I cannot stress this enough to farmers and landowners, an Option Agreement and Lease is one of the most onerous documents you can sign, and I hope, after reading this article, if you are about to enter into a contract with a solar developer, you will stop and think, and take your time.
I am not saying do not sign.
I am saying read it thoroughly, seek advice from someone who is experienced in this area of law, negotiate the best possible deal, financially and otherwise, and then, if you are happy to proceed, sign.
One clause I have seen in every agreement that has come so far to me this year is as follows: “If the tenant wishes to renew the lease, it shall give to the landlord not more than 12 and not less than six months’ notice in writing before the expiry of the term and, upon receipt of same, the landlord shall renew the lease for a further term of 15 years upon the covenants, terms and conditions herein set forth, provided that during the term the tenant shall have paid the rent promptly, and shall have met its obligations under this lease to the reasonable satisfaction of the landlord.”
This gives an automatic entitlement to the developer to renew a lease on your land for a further period, in this particular case, 15 years.
This is wholly unacceptable.
The developer should never have this right.
If the agreement is working well, and you have a positive relationship with the developer, then by all means you can negotiate again at the end of the lease.
In 25-30 years, when the first lease has expired, you will more than likely be dealing with a different company.
You also do not know what use you will have for your land at that stage.
I do not wish to be morbid, but it is possible you may not even be alive, and your children will be dealing with the developer and may have other intentions for the land.
Under no circumstances should you agree to an automatic extension of the term of the lease or for another lease.
Another clause that I have seen is as follows:- “If the landlord wished to dispose of the freehold interest in the landlord’s property during the term of this lease, it is agreed by the parties that the landlord shall firstly offer such freehold interest to the tenant, with the consideration attributable to such freehold disposition being based on the market value of the landlord’s property”.
This would allow the developer, in the event that you wished to sell your land in the future, to be given first choice to purchase your land for market value at that time.
First of all, who defines the market value?
Why should the developer have such a right?
At the very least, shouldn’t the developer have to pay extra for the benefit of that right? This is over and above what you initially agreed orally.
Under no circumstances should you agree to such a clause.
If the developer wishes to purchase your lands later, he can negotiate with you along with any other prospective purchaser, and you should be under no obligation to sell to anyone in particular.
Many of you will have seen the “standard” or developer-friendly documents produced by the solar companies, and they are often very similar.
They contain clauses such as the above two examples.
You need to negotiate these terms. Do not accept what has been given.
This “standard” document is negotiable.
Sometimes the promise of potentially large income can be distracting from other important issues.
Attention must be given to practicalities and implications for the rest of the farm.
Practical questions must be asked.
Who is going to be responsible for grazing the solar site and keeping weeds and vermin down?
The solar developer does not want anyone having access, for fear of them damaging the panels, but the landowner will not want weeds like ragwort spreading onto the rest of the farm.
What about access to the site?
Is this shared with other parts of the farm?
Who maintains the access?
Will all gates be kept shut, and possibly locked, to stop unauthorised access?
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KEYWORDS solar, signing, agreements, clauses