SENATE SUBSTITUTE FOR HOUSE BILL No. 2715*
An Act relating to leases of railroad lands; establishing
rights, duties, obligations and
remedies for certain tenants of railroad land.
Be it enacted by the Legislature of the State of Kansas:
Section 1. This act shall be known and may be cited as
Sec. 2. As used in this act:
(a) ``Good faith'' means honesty in fact in the conduct of the
(b) ``improvement'' means any public grain warehouse, building
other structure permanently affixed to railroad land;
(c) ``lease'' means any agreement between a railroad and a
under the terms of which a tenant occupies the surface of railroad
(d) ``person'' includes an individual, corporation,
ernmental subdivision or agency, business trust, estate, trust,
limited liability company, association or any other legal or
entity and any successor or successors in interest thereto;
(e) ``public grain warehouse'' means any public warehouse or
grain warehouse, as defined in K.S.A. 34-223 and amendments
(f) ``railroad'' means any railroad company as defined in
180 and amendments thereto, and any successor or successors in
(g) ``railroad land'' means any land acquired by a railroad in
right-of-way and any parcel or tract acquired by a railroad
adjacent to its
right-of-way, to aid in the construction, maintenance and
of its railway and which is occupied pursuant to a lease by a
owns improvements thereon;
(h) ``railroad operations'' means the movement, storage or
of railroad equipment used for transporting persons or freight;
(i) ``successor in interest'' includes any agent, successor,
trustee, receiver or other person acquiring interests or rights in
land, including, but not limited to, the owner or holder of any
estate or right of reversion relating to railroad land; and
(j) ``tenant'' means any public warehouseman, as defined in
34-223 and amendments thereto, or other person primarily engaged
the sale or distribution of fertilizer or agricultural chemicals
used or useful
in the production of agricultural crops, occupying railroad land in
faith pursuant to a lease.
Sec. 3. (a) A lease shall contain terms and conditions
which are rea-
sonable and just, and shall provide for a fair lease rental.
(b) Unless otherwise agreed by the parties to a lease, a lease
for a term of not less than one year.
(c) A lease may not be terminated prior to the end of its
(1) By agreement of the parties; (2) by reason of a party's breach
in the performance of the terms and conditions of the lease, where
defaulting party has been given written notice of default and a
opportunity to cure the default, but has failed to do so; or (3)
railroad land which is subject to the lease is reasonably needed by
railroad for railroad operations.
(d) A lease may not require that one party to the lease
defend or hold the other party to the lease harmless for
by the other party's negligence.
(e) A lease may require the tenant to remove the tenant's
ments upon termination of the lease, in which event the tenant
not less than six months following termination of the lease to
improvements, and until such improvements have been removed,
tenant shall pay monthly rent based on the annual rent specified in
(f) A lease may provide for the imposition of a penalty and a
able rate of interest, and interest may accrue if the tenant fails
to pay the
lease rental when due under the terms of the lease. If a dispute
to the lease rental provided in a lease renewal, no penalty shall
and no interest shall accrue during the time when the dispute is
resolved pursuant to section 4 and amendments thereto, if the
remains current on the rental required by the preceding lease.
Sec. 4. (a) All disputes regarding lease terms and
conditions shall be
resolved by negotiation, mediation or, if necessary, by court
provided in this act.
(b) The parties shall first negotiate in good faith to resolve
dispute. If each such dispute has not been resolved by negotiation
60 days after negotiation is requested in writing, then upon the
request of either party, the parties shall agree upon an
ified mediator to assist the parties in the resolution of each such
If the parties are unable to agree upon a mediator within 30 days
such written request, then upon application of either party, the
court shall appoint an independent, qualified mediator to assist
in the resolution of each such dispute.
(c) If the parties are not successful in resolving a dispute
a lease through negotiation and mediation, as provided in this
either party may commence an action in district court to resolve
(d) In any determination of fair lease rental of the railroad
value of improvements owned by the tenant shall not be
Sec. 5. (a) If a railroad unreasonably refuses to renew a
whether or not the tenant is required to remove its improvements
suant to the terms of the lease, or if a railroad terminates a
to subsection (c)(3) of section 3 and amendments thereto, the
under the lease shall not be ejected from the railroad land, unless
until the tenant is fully compensated by the railroad for the
(b) In the event any railroad land is sold, any lease shall be
to the purchaser as part of the transaction, and the purchaser
ceed to the rights and obligations of the railroad under the lease
provisions of this act.
(c) In the event any railroad land is abandoned by a railroad,
person establishing a superior right or title to such railroad land
deemed to be a successor in interest to the railroad for purposes
act and shall succeed to the rights and obligations of the railroad
the lease and the provisions of this act. The tenant shall not be
sessed by any such person unless and until the tenant is fully
by such person for the tenant's improvements, except that such
shall have the right to set off any obligation then due to such
the tenant under the lease.
(d) Any dispute as to the amount of full compensation or as to
railroad's unreasonable refusal to renew a lease, shall be resolved
manner provided in section 4 and amendments thereto.
Sec. 6. In any action involving a dispute arising out of
a lease, if
unconscionability is put into issue by a party or by the court, the
shall be afforded a reasonable opportunity to present evidence as
setting, purpose and effect of the lease or any provision thereof
to aid the
court in making the determination. If a court, as a matter of law,
lease or any provision thereof was unconscionable when made, the
may refuse to enforce the lease, enforce the remainder of the lease
out the unconscionable provision or limit the application of any
scionable provision to avoid an unconscionable result.
Sec. 7. The provisions of this act shall not apply to or
affect any valid
lease entered into prior to the effective date of this act or to
or extension thereof on the same terms and conditions, but the
of this act shall apply to and govern any renewal or extension of
on any different term or condition or any material modification of
such lease where such renewal, extension or material modification
fected on or after the effective date of this act.
Sec. 8. The provisions of this act are hereby declared to
If any provision of this act shall be found by the decision of a
competent jurisdiction to be invalid or unenforceable, such
not affect the validity of any other provision of this act.
Sec. 9. This act shall take effect and be in force from
and after its
publication in the statute book.
Approved May 11, 1998