Leasing or selling your property to a solar energy company

NJ.com reports that the Milford Borough Council is to introduce an ordinance tonight to permit and regulate solar energy structures in the town.  Its meeting is at 7:00 p.m. at the firehouse. http://www.nj.com/hunterdon-county-democrat/index.ssf/2011/04/milford_plans_ordinance_to_per.html

Many property owners in the Delaware Valley area have been approached lately by solar energy companies wanting to install panels on their property.  Installation of such systems are primarily beneficial because of the tax reductions and other incentives provided to these companies by the Federal and State government.  Generating energy through the sun is a part of the benefit, but apparently not the primary benefit.

If approached, you should contact an attorney before agreeing to anything.  Michael De Sapio and myself have recently completed successful negotiations for two major transactions for property owners.  Some things to keep in mind:

1.         The person who first approaches you is probably not an employee of the energy company.  They are a “finder” or “agent” who gets a commission for locating your property and convincing you to commit to an arrangement.  Therefore, do not accept terms simply because you feel comfortable with the person who is discussing them with you.  You may never deal with that person in the future.

2.         The representative may use the name of an established, recognized, energy company when they approach you.  However, you can expect that at the time a contract is given to you, the name of a different company will appear on the paperwork.  The energy company will create a new business entity, solely for the purposes of holding your property.  You need protection and a guarantee that a company that has financial where-with-all to pay will be responsible to you.

3.         An attorney can provide you some advice as to whether the price you are offered is reasonable.  Many proposals seem like a lot of money, but it is only common sense that the company’s initial offer to you is below what they have the ability to pay, based upon the income they will earn.

4.         Be careful if they want you to sign up right away.  How serious is their proposal?  Are they just trying to get you signed up to avoid the possibility of you signing with someone else?  Protect yourself from the possibility they may only be interested in speculating on your property, or tie it up to get it off the market.  Do you have protections that they will act quickly and you will really see the substantial monies that they promise?  One technique that we have used is to insist that you receive payments from the day that you sign and that you get to keep those monies whether or not the company obtains municipal approvals to install the panels.

5.         Are they offering you the right amount and type of insurance to protect you against law suits that which may arise if somebody gets injured on the property after the panels are installed?  This is critically important if they only propose to lease your property rather than buy it outright. 

6.         After the facility is built and they are making money, do the rental payments increase? If they propose to lease your property, are there provisions in the lease for the rent to escalate after 5, 10 and 15 years if the cost of living increases?

7.         If your property is in farmland assessment, are you protected by requiring that the energy company pays rollback taxes after they obtain permits?

8.         If the proposal is to lease your land the amounts that these companies are offering are quite significant.  You need to make sure that there are adequate protections that all of the equipment they install will be removed at the end of the lease. You do not want to be left with an unusable piece of property after 20 years, cluttered with unsightly and technically obsolete equipment. You also need to be protected against responsibility for any environmental contamination that might be created.  If a shell company has been created to lease your property, you will need some sort of performance bond or other security to protect you and to pay the cost of restoring your property.

These are only a few of the things that you need to think about.  Not every situation is the same and one or more of the above may not apply to you, or may be something on which you will have to eventually compromise.

If you want more information or a free consultation about an offer that has been made to you, you can contact Mike De Sapio at mdesapio@hunterdonlawyer.com or Guy De Sapio at desapiolaw@earthlink.net


About Gaetano M. De Sapio

I am the Chair of Republicans for Hunterdon.
This entry was posted in Current Events of Local Interest, Information for Our Clients, Solar Energy Law and tagged , , , , , , , , , , , , , , , . Bookmark the permalink.

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