A solar power company comes knocking on your door, offering good money to lease some land that you’ll never miss. If it sounds too good to be true, it just might be.
The Lone Star State has one of the fastest-growing solar markets in the country, and you may be asked to help harness the sun up in that big Texas sky. Solar companies could offer big money each month to use your land, but make sure you know all the details before signing on the dotted line.
The upfront offer might look good, but make sure to think about the impacts signing a contract could have on your land.
- Lease length: The duration of a solar lease needs to be long enough to make sense for a company to go through setup and breakdown on the bookends. A lease can last decades, so make sure you think about the impact your agreement could have on the property you’re leaving your children.
- Exclusive use: Solar leases often require being the only tenant. No wandering cattle or crops between panels and no oil derricks breaking the skyline. The lease could even prohibit practices like crop dusting.
- No royalties: Leases are generally paid per acre, not in terms of output. Some oil and gas pacts allow for royalties, but you may not see additional rent if the panels are operating beyond expectations.
- Land qualifiers: If your land enjoys special tax perks for agriculture or open space, you may want to take a close look at your plan. Solar farms could change your eligibility for tax breaks, and you may not qualify for those breaks again until years after the lease is over.
Shining light on the details
The terms of your contract aren’t always set in stone. You could have some room for negotiation to tip things a little more in your favor, so make sure you go over the contract with a fine-tooth comb. Be on the lookout for any provisions that might swing things in the solar companies favor, like an embedded confidentiality clause, or an agreement to settle disputes in out of state courts.
Be wary of solar companies trying to take advantage of the land you own without giving enough in return. But if the terms are to your liking, then solar leases can be a good way to gain money from land that might otherwise go unused for years to come.