Farm lease: improvements without a signed deal

He leases two lots for his crops. He proposes a 20-year lease with reimbursement of his investments; the owner replies with a counter-proposal. He says he will get back to them soon… and never does. During those negotiations, he invests, by his account, more than $150,000 in the land. In 2021, it is sold to another farm. The Superior Court dismisses his lawsuit. A costly lesson in the difference between negotiating and closing a deal.

The “agreement in principle” argument comes up often in commercial disputes. It reflects one party’s sincere belief that a deal had been struck, while the other considers that the parties were still in discussions. The judgment in Hammond c. Régie intermunicipale Argenteuil Deux-Montagnes (2026 QCCS 3176), delivered orally on June 10, 2026 by the Honourable David E. Roberge of the Superior Court (District of Terrebonne), and transcribed on August 24, 2026, is a reminder that Québec law requires more than an impression of agreement.

The facts: a one-year lease and negotiations that ran out of steam

The plaintiff is a farmer from the Lachute area who works the land with his family, notably through two companies. In May 2017, he personally signed a one-year lease on two farm lots with the Régie intermunicipale Argenteuil Deux-Montagnes, a public body responsible for waste management, for an annual rent of $15,000, renewable once. The lease was renewed in 2018.

In June 2019, the farmer proposed a 20-year lease at the same rent, with a right of first refusal in the event of a sale and reimbursement of his investments (drainage, levelling, soil preparation). In September 2019, the Régie accepted the principle of a 20-year lease and a right of first refusal, but made a counter-proposal: an indexed rent and reimbursement of improvements capped at $50,000 or prorated according to the years elapsed, whichever was lower. It stated that its lawyer would have to look into including a reimbursement clause in the event of a sale and that, “if” the proposal was acceptable, the agreement would then be drawn up. When followed up with in October 2019, the farmer replied that he was busy with the farming season and would get back to them soon. He never did. There was no communication on the subject until 2021.

The farmer continued to work the lots and pay the rent. In February 2021, the Régie decided to sell the land. He learned of it in February or March and submitted offers to purchase, first for about $900,000 through his children, then for $1,057,000, conditional on $157,000 being reimbursed to him. The Régie instead accepted the highest offer, from another farming business, at $1.4 million. Around April 20, 2021, it notified the farmer that the lease would end on April 30. He sued the Régie for more than $300,000: about $157,000 in investments, $106,440 in lost profits, $30,000 in rent paid “for nothing” and $10,000 for trouble and inconvenience.

Negotiating is not concluding

In Québec, a contract is formed by the mere exchange of consent, without any need for a written document (article 1385 of the Civil Code of Québec (C.C.Q.)), unless the law requires a particular form. Still, an offer containing all the essential elements of the proposed contract must be accepted unequivocally (articles 1386 and 1388 C.C.Q.). A counter-proposal is not an acceptance: it is a new offer (article 1393 C.C.Q.).

Justice Roberge concludes that no agreement was ever reached. Two essential elements, the rent and the compensation for improvements, had never been agreed upon. The Régie’s last proposal, from September 2019, was awaiting a response that the farmer never gave. In cross-examination, he admitted that the agreement still had to be “completed” and that the i’s still had to be dotted. If he believed there was an agreement in principle, his belief amounted, at best, to an inexcusable error.

The judgment adds two further obstacles. First, a public body such as the Régie expresses its will through a resolution of its board; no resolution had ever approved a long-term lease. Second, the 2017 lease contained an entire agreement clause, stating that the written contract represented the whole of the agreement: statements by the Régie’s representatives could not amend it.

So what happened after April 2019? Even though the lease excluded tacit renewal, the parties kept acting as if the 2017 lease were still in force: the farmer occupied the lots and paid the rent, and the Régie cashed it. The judge finds an implicit renewal, from year to year, on the same terms, until April 30, 2021.

No fault on the Régie’s part

Good faith must govern the parties’ conduct at every stage of the contract (articles 6, 7 and 1375 C.C.Q.). But, the judge notes, insisting that a contract be respected is not bad faith. The lease ended on April 30, 2021 under its own terms, even if the formal notice came late; the farmer had in fact known for several weeks that the land would be sold, and the Régie’s chair had insisted that he be told quickly so as to avoid unnecessary seasonal costs.

Nor was the sale to a third party wrongful. Absent an agreement, the farmer had no right of first refusal. He was not shut out of the process: his offers were considered, then turned down because they were below the listing price and the best offer. The judge also rejects the unproven theory of a rushed sale to fund a settlement before the Administrative Labour Tribunal.

The improvements stay with the owner

Without an agreement on reimbursement, the fate of the work is governed by law. Under article 1891 C.C.Q., at the end of the lease, the tenant must remove the constructions, works or plantations it has made. If removing them would damage the property, the landlord may keep them by paying their value or require that the property be restored to its original condition; and if restoration is impossible, it may keep them without compensation. Obviously, levelling, subsoiling, or lime and manure spread on farmland cannot be removed. The judge also stresses that it was “reckless, to say the least” to incur most of these expenses while the negotiations had not been concluded.

One more hurdle: who actually paid?

In the alternative, the judge adds an important lesson for business owners. The lease had been signed by the farmer personally, but most of the work had been carried out and paid for by his companies, and it was one of them that sold the crops. Yet a company has a legal personality separate from that of its shareholder: the shareholder cannot claim, in his own name, a loss suffered by the company. You cannot take advantage of a corporate structure, notably for tax purposes, and then ignore it in court. At best, the farmer’s personal losses would have been under $20,000 with respect to the investments, and he could not have personally claimed lost profits earned by a company.

The evidence of the expenses was also weak: no invoices, no record of hours, a list prepared after the fact, in 2021, never sent to the Régie, and an expert who had relied on his client’s assumptions without independent verification. The action is dismissed with legal costs, including the fees of the Régie’s expert.

Why this decision stands out

It addresses a common reality in the farming world, where land is often leased from a neighbour, a municipality or an organization on the strength of trusting relationships and informal arrangements. Investing in the soil of leased land means investing in someone else’s property. Without a clear written agreement, the risk rests entirely on the tenant.

The outcome may seem harsh: the Régie was generally aware of the farmer’s investment plans, had accepted the principle of a 20-year lease and sold the land on which he had done the work for $1.4 million. The judge notes, moreover, that the claim was not based on unjust enrichment, and that no evidence made it possible to measure the added value the work may have brought to the land. Would a better-targeted and better-documented claim have fared differently? The judgment does not allow us to say so, but it suggests that the evidence would have been decisive.

Key takeaways

An agreement in principle is not a contract. Until the essential elements (price, term, compensation) have been accepted on both sides, there is no agreement. Respond to counter-proposals and get the final document signed.

With a municipality or public body, insist on a resolution. These bodies bind themselves by resolution or by-law. The word of an officer, however sincere, is not enough.

Do not invest in leased property without a written agreement on reimbursement. Otherwise, the law may allow the owner to keep the improvements without compensation where restoration is impossible, as is often the case with soil work.

Sign with the right entity. If your company is the one operating and paying, it should be the party to the contract, or each party’s role should be clearly set out.

Document your expenses as you go. Invoices, proof of payment, work logs: without them, even a legitimate claim can fail.

Leased farmland, work done without a signed agreement: a farmer claims $300,000 and walks away empty-handed