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Ask questions before signing solar contract

Here are answers to questions you might overlook when considering a solar contract.

Tom J Bechman 1, Editor, Indiana Prairie Farmer

March 14, 2022

2 Min Read
chain link fence around field of solar panels
INDUSTRIAL SITE OR AGRICULTURE: This installation of solar panels on farmland is nearing completion in eastern Indiana. If you were the landowner, would you know what to expect in the future? Tom J. Bechman

Has someone knocked on your door wanting you to lease land to their company to install solar panels? If so and you’re interested enough to talk to them, do you know the right questions to ask?

Because the implications of changing land use so drastically are immense, you may not think of every situation that could arise. Should you reach the stage of entering a contract with a solar company, it will no doubt specify the rental rate per acre you will receive annually and the length of the contract. But what else should be in the contract?

Here are a few questions that may not seem obvious, but that could be crucial to protecting your rights and property value down the road. Answers are provided by Todd Janzen, an attorney specializing in ag law and president of Janzen Schroeder Agricultural Law LLC in Indianapolis.

Will a contract with a solar company be recorded in the recorder’s office? If the company doesn’t plan to do so, should a landowner insist? Would there be value to having it recorded legally? The solar company will likely record a shortened form of the solar contract with the landowner in the chain of title for ownership of the land. They will all do this because it protects the solar company’s rights as tenants. Companies typically do not record the entire contract or lease because they do not want the public to know all the contractual terms, like rent amounts. Recorded documents are public.

Should a landowner negotiating with a solar company ask for security in case the company goes bankrupt or ownership of the company changes? In other words, in case the landowner is left to clean up the site. What kind of security would be appropriate? Usually, we request that companies buy a removal bond that covers the costs of removal if the company cannot pay for it. The size of the bond would vary based upon the size of the project.

If a landowner elects to graze sheep or grow produce under the panels, and a panel or panels get damaged, or if they just get damaged by vandalism, does the landowner pay to fix them? It would be normal for the solar company to pay for damage that occurs to the panels. There would likely be an exception if the landowner causes the damage, but those instances would be rare since few landowners will be entering the property after the panels are built.

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About the Author(s)

Tom J Bechman 1

Editor, Indiana Prairie Farmer

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