Document the Deal
Make sure ranch construction projects and land use agreements are well-documented so both sides are prepared if, or when, misunderstandings happen.
By Nicole Lane Erceg
The ranch to-do list is a never-ending document. Fences need repairs, ponds need to be dug, cows need to be bred and barns need to be painted. It’s nearly impossible to get it all done by yourself.
When a new construction project comes up, or additional hands are needed, most landowners turn to a contractor for help. But what happens when the job goes wrong?
Zach Brady, a commercial litigation and agricultural lawyer, has represented clients across Texas and dealt with a variety of landowner disputes. His agricultural roots and courtroom experience shed light on the best way to avoid ending up in a lawsuit when the intention was to complete an update to the operation or add a new revenue stream.
When reality collides with expectations
Most landowners go into agreements such as easements, construction projects, leases or sales intending them to be beneficial to both parties. However, in the cases where things do not go as planned, often it’s time and money that are lost in attempting to fix the problem.
“The most important thing you can do with these types of situations is to avoid them,” Brady says.
It’s a scenario he sees on a regular basis. An agreement was made on a project or on land access and then expectations did not correlate with reality.
“The classic lawyer advice is to put it in writing,” says Brady. “But it’s important to understand what that means today. It doesn’t always have to be a written contract. It can be text messages or emails.”
Not every situation requires the help of a lawyer, but just getting the scope of the project, terms of payment on a sale of livestock or the exact names of who has access via an easement or lease can help clarify boundaries.
The key to avoiding disputes is to get all the expectations outlined in writing before any work begins. However, he cautions landowners to be careful with what is sent via text messages, email messages and written documents, because they are considered “writings” within the meaning of the law. Parties can be held to those terms in a dispute, no matter what was discussed before or after the correspondence.
“The more complicated the job, the more important it is to have a formal written agreement,” Brady says.
He shares that the best way to avoid problems that can lead to a courtroom solution is to do as much research as possible before a deal is struck or a contractor is engaged. This includes asking for references and vetting people before working with them. The time spent finding the right person or business to work with can pay dividends in the long run.
Beware of general agreement forms because just as cattle management differs greatly based on environment, standard agreements may not check all the boxes necessary for a specific landowner. Brady recommends making sure the written contract is customized to the exact project and operation.
“The cliché is true,” he says. “Take time to really read the fine print. If it does not apply to your operation or scenario, it’s okay to strike a paragraph and initial it.”
Legal help a justifiable expense
There are situations when it is worth the extra time and money to consult with outside counsel. Brady says anything involving real property should be carefully drafted and documented. Agreements granting access to a road, major construction projects, shared water sources and, especially, recreational use of land, should be drafted by a lawyer so that the document is enforceable and specific to the landowner’s exact situation.
“I understand that everyone is trying to avoid expenses in their operation and nobody likes paying lawyers,” says Brady. “However, the money it costs to document a deal, especially a significant one, is far less than the attorney’s fee that will be involved if there’s a major disagreement.”
At the end of the day, litigation will always be more expensive than taking time to document a deal. Although lots of business is done in the cattle industry on a man’s good word, Brady cautions about the risk that choice presents.
“I think all of us would like to believe that we ought to be able to do business on a handshake and trust the folks we’re doing business with,” he says. “My advice is just because a rancher feels like his word is all anyone should need, this doesn’t mean the rancher ought to feel that way about the other party who is providing the goods or services, especially if it’s someone who is helping him for the first time.”
The use of land for recreational purposes is one area that Brady says specifically needs attention to legal documentation. In situations where members of the public are accessing land for ecotourism or hunting, liability protection is just good business. Brady says these documents must be drafted by a lawyer who is familiar with land use and liability and should be customized to the specific landowner.
“Whether or not we think someone is going to get hurt or that they might sue the owner, the fact of the matter is that the liability is out there, so we need to be sure that we have protection,” says Brady.
Running a profitable cattle operation isn’t a job that’s done solo. Business must be done with people who come with varying levels of risk. Documentation and the right preparation before entering an agreement can help make sure both parties get the best end of the deal every time.
Document the Deal is excerpted from the June 2018 issue of The Cattleman magazine.