Top 7 Mistakes Landowners Make When Leasing for Energy Projects and How to Avoid Them
Leasing land for a solar, wind, or battery project can be a great opportunity but watch out for common mistakes! Here are the top seven pitfalls landowners face (and how you can avoid them):
1. Getting dazzled by big dollar signs and not reading the fine print: Some landowners sign a lease too quickly because the offered rent seems high. They forget the lease might last 25–40 years or more! How to avoid: Take your time. Read every detail or have a lawyer review it. Make sure the payments truly make sense over decades, not just the first year.
2. Assuming an “option” isn’t binding: Often the first paper you sign is a solar option agreement. Some landowners think an option isn’t a big deal – but it is! The option can tie up your land for years with no way for you to back out, while giving the developer the right to proceed. How to avoid: Treat the option seriously. Negotiate terms in the option (like how long it lasts and any conditions) because you might be agreeing to many lease terms right then. If unsure, don’t sign until you understand it.
3. Not vetting the developer’s track record: Many problems arise if the company is inexperienced or not financially stable. Some scammers pose as developers just to flip your lease to someone else. How to avoid: Research the developer. Ask for references from other landowners. Verify they have built projects before. A legitimate developer will have a real portfolio of projects and won’t pressure you to skip due diligence.
4. Giving away easements or rights for free: Check if the lease forces you to grant easements (rights-of-way) for power lines, roads, etc. Sometimes leases say you will “give” the developer any easements they need with no extra pay. That can restrict your land use beyond the project area. How to avoid: Ensure the contract clearly states how much land is used and get compensated for any easement or extra land use. Nothing should be “given” for free if it affects your property.
5. No plan for end-of-project cleanup: One big mistake is not securing a plan (and funds) for removing equipment when the project ends. If not, you could be left with old panels or turbines on your land. How to avoid: The lease should include a decommissioning clause – basically a promise that the company will remove all equipment and restore your land, backed by a bond or escrow money. This way, even if the company disappears, there’s money set aside to clean up.
6. Ignoring impact on taxes and farm status: Switching land from farming to solar can affect your property tax breaks. For example, some states rollback agricultural tax exemptions if land is used for energy. How to avoid: Before signing, consult with a tax advisor. The lease should clarify who pays any extra taxes or penalties (often the developer should cover these costs). Don’t lose your farm tax status without knowing the cost.
7. Not consulting an attorney or expert: Many landowners try to handle a complex 30-page lease alone and miss critical clauses. For instance, some leases say if you default (even accidentally), the developer could take ownership of the land! How to avoid: Always have an experienced attorney review the lease. It’s worth it. They will spot unfair terms (like clauses where you could lose your land) and help negotiate better ones. An expert can also ensure the lease protects you if the project doesn’t get built or if the company sells the lease.
By avoiding these mistakes, you can lease your land with peace of mind. Remember: a good energy lease should provide you income while protecting your property and rights. Don’t be afraid to ask questions and get help.
Let’s Talk
If you want honest help, or just want to learn more, reach out. I’ll explain the process, your options, and help you avoid common mistakes.
Jesus Quiroz, RWA
Right-of-Way & Land Expert (505)-417-9680
Power | Fiber | Solar | Battery | Data Centers