In rural New Zealand, it's not uncommon for land to be leased for grazing, cropping, or other agricultural use - often with little more than a handshake agreement or a generic template. While that might seem simple and practical, it can lead to significant misunderstandings, especially when relationships change, ownership shifts, or things go wrong on the land.
At Treadwell Gordon, we regularly help farmers, landowners,and rural tenants untangle lease-related issues that could have been avoided with clearer agreements. Here are five common mistakes we see in farm leases - and how you can avoid them.
Many lease agreements fail to clearly state the length of the lease or whether the tenant has a right of renewal.Without defined start and end dates, or a process for continuing or ending the lease, disputes can arise - particularly if one party assumes the lease is ongoing while the other has different plans for the land.
What to do instead:
Clearly specify the term of the lease (e.g., 3 years) and whether the lease automatically renews, can be renewed by mutual agreement, or ends without extension. Include notice periods for either party to terminate or renew the agreement.
Rural land often includes fences, water systems,buildings, stockyards, and irrigation infrastructure. If the lease doesn’t outline who is responsible for maintenance, repairs, or improvements, issues can arise - particularly if damage occurs or if an unexpected repair bill appears.
What to do instead:
Include a clear clause assigning responsibility for fencing, water supply, farm tracks, culverts, pumps, and buildings. A schedule of infrastructure responsibilities can help avoid confusion and ensure costs don’t fall unfairly on one party.
Without written limits, tenants may overstock or alter land use in a way that degrades soil quality, damages pasture, or breaches environmental rules. This can be especially problematic with sensitive land, long leases, or where tenants are incentivised to maximise short-term returns.
What to do instead:
Specify stocking rates, fertiliser use, weed control, and any permitted land uses. Include provisions for seasonal adjustments or environmental responsibilities (e.g., fencing off waterways, avoiding overgrazing).
Disagreements are part of any long-term arrangement, but if your lease has no process for handling disputes, even small issues can escalate into legal headaches. Without a clear process, both parties may feel stuck or forced to take expensive legal action.
What to do instead:
Include a clause that sets out a simple dispute resolution process,such as meeting in good faith, followed by mediation or arbitration. This can save time, cost, and relationships.
Perhaps the most common - and risky - mistake is having no formal agreement at all. Verbal arrangements or informal emails might seem fine at the time, especially with neighbours or family, but they create legal uncertainty if anything goes wrong, or if the property is sold or passed on.
What to do instead:
Always put the lease in writing, even if it’s short-term or between people you trust. A written lease protects both parties, ensures clarity, and is enforceable if needed.
Whether you're a landowner or a tenant, a well-drafted lease is a smart business move. It protects your rights, relationships, and investment. If you're entering into a new lease - or want to review an existing one - we're here to help.
Get in touch with us to speak with one of our team today.
