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Serving: WI

Don’t accept terms or payment in a developer’s 1st offer

Daniel Grizelj/Getty Images Wind Turbines in field
NEGOTIATING LEASES: There is always one clause in a lease that provides that any of the verbal promises and representations the developer made to you while negotiating are not part of the easement or lease. Only the terms of the written lease or easement are binding. Therefore, it is often advantageous to retain an attorney to represent you in these negotiations.
Legal Matters: Developers want land for wind turbines, pipelines and cellphone towers. Here’s advice for how to negotiate these leases.

Farmers are constantly approached by developers who would like to use part of their farmland for cellphone towers, wind turbines, solar panels, underground gas pipelines or high-voltage electrical lines. If you are approached by any of these developers, there are some important items you should consider.

Renegotiate everything

Just like when you are negotiating to buy or lease land from a neighbor, the developer’s first offer is usually not the best offer. Likewise, the lease or easement agreement that the developer initially provides to you is often written entirely in favor of the developer. Every developer I have met has been willing to renegotiate the terms of the agreement, including the amount of the payment.

When negotiating with a developer, you should know whether the developer has the rights of eminent domain. Eminent domain allows a developer to condemn your property for the right to use your property for the installation of a high-voltage power line or underground natural gas pipeline that, for example, runs through your farm from Chicago to Green Bay.

In those cases, you generally will not be able to stop them from running the line through your land, but you still have the right to just compensation — meaning you have the right to get paid what this easement is worth. In these cases, the developer’s first offer is still usually not its best offer.

Typically, a developer does not have the rights of eminent domain to put a cellphone tower, wind turbines or solar panels on your property. In those cases, the landowner has more negotiating power, but often you are competing with your neighbor, as it may not make much difference to the developer whether the cell tower is on your land or your neighbor’s land.

This easement or lease is often for a specified term, such as 30 years, but the developer has the sole option to extend the easement or lease for additional years after the original term is over.

The lease or easement agreement is often many pages long and full of critically important and often confusing terms and conditions. There is always one clause that provides that any of the verbal promises and representations the developer made to you while negotiating are not part of the easement or lease, as only the terms of the written lease or easement are binding.

For these reasons, it is often advantageous to retain an attorney to represent you in these negotiations. You want to make sure the attorney knows exactly what you are looking for and that he or she does not negotiate without you being actively involved in the process. An attorney who is more aggressive than you desire can lose a deal for you. You should be working with the attorney every step of the way.

Re-record easements

Speaking of easements, in this column about a year ago, I described Section 893.33 of the Wisconsin Statutes that says all easements recorded at the register of deeds office on or after July 1, 1980, have to be re-recorded every 40 years to ensure they are legally effective rather than having to be re-recorded every 60 years under the prior law. I further suggested that easements recorded at the register of deeds office between July 1, 1960, and July 1, 1980, did not have to be re-recorded at the register of deeds office until almost 60 years had passed.

Upon further review, the safest approach is to re-record all easements — even those initially recorded before July 1, 1980 — before 40 years have passed. If you have an easement that allows you to use your neighbor’s land that has not been re-recorded within the last 40 years, it probably is still legally binding, but you should still re-record your easement as soon as you can. If you do not have the original easement, then you can use an affidavit to record a copy of that easement.

However, utility providers, such as those providing high-voltage lines or underground gas lines, do not have to re-record their easements every 40 years. In fact, even if they failed to record an easement originally, if that utility line has been there at least 10 years, then it has the right to be there forever. This may seem unfair, but laws are written by politicians, and politicians write laws based on many things, including with help from lobbyists.

Given the complexity and nuances of long-term leases and perpetual easements with a developer and the extra confusion laws add, especially given that they are written by politicians, a landowner is wise to seek the assistance of an attorney when negotiating with a developer.

Tim Halbach headshotHalbach is a partner in the agricultural law firm of Twohig, Rietbrock, Schneider and Halbach. Call him at 920-849-4999.

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