How To Adjust Rental Payments When Tenants Own the Center Pivot
Center pivots comprise three main components: the pump, power unit and pivot. Traditionally on leased cropland, the landowner owns the pump and pivot. Depending on the area of Nebraska and available energy sources, the power unit may be owned by the landowner or tenant. Ownership of the pump and pivot by the landowner creates greater flexibility for the management of the land when terminating the tenant or selling the property.
There are instances where the ownership of the pump and pivot are divided between the landowner and the tenant. These scenarios can create complications. Before a lease with divided ownership is entered, a written lease agreement should be signed. This lease agreement should clearly state the ownership of each component, responsibilities of each party, and provisions regarding lease termination. This Center for Agricultural Profitability article will discuss some of the considerations and challenges of this scenario.