Renting farmland in Québec: protect your interests and secure your investment

3.5 min read

The legal rules discussed in this article apply in Quebec, where they are governed by the Civil Code of Québec. In other Canadian provinces, contract, publication and tax provisions may differ.

For many businesses, land rental plays an increasingly important role in strategy. According to the FCC Farmland Values Report, national cultivated farmland values increased by 9.3% in 2024. As Vincent Godbout, Manager of Valuations at FCC, explains, farmland availability remains a major challenge in tight market conditions.

Faced with this reality, renting can be a beneficial solution for both landowners and tenants – the possibility of farming parcels of land that would otherwise be out of reach, maintaining a stable income when you retire, and the opportunity to grow without increasing debt.

However, these benefits are only fully realized if the agreement is well defined. “The lease should be based on a clear, carefully drafted contract,” says François Lemieux, a lawyer specializing in agricultural law at UPA Avocats.

Economic considerations

Renting involves various economic aspects that should be considered, whether you’re an owner or a renter.

If you are a renter, it gives you access to additional land without tying up large amounts of capital. Your financial resources can then be put towards inputs, machinery or labour. “This arrangement offers considerable flexibility. It helps maintain cash flow and invest directly in production capacity,” says Godbout.
If you are an owner, renting is a way of generating regular income while preserving your asset base. “It’s an option often considered at retirement, especially in a market where values are maintained at a high level,” he adds.

Legal framework in Quebec

In Quebec, land rental is governed by the Civil Code of Québec. Even if a verbal contract is legally possible, a lease in writing is key to protect your interests, whether you're a landlord or a tenant.

“Too often, agreements are made with a simple handshake. However, in the event of a dispute or sale of the land, having a written lease makes all the difference,” explains Lemieux.

A clearly worded farmland rental agreement should specify:

the exact description of the leased property
rent amount and payment terms
term of the agreement
each party’s responsibilities (maintenance, drainage, facilities, etc.)
inclusions and exclusions, such as access to roads, buildings or equipment
termination conditions

In the event of a dispute or sale of the land, having a written lease makes all the difference.

Lease publication

Signing a lease does not always guarantee complete protection. If the agreement is not published in the Land Register of Quebec, a future buyer of the land may terminate it after 12 months by giving a six-month written notice.

“Publishing the lease provides real legal security. This approach protects your crop investment by making the agreement enforceable against any potential buyer, who will then have to honour it,” says Lemieux.

All too often neglected, this formality, which requires certification by a lawyer or notary, is an essential guarantee.

Rules for indeterminate term leases

Indeterminate term leases are subject to specific rules. The party wishing to terminate must give notice equivalent to the frequency of rent payments, up to a maximum of three months.

“The notice may be verbal or written, but it is strongly recommended to send it in writing and obtain an acknowledgement of receipt. This demonstrates that the other party has been properly informed,” explains Lemieux.

Tax considerations

Land rental has significant tax impacts. For the landowner, the rent received is taxable, while for the tenant it represents a deductible expense. Depending on the situation, it may be more beneficial to sell and achieve a capital gain, or to keep the land and generate rental income. In any case, it is advisable to consult a tax specialist.

Adapting the contract to your reality

There is no universal model for a lease agreement. When first starting out, a short-term lease may be enough to limit commitments. In the expansion phase, a long-term lease can help with planning and justify more significant investments. And in succession planning, certain provisions, such as the option to purchase, can also prove useful in securing the transition and continuity of operations.

Contract templates are available for simple agreements. “But when it comes to special clauses or more complex situations, it's best to consult a lawyer or notary to obtain a document that’s truly tailored to your business,” concludes Lemieux.

Article by: Melanie Lagacé

Business relationships Legal agreements Farmland values