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Leasing Indian Land

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With very few exceptions, an Application to Lease Indian Trust Land (residential, business, agricultural, mineral and gas) must be approved by the secretary of the interior. Even tribes that have compacted to provide their own realty services must follow federal regulations and ultimately have all leases go through the BIA for approval. Stipulations established in the Indian Land Consolidation Act (ILCA) of 1983 and the American Indian Probate Reform Act (AIPRA) of 2004 also require written consent from a majority of the undivided interest holders in an allotment for a lease to be approved (see “Landowner Consent Requirements“ below).

According to federal regulations, in order to acquire majority consent for a lease, the secretary can provide consent on behalf of some groups of landowners, such as minors, those whose whereabouts are unknown, and certain heirs of an estate. As a result, some leasing decisions are made without the knowledge and full consent of all landowners.

Steps in the Process
Whether it is an Indian or non-Indian person seeking to lease Indian trust land, the process is the same. An application to lease must be submitted to the appropriate BIA realty office, including the required landowner consent. Upon written request, the BIA will provide the lessee (the person seeking to lease the land) with a list of the landowners’ names and addresses to acquire necessary consent.

When a lease is about to expire-about 13 months before the lease ends-the BIA sends landowners a notice explaining what they need to do to lease their land along with an appraised value for the land. Landowners have 90 days to negotiate a new lease on their own. If they fail to do so, the land will remain in the federal leasing system and the bidding process will begin automatically. “Bid sheets” listing Indian lands available to be leased will be posted in newspapers, post offices, and other public places. In order to bid on land, potential lessees must submit a sealed (not public) bid to the BIA. The highest bids are selected and the lease agreement is drafted.

After the lessee signs the lease, it is sent to tribal realty or the agency for approval. The superintendent approves the lease, and then it is sent to the Land Titles and Records Office for recording. Landowners are sent a copy of the lease once the process is completed. Once a lease is approved, lease payments are submitted to the BIA, processed by OST, and deposited into IIM accounts for disbursement to individual landowners and tribes. These payments will be shown on the IIM Statement of Account.

What to Expect
Lease agreements are usually negotiated by the BIA on behalf of the landowners, but landowners can and should have a say in the terms of the lease agreement, including the type of use, the length of the lease, and the amount to be paid. When landowners receive letters requesting consent to lease their lands, they should read these carefully and ask questions before signing anything. Local landowner associations or tribal land offices can be a good resource for information on leasing. In addition, the IIM Statement of Account and List of Real Property Assets both list detailed information about any leases held on a trust account holder’s lands, including when those leases expire. This is a good place to start for individuals who would like to learn more about how their lands are currently being managed and would like to take a more proactive role in future lease negotiations.

It should be noted that an Indian landowner who owns fractional interests in trust property must also obtain permission for a lease for any specified use of the land from a majority of the total landownership. As with any other lessee, the Indian interest holder must pay his or her co-owners at least fair market value for this use, unless the other owners have waived their right to receive rental income. Waiving the right to receive rental income is relatively common among families where there are only a few owners in the allotment.

Length of Time
Once a completed application has been submitted, it could take anywhere from a few months to more than a year for a lease to be approved.

Landowner Consent Requirements
A new lease or permit requires consent from a majority of interest holders for it to be approved by the BIA. The specific consent requirements, as amended by AIPRA in 2004, are as follows:

  • 90 percent of the ownership, if there are five or fewer owners
  • 80 percent of the ownership, if there are between six and ten owners
  • 60 percent of the ownership, if there are between eleven and nineteen owners
  • a simple majority (more than 50 percent of the ownership), if there are twenty or more owners

Tribal consent is not required for the BIA to approve a lease on trust land where the tribe owns a minority interest and minimum consent has been obtained.