Many property owners considering a Solar Lease Agreement already have an active Oil and Gas Lease “encumbering” their property. These encumbrances are prior agreements which may affect Solar Development. Oil and Gas Leases, Right-of-Way Agreements, Easement Agreements, Utility Agreements, mortgages, Clean and Green, Conservation Easements and other existing contracts may already encumber the property.
A landowner must meticulously identify all existing encumbrances on their property prior to entering any Letter of Intent or Solar Lease Agreement. Under certain circumstances, an existing Oil and Gas Lease or Easement Agreement may preclude Solar Development entirely. An existing mortgage may also preclude entry into a Solar Lease Agreement.
However, upon identification of all prior agreements, a skilled attorney should be able to negotiate contract language which will allow the property owner to enter into a Solar Lease Agreement without exposing the property owner to any liability for existing encumbrances. For Example, if a property owner has an existing Gas Lease, the Solar Lease Agreement must include language requiring the solar company to Indemnify and Hold Harmless the property owner from any claims that may be brought by an Oil and Gas Company. Negotiation to address existing encumbrances and protect the property owner from any related issues is critical. Property owners should secure experienced, quality legal representation immediately upon considering a Solar Lease Agreement. A mistake regarding existing encumbrances may involve costly liability and must be avoided.