Legal Risk Considerations of Ag Land Ownership - Allan Vyhnalek

Department of Agricultural Economics Author

11/03/2020 Added

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Allan Vyhnalek is an extension educator for farm and ranch succession and transition in the Department of Agricultural Economics.

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[00:00:10.139]Allan Vyhnalek: Hi, my name is Allan Vyhnalek, with the University of Nebraska and I work as an extension educator, that has statewide responsibilities to talk about farm succession.
[00:00:21.030]Allan Vyhnalek: For this project, or for this video, I've been asked to talk about the ag legal risk considerations that farmers producers and landowners need to consider as they work through this part of risk management. Here's my contact information. I'm on campus on Israel three Philly Hall.
[00:00:42.750]Allan Vyhnalek: I have a website AG econ you know that edu slash succession. And I have an email address, even I like to add you an l.edu. It will also be on the last saw slide is series. So that's how you get a hold of me.
[00:00:57.330]Allan Vyhnalek: As we work through the code. I'm not in my office much very seldom there actually
[00:01:02.670]Allan Vyhnalek: But go ahead and leave a message at that phone number and I will get back to you as your messages are recorded and sent to me via sound file on emails and attachments
[00:01:12.930]Allan Vyhnalek: And I can listen to them and I'll call you back as soon as I can so be glad to get ahold of you if you just leave me a message, I'd appreciate that. So,
[00:01:23.280]Allan Vyhnalek: This Chris consideration things interesting because I'm glad that you decided to sit in. I appreciate you attending
[00:01:30.930]Allan Vyhnalek: This is not a substitute for going to see your lawyer. It's not a substitute for actual legal representation
[00:01:37.530]Allan Vyhnalek: I'm just trying to get you some information so that you can generate your own thought have your own discussion with your family and other business partners.
[00:01:44.580]Allan Vyhnalek: And get you to think about what your goal should be for considering or managing this type of risk.
[00:01:50.730]Allan Vyhnalek: Probably some of this is going to be repeat, so I apologize if there's information you already know, but let's be sure you're up to date and understand what we have going on here with the legal risk.
[00:02:00.840]Allan Vyhnalek: There's all kinds of agricultural risk if you're on a farm, you have risk all the time. You have the market prices get production risky of weather is get human risk financial risk.
[00:02:10.650]Allan Vyhnalek: And today we're going to talk about the legal or institutional risk or the biggest risk of you're losing your business, if you will. So it's just something to keep in mind. And so I think we should get started.
[00:02:24.630]Allan Vyhnalek: So if my catalog road and they cause an accident, somebody runs into a cow, cow and they get hurt or if their vehicle gets damaged in my liable. Well,
[00:02:35.700]Allan Vyhnalek: Probably not, but maybe depends. It probably depends is the best answer but cattle do and can get out. I mean that's that's not that's not unusual data usual of an occurrence. It happens once in a while.
[00:02:48.960]Allan Vyhnalek: These there are accidents properties damaged people can get hurt, but the Nebraska law says that the burden of proof is on the plaintiffs.
[00:02:58.260]Allan Vyhnalek: Which means that the person that had they accidentally hurt your cow or hurt them or vehicle.
[00:03:03.930]Allan Vyhnalek: They have to prove there was a problem because you have to prove that the cattle owner was negligent negligence in this case means that the fence wasn't maintained or there's a gated just flat left open
[00:03:16.290]Allan Vyhnalek: The history. There's no history of cattle being out mean that you always maintain defenses just have to be an aberration and
[00:03:24.450]Allan Vyhnalek: The best way to handle this sort of liability issue is to just have a good general farm liability policy if you have livestock. Make sure that policy covers livestock getting on the road.
[00:03:36.720]Allan Vyhnalek: But again, you don't necessarily want necessarily have a claim against you if you maintain good fences and you don't have used to your account getting out but
[00:03:47.400]Allan Vyhnalek: If there's a problem expected insurance companies always go after that foreign liability policy. And so I should have
[00:03:56.640]Allan Vyhnalek: My neighbors beans or or grapes, or any injury happens because of my herbicide spray that according to the neighbor. And I'm not saying it doesn't happen. It absolutely does.
[00:04:08.490]Allan Vyhnalek: So because herbicide can and will draft a canvas lately major, major concern in agriculture and what I see there is we have
[00:04:16.920]Allan Vyhnalek: farmers farm cooperatives, they will and other chemical spray people they will not apply that camera anymore because of the drift. It's huge.
[00:04:26.370]Allan Vyhnalek: So it does happen, it will happen. So are you are you liable for that injury. Well, deep into that depends to
[00:04:36.360]Allan Vyhnalek: Herbicide drifts a major concern for wineries and organic crop production because organic cannot have any chemical on and wineries if they get a sniff of to 40
[00:04:45.510]Allan Vyhnalek: Or kamba they look like the lower left picture in this is slow, producing my supply the app. This but the bottom line is the producer has to apply that chemical according to label.
[00:04:56.580]Allan Vyhnalek: Or they can be liable. They can be sued.
[00:04:59.580]Allan Vyhnalek: But it's so it's a great idea to record the weather conditions. Every time you start an application and and I probably should have it on the slide.
[00:05:06.990]Allan Vyhnalek: Which also record how much material you're applying all the things you're supposed to do. For the record keeping.
[00:05:12.210]Allan Vyhnalek: How much material you're applying and how many gallons of water, what's your, what's your pressure was whatnot, what nozzle tips used all those kinds of things.
[00:05:19.860]Allan Vyhnalek: And record wind speed, wind direction wind and temperature. Every time you start applying please do that it's important
[00:05:27.840]Allan Vyhnalek: And the best thing that will happen I that then is that if you apply within your label directions and drift still occurs and it does Nebraska Department of Ag has has has not found negligence against the producer.
[00:05:42.810]Allan Vyhnalek: I can tell you that I've talked to Nebraska Department badge inspectors that will absolutely say if I have a producer that's following
[00:05:50.040]Allan Vyhnalek: The label directions is under the wind tolerance and has done everything correctly and they have a drift, the neighbor calls into drift and says, hey, this guy drifted on me.
[00:06:00.330]Allan Vyhnalek: I will not find them liable because they follow the label. Sometimes it just happens. However, if you don't have this evidence if you don't have this
[00:06:09.720]Allan Vyhnalek: This this material derived collection of data, then you're you can you can have a while the liability issues to just
[00:06:18.240]Allan Vyhnalek: I think I've covered that. Well now, so if you have questions, make sure you let somebody know and find out. Contact your local AG AG Peter and the crops educator and they can help you with that.
[00:06:28.440]Allan Vyhnalek: Have a semi truck and tractor trailer and I have my hired hand take corn to desktop plant, he or she has had an accident, am I responsible
[00:06:39.330]Allan Vyhnalek: So first of all, I always make sure you have that equipment. Good, good repair have good tires on it. Make sure the brakes work, you know, all those things you should have done to make sure the safety of that vehicles in good working order in good repair.
[00:06:52.950]Allan Vyhnalek: But the injured person. And for instance, if somebody in this car here they've had an accident.
[00:06:59.520]Allan Vyhnalek: They consume the driver, but more likely they're going to sue the employer or both, okay, they're good lawyers just expect a lawsuit. If you're my driver has a has a
[00:07:11.280]Allan Vyhnalek: Has a problem you're responsible for the actions both good and bad and employees. That's the way the law reads my understanding.
[00:07:20.100]Allan Vyhnalek: And be sure your vehicle insurance is valid for the employee for the drunk or the employee driver and have good coverage.
[00:07:27.090]Allan Vyhnalek: In other words, make sure that you have that driver listed on your policies that they can be covered and to make sure you have adequate coverage and you may want to review that coverage and make sure that you have enough insurance.
[00:07:39.720]Allan Vyhnalek: Now, the little caveat I would throw in here that's different, as we go forward is some have considered putting their truck or trucks into a separate Corporation
[00:07:50.670]Allan Vyhnalek: I little, little typo there like a Limited Liability Company Corporation to try to lessen their liability here are trying less little bit less than their load here.
[00:08:01.920]Allan Vyhnalek: Meaning that if I put my drop my semis into their separate LLC and they operate separately from the rest of the farming operation if there's a problem if there's an accident.
[00:08:12.750]Allan Vyhnalek: Then it the first line of defense is that that LLC is insurance LLC with LLC itself would have to buy the insurance for the policy.
[00:08:20.940]Allan Vyhnalek: For those vehicles and then after that's exhausted. They can come and get the trucks or the what's left to that aspect as soon as there's only one and there's, it's been an accident and
[00:08:32.250]Allan Vyhnalek: No more liability can occur at farming operation because that LLC, separate from the farming operation.
[00:08:38.160]Allan Vyhnalek: But in order for that LLC to be valid. You have to make sure that you follow all the rules of the corporation.
[00:08:46.380]Allan Vyhnalek: Other words, you have to make sure you pay the driver to the LLC, right, I'll see itself has to be able to pay its bills like for diesel fuel and oil changes and equipment repair and everything.
[00:08:57.000]Allan Vyhnalek: And then you have to through your other means pay the LLC for doing the truck. In other words, you can't just create an LLC or this kind of corporation and and not have it received money and pay out money and have regular corporation annual meetings and all those kinds of things.
[00:09:14.640]Allan Vyhnalek: So that its operating correctly. And again, don't i don't know a lot about how this all works in detail. Make sure you contact a lawyer about this kind of help to get an LLC set up for
[00:09:28.200]Allan Vyhnalek: Your trucks, but it's a way to separate them from your other assets like the land and
[00:09:35.430]Allan Vyhnalek: Create create a little bit of background reinstallation. The big thing is have good insurance makes your club truck works right can make sure your drivers competent and and you know they won't have a record was completely avoidable.
[00:09:48.030]Allan Vyhnalek: Okay I allow someone to hold my ground and they get hurt, and my liable if you're allowing someone to hold your ground you should probably post this little warning.
[00:09:59.100]Allan Vyhnalek: And because they just changed the law here. The several years ago, four or five, six years ago now under the
[00:10:07.020]Allan Vyhnalek: The agro tourism agritourism act and it says that it but the way it basically, what it says is if I allow somebody to come down on the ground and they get hurt.
[00:10:18.120]Allan Vyhnalek: I am not liable because I allow them to have my ground I let them participate in eco tourism activity, but also understand that.
[00:10:27.660]Allan Vyhnalek: That if you don't charge for that, then you have no responsibility for their lives, their injury that was kind of on them.
[00:10:35.820]Allan Vyhnalek: Because it did last statements you are assuming a risk of participating in agritourism activities which you're entering the owners premises.
[00:10:42.840]Allan Vyhnalek: So if you were there and you got hurt that that's just the way it goes is part of being 100 part of being a horseback rider part of being a four wheeler, and for really operation or side by side.
[00:10:54.990]Allan Vyhnalek: excursion, that sort of thing. So you should have something like that posted. You can look that up fairly quickly. You don't have to worry about trying to write this down. I noticed too many words you look that up quickly.
[00:11:04.620]Allan Vyhnalek: On on on that that law under that website. I've heard day I'll be 329. This also includes not only hunting but fishing swooning boating kayaking canoeing tubing watersports camping camping, hiking, all that sort of thing.
[00:11:19.050]Allan Vyhnalek: So you can read that. But it's also ecological studies archaeological site studies or seeing scientific studies and other similar activities. There's words.
[00:11:27.990]Allan Vyhnalek: It's not only for hunting, but other recreational purposes, including a bunch more that I would consider to be fringe recreational hers.
[00:11:34.740]Allan Vyhnalek: But again, if you let somebody use your ground for recreational purposes horseback riding, for instance, they get hurt. You're not liable. Now if you charge somebody use your ground.
[00:11:47.160]Allan Vyhnalek: Then is this doesn't apply quite as well. Then you have to be, then you have to make sure that you don't have an attractive nuisance out there.
[00:11:53.910]Allan Vyhnalek: You don't have a you have all your whole sticks and that's where things. They can't just fall into a hole. If you have a whole there that's not fixed, make sure it's posted or if there's
[00:12:01.680]Allan Vyhnalek: Some kind of a flag or something in place to make sure they're not going into that thing again check with your lawyer for specifics, but I'm just bringing up the issue is something to consider.
[00:12:11.280]Allan Vyhnalek: On to the next item agritourism walk continued, you can still be liable if you don't guard guard against dangers.
[00:12:17.700]Allan Vyhnalek: You failure maintain your property properly, you have deliberate misbehavior. In other words,
[00:12:23.310]Allan Vyhnalek: This is kind of this kind of weird to me. Um let somebody go out there and hunt and I'm going to set up some kind of trap. So if they walk through something or do something something battle. I can't imagine somebody would do that or consider that, but
[00:12:36.450]Allan Vyhnalek: I didn't fall falling to follow the requirements for your land just good land management requirements like capping allowed have somebody fall into it.
[00:12:45.510]Allan Vyhnalek: But as your job, you have that couch. So you can still be hard held liable. But by and large, you are not liable.
[00:12:53.700]Allan Vyhnalek: Again, for all of these good liability coverage is your, your best defense. It can be tied to your regular property insurance coverage. I know that I own farm ground and sling County.
[00:13:04.200]Allan Vyhnalek: And I have my liability coverage tied to my homeowner's insurance for my house here in Lincoln is typically not
[00:13:10.980]Allan Vyhnalek: That expensive. I think it's 150 hundred $70 a year and it's well worth that investment to keep that ground safe not have somebody over some injuries. I just, I tried very hard not to create. So that's, that's incredible that's that's those there's those items that I needed to talk about
[00:13:30.210]Allan Vyhnalek: For agritourism operations. However, if you're gonna if you're going to have a hunting for a fee pumpkin farm, pick your own strawberries are those kinds of things.
[00:13:38.040]Allan Vyhnalek: To get additional insurance. It's not covered by regular production policies consult a lawyer or insurance professional to get appropriate coverage.
[00:13:45.510]Allan Vyhnalek: So make sure that if you're doing this hunting for a fee are coming out and you you're charging people to go pick pumpkins or pick your own strawberries and we'll pay by the pound, that sort of thing. Get that get additional insurance then to handle those kind of liability issues.
[00:14:03.450]Allan Vyhnalek: Okay onward fencing.
[00:14:06.690]Allan Vyhnalek: I have no livestock. There's no fence between my neighbor and myself, but my neighbors come to me now, and said, hey,
[00:14:13.230]Allan Vyhnalek: I think that there's coordinate field this year and we want to raise our catalog, the corn stocks this fall.
[00:14:19.740]Allan Vyhnalek: You need to put up half the fence. So as a landowner across the fence for my across the property line from enabled. You have to put up a fence. Am I required
[00:14:28.680]Allan Vyhnalek: To put up a fence for my neighbors, and I don't have can guess what the brass guys offensive line. Guess what it says.
[00:14:36.240]Allan Vyhnalek: landowners are required to equally split the cost of the fence you meet in the middle of the property of that of that boundary between the two property owners. You look right and as your
[00:14:46.140]Allan Vyhnalek: Chance to build and maintain you know your level are responsible for putting in that fence, even if you don't have last doc. I'm sorry to report that and fence to disputes.
[00:14:56.130]Allan Vyhnalek: Are the big change that law for about 10 years ago now is a fence disputes are settled by a court and judge, but not by a township board now. Can I ask you to put in a a poly
[00:15:11.790]Allan Vyhnalek: Six board fence, like you see around six or eight board fence, like you see around properties in town and he asked you to put up something fancy know you just follow the fence law, which talks about
[00:15:22.710]Allan Vyhnalek: Posts, it is so many feet of interval. I think it's mine. Rod rod which is 16 to 30 feet.
[00:15:27.750]Allan Vyhnalek: And what kind of post you put in. How many wires you put it as is typical for wires and you just assume playing a barbed wire for a wire fence and as so many feet apart you
[00:15:36.480]Allan Vyhnalek: Can find a pencil online. You don't have that all defined by you are required to put that up in many cases the landowner that not there and absentee landowner that has a neighbor that once a fence up
[00:15:47.820]Allan Vyhnalek: Will just help that neighbor pay for fencing and they'll put though that the neighbor that has livestock and put the fence up for them, they'll, they'll try and work with people if they get some of the costs covered yes only correct
[00:15:58.260]Allan Vyhnalek: I know that in certain instances. I know farmer, for instance, that rents.
[00:16:03.210]Allan Vyhnalek: Several hundred acres of corn stocks and he just puts up a one wire electric fence during cornstalk season. And since it's not permanent. It's not year round. He just goes in and puts it up.
[00:16:12.660]Allan Vyhnalek: He doesn't worry about contacting neighbors and have them cover half of that he just puts it up has cattle graze and it takes back now so
[00:16:19.410]Allan Vyhnalek: depends on your situation depends on what's going on. If they want to permit fence as a land or you get to pay for your half, no matter how whether you have that last soccer. No.
[00:16:28.980]Allan Vyhnalek: written lease agreements, another legal thing I wanted to talk about because I talked about all time of the talking about that this republic close to 15 years. Now, it's important to have one, you really need to have written least agree, especially with relatives.
[00:16:44.610]Allan Vyhnalek: Have to lease in place, not for you. But for those that follow you. And the point is
[00:16:53.190]Allan Vyhnalek: I am these my farm ground to my brother, he and I got to kind of figure it out. We know we're going to do what we know we're not going to do if we didn't have a written least in place.
[00:17:02.250]Allan Vyhnalek: One of us has gone one of the scanner unexpectedly one of us can answer for myself for ourselves.
[00:17:08.700]Allan Vyhnalek: And so now my son or my wife and my wife and my son and my daughter have to figure out how to deal with my brother and nothing's written down, guess what.
[00:17:16.650]Allan Vyhnalek: there's ambiguity. There's, there's, there can be a trust issue there could be there could just be problems. So just get things written down since you know what you have going on.
[00:17:25.350]Allan Vyhnalek: Because you're not writing the lease down and writing all the provisions down for yourself, although that helps your writing it down for those that follow you.
[00:17:33.840]Allan Vyhnalek: And you also need to to record the specifics of what's happening for the business arrangement for that property builders, things like, Who's, who's taking care of
[00:17:44.850]Allan Vyhnalek: The fence who's taking care of the non crop acres in terms of we control and to volunteer tree control, that sort of thing.
[00:17:51.570]Allan Vyhnalek: How are they, how, for instance in crop share how they expenses being shared who's covering what part of seed who's covering what part fertilizers and carbs. What part of the irrigation fuel that's for all cases even around that cashless bailing. The point is,
[00:18:06.420]Allan Vyhnalek: All the, all the specific so those leases should be recorded and see you know exactly what's going to happen if there's hey how's the hate, hate going to be handled in terms of rent and who's going to pay what not based on what price and
[00:18:17.910]Allan Vyhnalek: Just get that stuff right now so important to our beliefs written down.
[00:18:23.580]Allan Vyhnalek: And so if you're a huge debate, I guess I got to make this point again. And it's important to make this point again.
[00:18:31.230]Allan Vyhnalek: The written list is more important for those that follow you in case you are unexpected and capacity to effectively. It's really important to have that. So there's no loss of trust as well. Ambiguity all those kind of things can kind of put
[00:18:45.330]Allan Vyhnalek: The things I've written Lisa says to set a date for started into the lease and the other words this day Disney starts on March first and ends on February 28
[00:18:54.870]Allan Vyhnalek: Terms for notice determination renewal. Okay, so where do I go to the least starts march 1. So what am I gonna let you know there's going to be terminated for the next lease.
[00:19:03.570]Allan Vyhnalek: That you don't have four months ahead of time, six months at a time, nine months at a time when you need to know just set that date.
[00:19:11.310]Allan Vyhnalek: Renewal is can be different determination and least beginning and we Sandy, you know, mean that as, for instance.
[00:19:19.110]Allan Vyhnalek: I know that in in Nebraska. We have landowners. There's no purpose and so don't want to leave late October mid November, maybe RIGHT AFTER THANKSGIVING TO GO DOWN TO ARIZONA or Florida or Texas or wherever they go.
[00:19:31.260]Allan Vyhnalek: To be snowbirds and so they'll want to get their lease for 20 any won't come back until April till around Easter.
[00:19:37.500]Allan Vyhnalek: But they will they'll want to get their least put in place with at least rate put in place for 2021 now in the fall. I'm recording this and late October 2020 and I want to get this all put in place so that
[00:19:52.590]Allan Vyhnalek: Come march 1 whatever the there at least starts. It's all done, it's all set. If it's a cash least you want to set the rate and all that sort of thing before they leave for the South.
[00:20:01.380]Allan Vyhnalek: And so that's that renewal thing we're talking about maybe the turntable going to keep the same target keep the same tenants are happy with that. But then now we just discuss what that rates. So it's just some to do some to keep track of and something to be on top of
[00:20:15.450]Allan Vyhnalek: Designate responsibilities will parties are kind of talked about that in the last slide. Just make sure as you have who's covered wide when it's going to get covered all those kind of things so that both parties know exactly what's going to happen to them and what their response.
[00:20:28.320]Allan Vyhnalek: And a designated conditioned if if in the future of one party passes away, or one parties and capacity. In other words, if I'm gone.
[00:20:35.520]Allan Vyhnalek: Who's gonna who's going to work on the leases landowner for my property. Well, I've already designated through my trust. It's going to be my children.
[00:20:43.410]Allan Vyhnalek: Now, my wife and my children. And so everybody needs to have that kind of designation in. We need to make sure it's the least arrangements talk about that too. So there's no ambiguity there.
[00:20:54.330]Allan Vyhnalek: So just, just something to consider. And you can get specify a wide variety of other conditions that you need to worry about, like, like for instance.
[00:21:03.930]Allan Vyhnalek: If you have a water restriction on how much water you can pump so many acre inches per year on your on your ground are so many creatures over a five year period or three year period or whatever your, your district.
[00:21:16.710]Allan Vyhnalek: Your energy districts, allowing you have to put in provisions to
[00:21:21.060]Allan Vyhnalek: Cover, what happens if that farmer over applies water during the period that they have the ground rented and then he just turned around, back to you. So I'm done. And there's no water. Water
[00:21:31.890]Allan Vyhnalek: Water is used up and that that's a problem about that's like. So that's the example with these other conditions are
[00:21:39.390]Allan Vyhnalek: So the summary for this talk today just to get you thinking to constanta used to get you to green thinking about what you're going to do is make sure you have good liability insurance cover all those things I talked about earlier.
[00:21:50.250]Allan Vyhnalek: Post your property properly post your property properly. If you have a big agribusiness tourist business and make sure you have agritourism the insurance to cover that.
[00:21:59.880]Allan Vyhnalek: You have you're responsible for your fence. If you need one and keep it in good shape and absolutely have written, Lisa. So some of the things I talk
[00:22:07.440]Allan Vyhnalek: Now for the project people that I'm recording this for I got this part of my lesson and I got some lessons. Some optional stuff or some other additional things for you to watch on the state planning.
[00:22:16.470]Allan Vyhnalek: That's also part of the egg thing and if you for others that are watching this and are part of the nice thing the estate planning stuff is that that website that I talked about.
[00:22:25.680]Allan Vyhnalek: AG econ you and els.edu succession. Look for my state planning videos there and you can get some more information there for these private people I'll try and send you some suggested links suggested videos for you to watch
[00:22:38.550]Allan Vyhnalek: Or I'll make a record something for you. We'll see how that works out.
[00:22:41.880]Allan Vyhnalek: Anyway, I'm Alan and I come to university Nebraska extension educator for farm succession. Today I talked about egg legal risk considerations and issues.
[00:22:50.430]Allan Vyhnalek: If you have questions, there's my email address. There's my phone number. I'll be glad to help out. And thanks very much for watching. I appreciate a lot

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Legal Risk Considerations of Ag Land Ownership - Allan Vyhnalek

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