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Lease of livestock
The leasing of livestock is predominantly carried out in the dairy
industry, with the seasonal leasing of dairy milking cows. Owners of
dairy cows lease their livestock to other farmers to use as part of the
herd and to be milked for the season. The lease is usually secured by a
General Security Agreement under the Personal Property Securities Act.
This enables the livestock owner to repossess the cows in the event of
any breach of the agreement.
Some of the standard terms of the agreement include: a rental payment
for each cow, the ownership of the calves, the condition score of the
cows at the end of the leased term, somatic cell count, condition score,
TB status and liability for deaths. The legal terms for the parties are
bailor and bailee (owner and lessee respectively) and the formal
document is normally known as a bailment agreement. Included in that
bailment agreement can be a specific security over the livestock,
registrable under the Personal Property Securities Act 1999. The
specific security agreement can be registered on the web based system,
enabling the bailor to enforce their rights against the bailee.
It is important that if the bailee is a sharemilker, that the bailor
insists that the consent of the landowner is obtained, for the bailor to
enter onto the land for the purposes of exercising their rights under
the specific security agreement. Otherwise the bailor will be a
trespasser and the farm owner and the bailee can prevent the bailor
exercising their rights. The farm owner who has a financial interest in
the cows being milked, will not want them removed during the season.
Leases of Farm Land
Informal leases of farmland are very common throughout New Zealand. In
many instances, the leases are either oral and the only evidence of the
lease is the monthly invoice. Sometimes the lease is by an exchange of
letters, and less frequently formal leases are entered into.
If a lease is to run for a reasonable period of time and routine
maintenance and fertiliser applications are required, it is important
that the responsibilities of the landlord and tenant are documented.
There is no specific requirement that once a lease is for a set number
of years it must be in writing. However like all contracts, it is in the
interests of the parties to reduce the possibility of any conflict or
ambiguity as to each party’s responsibilities. A formal lease provides
certainty. Incidentally, there is no maximum statutory term for the
lease of farm land in one title, but there is a maximum term of 20 years
for the lease of part of any land in one title.
Some essential terms are:
- Rent
- Payment period
- Term
- Area
- Land use type
- Default interest rate
- Liability for rates/insurance
- Drain Maintenance
- Weed spraying
- Fertiliser application
- Hedge trimming
- Track upgrades
- Cropping
- Nominated arbiter
Please
refer to our
disclaimer.
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