Timber Leases

We have lots of experience with terminating timber leases and how to prepare for the day when the rent stops coming in and then you have to manage the land, post lease. This can be somewhat daunting as many leases have been in place since the 1950’s before some owners were even born.

Waiting until the property is turned over at lease expiration is way too late to get a grip on what will happen at the end of the lease term. Some serious hand holding should be done between the land owner/ lessor and the vacating tenant/lessee during the last five years of the lease.

Many long term leases are somewhat vague in regards to what is the condition of the property that will be left when the term ends.

Some serious litigation has occurred between lessor/owners and lessees about lease termination performance issues and interpreting what good forestry practices are relative to the 1960’s and today.

We are starting a project now on estimating what the condition should be at lease termination for some clients to make internal decisions.

Like most forest holdings there are numerous stands that will be harvested or thinned during the last years of the lease. Questions arise like, what will we get when its over? Will we get what we are supposed to get when the property reverts back to us? Who is going to fix our roads and crossings? Who will assist us going forward under our management plans? Do we even have a plan?

Unfortunately many leased fee owners do not have a plan and many forget or ignore the rights of the lessee who owns the timber until the lease is over. The buzzard coming home to roost can get real very fast.

We suggest having a professional forestry consultant work closely with the timber lessee especially during the last five years of the lease to try to estimate what the property and stand conditions will be. This helps to quell discord and full scale war.

Forecasting operations based on tenant plans and estimating stand ages by specie, merchantable or pre-merchantable volumes or ages at the end of the lease will burn up a laptop with what if scenarios.

Since the future is unknown and biological risks and losses can not be contemplated current prices and practices are used to make such forecasts. Nobody has a crystal ball in the timber industry ,especially during these days.

This post is not designed to explain all the procedures but to inform land owners to not go to sleep at the wheel and wait until the horse is out of the barn and running down the highway to begin this complicated process.

If you or your family is facing a similar situation we will be glad to discuss how we might assist in the orderly transfer of the property back to you at lease end. We have seen how a much better transition can occur and the possibility to save thousands in legal fees if folks get their lips all stuck out and go to law suiting, as a friend of ours used to say.