Understanding the fine print is key in any land development deal
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For the farmers and landowners being approached for land by renewable energy companies, there is much to consider.
In this Q&A interview, Ray Fitzpatrick, law partner at Augustus Cullen Law solicitors, provides a glimpse into some of the issues and the complexities in land use agreements between the land owner and the renewable energy developer.
“The farmer should pay particular attention to the area of land included in the option. The developer is entitled to take a long lease (typically 30 years) over the entirety of those lands and likely longer through an extension or automatic renewal. Furthermore, the developer is normally entitled to create access roads or cable easements over retained lands, or other lands owned by the landowner. So, if particular lands should be excluded, or do not fit in with the long-term plans of the farmer, these should be expressly mentioned or excluded.”
“They could ask about rent. They could ask for confirmation that the rents are index linked, i.e. to the Consumer Price Index. Also, they could look for a commitment for a minimum acreage to be included, in the event that the option is exercised. That way they can be sure that if the project goes ahead, they will earn a minimum amount.”
“Yes. And I must say that my experience with agents has been very positive. But of course ID should be looked for and with that, there should be a request for the proposed Heads of Terms in writing.”
They should not hand out any personal details. All funds should go through the lawyers.” Those words of wisdom imparted, the Augustus Cullen Law partner makes it clear that his experience with agents has been “very positive.”
“They should look for details of other projects that the developers have been involved in, and ascertain what projects are up and running. An inexperienced developer can cause problems by signing up landowners in a particular community, in a manner which precludes other more experienced developers that have the wherewithal to actually get involved and get the project done.”
“It is common for neighbouring landowners to be approached for sale or lease of their land for renewable energy projects. The approach you mention can work where people will engage. However I have also seen it delay projects.”
“I have only seen the sale of land arise in the case of storage projects, or for energy projects where a substation needs to be built. The vast majority of our instructions for renewable projects — say 95 per cent — are for options for leases.”
“Yes they can. An example of this might be where one child was given a particular portion of lands, that has all of a sudden become valuable or lucrative, then there is potential for tension.”
“The younger generation is more open to renewables, in my view. I completely understand why someone who has farmed lands for decades, and where land has been in the family for decades, might approach the situation with serious caution or concern.”
“Yes. I am not aware of any incidence in which options were signed by individuals without a solicitor’s involvement. While I might sound like I am biassed, it is absolutely essential that proper legal advice is obtained from someone who knows and understands the agreements.”
“We often have referrals from solicitors because they would rather not give advices in an area that they view as very specialised. Our office has been providing advices in this area for many years at this stage and we are well aware of what to look out for.”
“The developer typically covers the cost so this should not concern the landowner. If a developer is not willing to cover legal costs for the negotiation of the option, then, in my view, the landowner should run a mile. This for me demonstrates that they are not willing to properly invest in a project, but that they are happy to tie up the landowner’s lands for a significant amount of time. It is important to remember that the option will restrict the use of the land, and possibly restrict the transfer of land.”
“They can, as long as their solicitor is comfortable with providing the advices.”
“More are being approached for solar development than for wind.”
“In my experience, landowners and their neighbours are more amenable to solar development.”
“There are significant financial incentives for the farmer. Also, given the climate crisis, I believe that people are more open to the prospect of renewable development than they would have been in the past. People would refuse for various reasons, including that they wish to farm or use their own lands as they think fit. They may also be concerned about issues with their neighbours, or because of a fear of the unknown, all of which are entirely understandable.”
“It is very important to give clear information on what it is that is proposed at the early stages of a project. Simple matters such as providing the farmers with details of the scale of the intended development, the anticipated timelines for planning, grid connection, and the payments to be made, as well as keeping the farmer informed along the way, all help to keep a positive relationship, as well as building a good and positive reputation for the developer.”
“Farmers should choose a solicitor that they have faith in. They should be happy that the solicitor they choose has experience and knowledge in the renewable area.”
