Greenhouse industry has new tool: a sample facility lease form

What should a greenhouse owner and a potential lessee consider when formulating a lease for greenhouse space?

Like other industries, some producers are expanding, some are getting ready to retire and unfortunately, some are in financial trouble. MSU Extension has compiled a sample greenhouse lease that includes many things an owner and an operator should consider in leasing greenhouse space. The document includes a sample lease format that is designed to be flexible and addresses issues related to leasing a facility for an entire year, for a single crop such as poinsettias, or for a season such as the spring crop cycle.

By knowing what to consider in advance of signing an agreement, potential misunderstandings can be prevented. Discussed below are a few of the factors the document addresses and includes as provisions.

Payment of rent

Is the rent to be paid in advance or installments? Will security be required from the operator to secure the unpaid installments? If so, what type? Is the rent based on usable or total square feet? Is there a security or damage deposit required?

Property maintenance

If the operator is to provide his labor for facility maintenance, at what point can an outside professional be hired? Does the operator seek owner approval, or is approval already granted if the repair is less than a predetermined maximum cost? Can the operator purchase materials, and, if so, should there be a defined dollar limit before obtaining owner approval?

Costs of operation

If both owner and operator use the same utility meters, how will the cost be split if one party requires a different temperature setting than the other?

Conflicts between owner and operator

A method to resolve conflicts that is specified in the lease can save all parties potential legal fees. How will conflicts be settled? Will conflict resolution be limited to mediation, arbitration, or some other method? 

To order a copy of Bulletin E3141 Sample Greenhouse Facility Lease, visit the MSUE Bookstore at: www.bookstore.msue.msu.edu and request it by the title in a keyword search on that page. Retail cost is $5.00.

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