Farm Tenancy Despite No Rental Payment
Tuesday 04 April 2017
A recent ruling in the French courts has once again demonstrated the risks associated of allowing a local farmer even informal use of your land.
In a case heard in the Appeal Court sitting in Nancy, the judges ruled that the existence of a farm tenancy can be established by means other than monetary consideration.
The requalification of a licence to use land (prêt à usage) as a formal farm tenancy (bail rural) is no incidental matter, for it effectively gives the farmer a tenancy for life, which can even be passed on to their successors.
Article L 411-1 of the code rural et de la pêche maritime makes it clear that consideration to the landowner need not necessarily be in the form of a monetary payment, stating:
“toute mise à disposition, à titre onéreux, d'immeubles à usage agricole en vue d'y exercer une activité agricole est soumise au statut du fermage ; ……… La preuve de l'existence des contrats visés dans le présent article peut être apportée par tous moyens."
The question that arose in this case was whether the land had been made available to the farmer in return for a consideration (titre onéreux) paid to the owner.
The law does not state either the amount or the nature of the payment that must be made.
Accordingly, the consideration for use of the land could be in the form of major repairs or improvements carried out by the farmer. In theory, routine maintenance that merely allowed the farmer to make gainful exploitation of the land could not be characterised as proper consideration.
However, in this case the court considered that the erection of fencing, clearance of hedge-growth and weeds, protection of trees and fertilisation of the ground, carried out with the consent of the landowner, amounted to improvement works which went beyond routine maintenance, sufficient to be have created a farm tenancy.
In coming to their decision, the judges undertook a valuation of the works carried out by the farmer, amounting to over €2,000, sufficient in their view to cover the first nine years of the farm tenancy, which they considered to be worth €233 a year.
Readers who may still be in any doubt about how the courts interpret these matters, and the potential problems that can arise for landowners, need only refer to the links below.