Solar Farm Lease Considerations and Questions

In recent months, Northern Illinois farmers and landowners have been receiving contacts from various solar farm companies inquiring about leasing property to create solar energy systems. Mr.Garrett Thalgott, Office of the General Counsel for the Illinois Farm Bureau, has spoken to farmers and landowners regarding solar farm proposals and the contracts that are being proposed.  From these presentations, he has put together a summary listing of items that should be considered and questions that should be asked before a landowner enters into an agreement with a solar company. 

Garrett emphasized that not all solar farm contracts are the same, and these considerations are not intended to be exhaustive. There is no substitute for careful and exhaustive review of every term with trusted advisors.

1. Solar energy leases/easements

a. Legally binding agreements

b. Should be carefully reviewed

c. Recommend consulting with an attorney experienced in long-term lease and easement contracts

2. Consider future land uses

a. Future development pressures?

b. Possible building sites for personal uses?

3. Property description

a. Ensure that land is accurately described

b. How much of the parcel is the company obligated to lease?

4. Agreement term a. How long does the agreement last?

b. When does the agreement start?

c. When will you start receiving rent?

d. Is there a development or diligence period where no rent will be received?

e. Are there renewal periods? Who can renew the agreement and how?

5. Restoration of the land a. Is there an AIMA on file with the IDOA?

b. Does the county zoning ordinance specify decommissioning procedures?

c. What needs to be done to restore land to present levels of ag production?

d. Who pays for decommissioning?

e. What if developer sells or becomes insolvent? Who is responsible for decommissioning?

f. What if tile is damaged? Who fixes? When do they fix it?

6. General considerations

a. Developer’s exclusive right to use the sun and impact on farming operations or other uses

i. Dust from farming?

ii. Aerial spray droplets from spraying?

iii. Trees or shaded areas on property?

iv. Hunting?

b. What if original developer defaults or goes bankrupt?

c. Who can terminate the agreement? When can it be terminated?

d. How broad is the confidentiality clause?

e. Who pays the property taxes? What happens if the property taxes aren’t paid?

This information is for general education only. Please consult a qualified attorney for legal advice.