My inlaws have been approached by a solar company about building a solar farm on their property. They would pay them a per acre lease but only after project is built and selling energy to the local utility.
Has anyone seen or been part of such an arrangement? Thanks for any feedback.
Just some general thoughts.
Make sure the lease income is equal to the most productive use for the land, even if it's not currently being used for that purpose.
If a tax reassessment is triggered by this use, make sure the solar company picks up the difference.
The lease deal should be for a fixed sum, not some complicated formula that relies on whatever subsidies and fees the company is getting from the utility and/or government.
Make sure there is a commitment to remove all the equipment/foundations/feeders from the property at the end of the lease period and return the lease area to its previous state. Have the commitment backed by an escrow fund that can cover the removal costs from day one. Let the company figure out how to finance that.
The lease period should be long enough that the income stream justifies all the headaches that will be involved in setting up this venture. Not less than 10 years, I should think. The lease should pass to the estate, intact, in the event of the death of the lessors.
Make sure that the installation is enjoined from damaging any use of the portion of the property NOT leased, with suitable penalties and metrics in case there is an infringement.
How will the company get access to the lease area? Who's covering damages to adjacent property holders? Who pays for any hearings/filings/studies (make sure they don't come out of lease payments!)?
I'm sure there are others, but this is what I have off the top of my head.
