Payment for the first Year's rent is due immediately following the auction.

1. ASSIGNMENTS AND THIRD PARTY USE. This lease or any part thereof shall not be assigned, nor shall the LESSEE allow the land or any part thereof to be used in any manner by anyone other than the LESSEE without the written consent of the Commissioner of University and School Lands (COMMISSIONER). A grazing permit issued by a grazing association to a member-permittee shall not be a violation of this clause.

2. PROHIBITED USES. The land shall only be used for the purposes set forth in the lease. LESSEE may not cultivate additional acreage or change the location of fields. Other prohibited uses include, but are not limited to, equipment storage; hay storage; trash dumping; rock dumping; feedlots; feeding; draining water on or off the land; mining scoria, gravel, clay, or any other minerals; cutting wood; or allowing others to do the same unless authorized in writing by the LESSOR.

3. NONPERMANENT IMPROVEMENTS. LESSEE may place nonpermanent improvements, (e.g., fences, corrals, water tanks, and mobile calf creep feeders) on the land and must remove them within 120 days after the lease expires. Any nonpermanent improvements not removed within 120 days shall become the property of the next LESSEE. The COMMISSIONER, upon written application from the LESSEE before the end of the 120-day period, may, for cause, extend the period of time for removing nonpermanent improvements.

4. PERMANENT IMPROVEMENTS. Permanent improvements (e.g., buildings, wells, dams, water holes, water lines, trees) may not be placed on or removed from the land without written consent of the COMMISSIONER. All permanent improvements shall be deemed the property of the LESSOR. However, at the discretion of the COMMISSIONER, the cost of permanent improvements may be credited to the rent for the following lease years or may be depreciated for the protection of LESSEE'S investment in the event the land is leased to another person, sold, or exchanged. To be eligible for rent credit or depreciation, the application must be received and approved by the COMMISSIONER before construction.

5. USE AND MAINTENANCE OF PERMANENT IMPROVEMENTS . LESSEE may use wells, dams, dugouts and water lines on the land and any other improvements belonging to LESSOR. Said use is subject to payment of any amortized costs to a prior lessee as defined in paragraph 4. LESSEE shall maintain all improvements belonging to LESSOR, at no expense to LESSOR, in as good condition as received, normal wear excepted. Major repairs must be approved in writing by the COMMISSIONER before beginning work. All repairs shall be deemed the property of LESSOR subject only to the right of LESSEE to request depreciation or rent credit, as defined in paragraph 4, for major repairs.

6. LESSEE ACCEPTS LIABILITY FOR INJURIES AND DAMAGES TO HIMSELF AND OTHERS - CONDITION OF PREMISES. LESSOR makes no representation concerning the condition, safety, or usability of the land and any improvements. LESSEE leases the land and any improvements on an "as is" basis. LESSOR does not covenant that the land and its improvements are fit or safe for the purposes for which LESSEE intends to use them. LESSEE accepts liability and indemnifies and holds harmless LESSOR for any loss that may be suffered by the person or property of LESSEE, LESSEE'S employees and agents, and anyone else, when such loss is in any way related to LESSEE'S use and management of the land and its improvements.

7. CROPLAND AND SUMMERFALLOW. If cultivation is specifically authorized by this lease, LESSEE shall maintain an amount of summerfallow on the land consistent with good cropping practices for similar soils in the area or the amount on the land when the lease was issued, whichever is greater. Cropland must be farmed under the Federal crop program such that crop bases are maintained unless exempted in writing by the COMMISSIONER.

8. CONSERVATION AND WEED CONTROL. LESSEE shall control all noxious weeds on the land and maintain all summerfallow in a reasonably weed free condition. LESSEE shall not allow overgrazing which would result in forage production below the potential in good range condition. LESSEE shall prevent soil loss through erosion in excess of the established soil loss tolerance by the use of crop residue management, grassed waterways, stripcropping, tree planting, or other accepted conservational practices.

9. LAND USE PLANS. LESSOR reserves the right to require LESSEE to implement a soil conservation or range management plan at any time during the lease to prevent damage or to improve the condition of the land.

10. ROAD DITCHES. LESSEE shall mow and maintain road ditches as required by law.

11. PUBLIC ACCESS. LESSEE may not post or otherwise prohibit non-vehicular public access to the land, but exceptions may be granted at the sole discretion of the COMMISSIONER. If the LESSEE desires to be notified prior to anyone entering upon the land, the LESSEE shall post only signs provided by the COMMISSIONER setting forth the LESSEE'S name, address, and telephone number. LESSEE may not lease, sell or otherwise charge for access on the land.

12. EASEMENTS/PERMITS. This lease is subject to all existing and future coal, oil, natural gas, uranium, gravel, scoria, clay, and other mineral leases and exploration permits covering the land. LESSEE agrees that the holders of such leases or permits may enter upon the land and conduct exploration and mining operations. This lease is further subject to all existing and future easements, rights-of-way, and other servitudes covering the land and LESSEE agrees to honor same. LESSEE shall not be entitled to any compensation by reason of such leases, permits, easements, rights-of-way, or servitudes unless otherwise provided for by LESSOR.

13. RIGHT OF ENTRY. LESSOR or its agent may enter the land at any time without notification for the purpose of inspecting the land and improvements thereon. LESSEE further agrees to allow LESSOR or its agent access across LESSEE'S property, or property leased by the LESSEE, to the land.

14. SALE OR EXCHANGE. This lease is specifically made subject to termination in the event LESSEE is notified during the months of October through January that all or a portion of the land will be sold or exchanged by LESSOR. If the land is sold or exchanged, LESSEE will surrender possession of the land within thirty days of mailing to LESSEE a notice of the sale or exchange.

15. COMPLIANCE WITH LAWS AND REGULATIONS. LESSEE shall comply with all applicable rules and regulations of the Board of University and School Lands and all applicable state and federal laws, including payment of any taxes levied against the land or LESSEE'S interest thereon.

16. FAILURE TO PAY RENT. If LESSEE fails to pay rent when due, this lease shall automatically expire on the last day of the lease period for which rent was last paid. In order to enforce such forfeiture of lease, no demand for rent either written or verbal need be given LESSEE nor shall a notice of termination be required.

17. CANCELLATION. If LESSEE fails to comply with any of the terms and conditions of this lease, it may be cancelled by LESSOR. Cancellation is effective upon actual notice of cancellation by LESSOR or 3 days after mailing of notice of cancellation, whichever is earlier; except that no notice is required for cancellation as provided in paragraph 16.

18. NO WARRANTY OF TITLE. LESSOR neither warrants nor agrees to defend title to the land.

1707 North 9th Street | PO Box 5523 | Bismarck, ND 58506-5523 | Telephone: (701)328-2800 | Fax: (701)328-3650

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