For farmers and landowners considering leasing land to cellular or solar energy companies, there are several issues to consider.
Attorneys Mark Botkin and Kevin Rose told farmers on Nov. 28 that, above all, landowners should make the companies bear the costs associated with such leases. The pair from Harrisonburg law firm BotkinRose PLC spoke on Lessons Learned on Leases – Solar, Cellular and Others at the Virginia Farm Bureau Federation Annual Convention in Williamsburg.
“Make it so the rent you receive is a net figure,” Botkin said.
Having a written lease also is a must, he emphasized. “Most cell and solar tower companies will want a recorded memorandum of lease.”
The lease should include extension or renewal and termination clauses to include potential deconstruction costs for removing the tower.
That’s key, Botkin said, in the instance of a lease term during which critical technology changes. If, for example, 20 years into a long-term lease a tower becomes obsolete, “you now have a cell tower on your property that needs to be removed. Make sure the lease requires the company to take down the tower at the end of the term.”
Cell tower leases generally will be for longer terms, like 25 years. Solar leases can be for anywhere from five to 30 years. With that in mind, “protect the lease with an escalation clause,” Botkin added. “That will ensure that rental payments will increase to reflect inflation.”
Additionally, Rose said, do not assume that there is no room for negotiation on leases. “Most companies are looking at multiple sites, so you don’t want to play too much hardball or they’ll go on to the next guy. But I’ve found the companies are reasonable, and the leases are not a ‘take it or leave it.’”
Botkin encouraged landowners to keep in mind that most leases will require 24-hour access to the leased land, access roads, maintenance and upkeep. “Make sure the company will pay for all associated costs,” he said.
It’s also important that the cell tower or solar company obtains and pays for an insurance policy and adds the landowner to the policy as a named additional insured.
“Keep in mind, too, with many of these leases, you are not dealing with just one person,” Rose explained. With many cell tower leases there could be multiple cell carriers per tower, in addition to the tower company.”
With leases comes the potential for personal property taxes, real estate property taxes and rollback taxes, all of which should be paid by the company.
And all lease agreements should be reviewed by an attorney, Rose and Botkin advised.
“It’s pay me now or pay me later,” Rose said. “It’s not that expensive to have someone glance at a document. It’s not like it’s a $1,000 bill. With a quick glance I can pick a problem area which warrants having someone take a look at it. It’s not as expensive as you think.”