Pay Rent Right, Every Time

Most rent mistakes are small ones: a payment figured from last year's terms, a check sent to an old address, a split payment nobody wrote down. Rent goes smoothly when four things line up — the terms, the math, the approval, and the record.

Four steps, in order

1. Terms. Start from the signed lease: the amount or formula, who gets paid, each person's share, and the due dates. 2. Figure. Set the payment schedule, or plug in the flex-rent numbers. 3. Approve. Check anything unusual before the money goes out. 4. Pay and record. Send it, note the date, and let the landowner know.

One habit for each kind of rent

For cash rent, write the schedule down as soon as the lease is signed — including split payments and rent that goes to more than one person. For flex rent, keep the formula with the lease and save the numbers you used — price, yield or revenue. How you got the number matters as much as the number. For crop share, keep each person's share tied to the lease and the crop year, and save the settlement sheets.

Ask before you send

Does this payment match an active lease? Do the payees and shares match the signed lease? Are recent lease changes included? Can the landowner get a clear statement, and can your bookkeeper get a clean record? Five quick questions catch most problems while they are still cheap to fix.

Finally, close the loop after the money moves. Match each payment back to the lease it belongs to, and check it against the bank record. When what you owed, what you paid, and what the bank shows all agree, the payment is truly done — and nobody has to rebuild it from memory at tax time or in a renewal talk.

Source: adapted from Field Time, Not File Time (Oaken, free ebook). Educational content only — not legal or tax advice.