“Get it in writing.” These are the four words that Tiffany Lashmet, Extension ag law specialist, expects will be etched on her headstone.
Whether talking ranch and farm leases, or family estates on behalf of Texas A&M AgriLife, Lashmet repeatedly reminds her audience of the importance of written agreements. She would tell you it’s her pet peeve. But it’s not her only one.
“I hate my football team giving up third-down conversions when we’re on defense,” she jokingly said.
Just as a good defense requires strategy, Lashmet believes agricultural agreements do as well.
Undocumented pacts leave individuals unprotected, she said, as evidenced by the countless testimonies she has heard. Here are six documents she urges producers and landowners to have in writing:
1. Farm and ranch leases. “We need to make sure both parties are on the same page when it comes to that lease,” she said. “That’s important. No matter who you are, how long you’ve been leasing and how good of friends you are, put it in writing.”
It doesn’t have to be complicated or adversarial. “Sit down and do it together if you want to, but have something that spells out, ‘Here’s what we’re going to do if X, Y or Z happens.’”
Lashmet gives an example of partnering with older landowners.
“A bunch of ag land is going to transfer from this generation to the next in the next 10 to 20 years, and that handshake deal you’ve got with Grandpa, who’s never given you any hassle, won’t be with Grandpa anymore,” she says. “It’s now going to be with Grandpa’s kids or his grandkids or Grandpa’s new wife, right after Grandma died. That happens a lot.
“And if you don’t have a written lease, you’re not protected.”
For tenants, they need to record the lease in the courthouse deed records. This is especially important if the land sells during the term of the lease.
“Here’s the way it works in the law: If you’ve got a lease on a piece of property, if you buy with notice — meaning you knew about the lease — the lease continues. You just step into the shoes of the selling landowner.”
Lashmet describes three ways to give notice:
An actual notice is when you tell the buyer a lease exists. It’s often included in the contract.
A constructive notice is when a reasonable person should have known a lease existed. “Don’t rely on that,” she said.
A record notice is a document filed in the deed records. “Whether the buyer ever looks, they’re deemed to be on notice,” she said.
Tenants concerned about having their lease as a public record can do a memorandum of lease. “All it needs to say is what property it is, who is leasing it and the terms of the lease. Both parties need to sign it, notarize it, file the deed records, and now you’re protected if that property sells,” she said.
2. Easements. “If you are crossing someone else’s property to get to your own, you have got to get that in writing,” Lashmet said.
People will say that in Texas, there’s no landlocked property. “That’s absolutely false,” Lashmet emphasized. “If you’ve got a landlocked piece of property and you can’t get your neighbors to agree to give you access, there are some legal options. There are things you can try. You’ve got to go to court, file a lawsuit, prove certain elements that can be pretty tricky to prove, and maybe the court will grant you access.
“If you can’t successfully prove the required elements, you’re landlocked and you can’t get to that property. And you can’t borrow against it, because nobody is going to lend money on property that has no legal access.”
A landowner will also have a difficult time selling that property unless they get a cash buyer who’s willing to buy landlocked property, she added.
Lashmet warns against handshake agreements. “The best thing to do is get that in writing.” Also, record it in the deed records.
“If Grandpa owns the property and he’s crossing his neighbor [property], and Grandpa doesn’t record his easement in the deed records, when they have different landowners and there’s no easement, the handshake deal doesn’t matter. Also, people will say, ‘I’ve been using it for 30 years. I can automatically keep using it.’ No, it’s not that simple.”
Easements can be in perpetuity, as in indefinite, or for a specific time period. Either way, Lashmet recommends being specific about how the easement will work and how many people can use it.
They can be drafted for a specific time period, specific person or a specific purpose. She suggests contacting a lawyer for guidance.
3. Wills. “I cannot tell you the stress level it puts on a family when somebody dies without a will,” Lashmet said. “By virtue of being involved in ag operations, you have a complex estate. You can’t use the wills on the internet for $39.99. So please, it is well worth it to get a will drafted by an attorney.
“I promise you, the money you will spend having a lawyer craft a will is a fraction of what your family is going to spend to take the estate through probate if you don’t have one.”
A will in Texas can either be handwritten or typed. Verbal wills are not recognized as valid.
“The money you spend getting your will set up is going to be minuscule compared to what happens if you have to go through an intestate probate or if there’s some sort of contested situation when you die,” Lashmet said.
“If you want to save money, spend it now,” she said. “Make sure your assets go where you want them to, and you’ll save money in the long run.”
4. Advanced health care directive. This is another document for end-of-life planning purposes. It’s an “instruction to your doctor about whether or not you want artificial life-sustaining treatment in the event you are diagnosed as terminal or irreversible,” Lashmet said.
In Texas, a statutory form is available online and is easy to complete. “Fill in the blank. You can either have it notarized or signed by two witnesses, and you’re good to go,” she said. “It’s a big gift to your family to know your exact wishes, if this difficult decision has to be made.”
5. Medical power of attorney. This document lets you choose the person who will make medical decisions on your behalf if you cannot make the decisions yourself. Like an advanced health care directive, fill-in-the-blank forms are available online.
6. Durable power of attorney. For this document, you designate the person who would act on your behalf, if you cannot, in financial or business matters. A statutory form is available online.