A solar energy company has approached me to lease my farm for 20 years to install panels. The property would be tied up for the duration of the lease. They pay about $30,000 per year. You can only sell to the solar company during that period. After the 20 years, they restore the land to original condition and you are free to do with it as you please. Does anyone have any experience with this? Too good to be true? What say you?
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Company wants to lease farmland to install solar panels? Deal/No Deal?
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Last: 3 yr ago by JobSecurity
Get a lawyer that's familiar with this kind of thing to review the contract. That's all I've got.
What company?
If you have no other use for the land, it's worth exploring. Get a good lawyer.
If you have no other use for the land, it's worth exploring. Get a good lawyer.
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Tylerag72 said:
A solar energy company has approached me to lease my farm for 20 years to install panels. The property would be tied up for the duration of the lease. They pay about $30,000 per year. You can only sell to the solar company during that period. After the 20 years, they restore the land to original condition and you are free to do with it as you please. Does anyone have any experience with this? Too good to be true? What say you?
$2500 a month rent the land? How much land are we talking about? It's mailbox money but I'd be might be looking for more if it's a decent chunk say 40-50 acres.
I'd also look at the rent increases over the term and see what they are. Probably would pop every 3-5 years is what I'd expect. Especially so with inflation these days.
Does this impact your ability to finance or refinance the land during the term? Most likely a yes but something to be aware of.
Are they asking any other land owners around?
Will you lose your ag exemption? Shouldn't the rent increase periodically?
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As others have said, if you choose to do this, be very careful about how rent bumps are structured. The devil is in the details. Pay an attorney to review the lease for you, and pay someone who does commercial leases like this to make sure that you don't end up getting paid the equivalent of pennies 20 years from now. When I worked for a very large commercial real estate investment firm, any lease out for approval with a duration over 10 years had to get sign off from an officer level employee. They took it that seriously because a lot can go wrong.
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Get an attorney to review the land use issue - ag exemption ramifications as well to review the lease in its entirety.
^ this
who cleans it up when they go under ?
answer: YOU
who cleans it up when they go under ?
answer: YOU
Tying up land for 20 years at $30k per year? Doesn't seem worth it to me. They ain't making more land! And I imagine a better opportunity will come along or be able to be created during this duration with said land that is worth more than this opportunity
I've done lots of solar leases. Send me a note if you want to talk. I'm happy to share.
Require a cleanup bond or escrow in your bank.aggiepaintrain said:
^ this
who cleans it up when they go under ?
answer: YOU
How much land? 30K seems a little cheap unless we are talking 30acres
Crank the rent up and make the penalties painful for failing to clean up.
Penalties after the fact isn't the way to go. As mts6175 said, bonds or escrow is the way. This is common practice.dc509 said:
Crank the rent up and make the penalties painful for failing to clean up.
Im sure that's the way to go, and I'm not disagreeing with you. I've never done a solar lease, but having something on that front seemed like a good idea.
I understand, but you are not dealing with a big corporation. Even if developed by a large company, each project is a special-purpose entity. The entity will have no assets at the end of the project for a landowner to pursue collection of a penalty. There's more to it, but view a penalty as just a promise.
Do you have confidence this company will still exist in 20 or 30 years? Could this company stay solvent if government solar subsidies/tax breaks went away?
If the company folds then what good is a contract with them?
As everyone else has said get a lawyer for these types of questions.
If the company folds then what good is a contract with them?
As everyone else has said get a lawyer for these types of questions.
Still think it is just a pass. Not know anything more about the situation. But that's just the sense I get.
Most impressive part of this thread is that the OP has 23 posts in 19 years, still a rookie after 23 years but with tons of bling. You seem to be the quiet type, so definitely don't do this lease if the land is anywhere close to where you will go near it on a regular basis.
Lol. Indeed.
And my thing is that a lot changes/could change in 20 years. Keeping flexibility and options is important
And my thing is that a lot changes/could change in 20 years. Keeping flexibility and options is important
Long-term leases aren't for everyone. If you enjoy the land or don't have additional property, a lease may not make sense. In my experience, leases are most attractive to landowners who expect to never sell their land.
I've worked with ranchers, farmers, foundations, and universities that have owned land for over a hundred years and expect to own it forever. The revenue potential from a lease compared to farming/ranching/hunting is extremely compeling. If a project moves forward, these landowners will make tens of millions during the lease and will still own the land in 30 or 40 years when the solar lease ends.
I've worked with ranchers, farmers, foundations, and universities that have owned land for over a hundred years and expect to own it forever. The revenue potential from a lease compared to farming/ranching/hunting is extremely compeling. If a project moves forward, these landowners will make tens of millions during the lease and will still own the land in 30 or 40 years when the solar lease ends.
20 years is actually short for a solar lease. Many are 30+ for larger projects
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