Grazing agreement

About this document

Most of our competitors sell grazing agreements that are either short term common law tenancy agreements or agricultural leases that restrict the tenant to using the land for the single purpose of feeding livestock.

Using a lease to achieve the end is fine, but doing so gives the tenant certain rights at the expense of the land owner. For example, the landlord must notify the tenant of his intention to end the grazing lease well in advance and in a certain way. Letting under a lease or a farm business tenancy (FBT) agreement may also have unintended tax consequences for the land owner, in that eligibility for certain tax reliefs (such as business property relief or BPR) and subsidies pass from the owner to the tenant.

This agreement is different, in that it is a contract to take what grows on the land rather than a license to occupy. Because it gives the licensee no rights of occupation, no exclusive possession, no renewal rights and no succession rights, the land owner concedes far less than he or she would do under a grazing lease.

This agreement can be used for livestock of any type, including sheep, horses and cows. It is suitable if there is a shed, shelter or barn on the land, but the building must be used for the animals only and no provision can be made for the upkeep of the building by the tenant. The landlord must maintain the land and buildings.

The law relating to this document

The legal background to grazing agreements is, in our opinion, quite interesting and worth a short note.

Farm tenancies require the landlord to comply with the obligations set out in statute law that give and protect the rights of the tenant. The law attempts to rebalance the power between tenant and landlord, for example, restricting the landlord's access to the land, or the notice period which he can give the tenant.

Loopholes in the law have been closed over the years, to the point where any contract that allows a land owner to receive payment in return for letting someone else occupy the land is construed as a tenancy agreement, even if the written contract is dressed up to look like a licence agreement.

To make matters worse for the land owner, a faux license is likely not to contain provisions that protect his rights in the same way that a proper lease would do, for fear of looking like a lease.

This grazing agreement is neither a lease nor a license to occupy. It is known in law as a "profit à prendre", and the effect of it is to grant a right to buy a crop and to take the crop using animals to graze the land. To qualify as a profit à prendre, a single specified crop must be sold (in this case grass) and the collection of the crop must take less than a year.

When to use this agreement

This agreement can be used when the grazing land will be used:

• for 364 days or less (a 9 month contract is often used as it gives the land time to recover)
• only for grazing animals on grass
• for any type of animal, including livestock and horses

Note that this agreement does not permit other uses such as breeding or equipment storage. Both require formal agricultural leases. This grazing agreement is confined to “taking a crop” of grass. The law is unspecific as to where the line should be drawn.

If there is a building or shelter on the grazing land, you should be able to use this agreement, provided that the building will only be used for the animals, and not for other purposes.

We suggest that if you are in doubt, you should refer to our information page: Choosing between a land lease, an agricultural tenancy agreement and a licence.

If your "tenant" is a farmer or a business (as examples, a cattle or sheep farmer or a livery yard or riding school owner), then you should consider using a farm business tenancy agreement. If the land will be used for non-agricultural business use, a agricultural property lease for non-farming business use is likely to be more appropriate.

Practical considerations

You should enter into the contract “with your eyes open” as to the damage to the surface of the land which can be inflicted by over use and by wet weather. If the licensee is to graze 4 pet sheep on the land, the damage is likely to be very different to that caused by a herd of cows. You can help to protect your land by granting a licence for much less than a year, allowing the field or pasture to recover.

Remember that different animals eat different plants. It might be a good idea to alternate the types of livestock allowed on the land so as to keep certain species of plants from overwhelming others.

The terms of the licence should be kept very simple and must apply only to the purpose of grazing. Responsibilities for mending gates, and undertaking any long term improvement should be left unspoken as responsibilities of the landlord.

Agreement contents

The grazing licence covers the following:

• The sale
• The grant to the buyer to access the land
• Payment
• Interest
• Use of services
• Condition and repair
• Restrictions on the licensee
• Positive obligations of the licensee
• Licensee's indemnity
• Access for Licensor
• Transfer and alienation
• Other matters