the farm's outlet is subpar, that is the #1 issue to address before proceeding. | |
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Tile and land lords
