Solar Farm Lease Risks for Landowners: What to Watch For
Leasing part of your property to a solar developer can diversify farm income, but a solar lease is a long-term commercial contract. Understanding the solar farm lease risks for landowners before you sign puts you in a far stronger position to negotiate protections. Here are the main solar farm lease risks to keep front of mind.
A very long commitment
Solar leases commonly run 25–40 years, often longer than you will own the property. The lease binds future owners, including children who inherit the land, so it should fit your succession and estate planning.
Restrictions on how you use your land
The lease may control not just the leased area but the land around it — restricting building, tree planting, or anything that shades panels or blocks access. Make sure it clearly preserves your right to keep grazing or cropping the balance of the property.
Decommissioning and developer insolvency
One of the most serious solar farm lease risks is being left with infrastructure if the developer fails. A well-drafted lease requires decommissioning and rehabilitation, backed by security such as a bank guarantee — otherwise you could carry the cost.
Transfers, design changes and hidden costs
Developers frequently sell projects, so an unknown operator may take over. Technology changes can alter the footprint and payment. Hosting a commercial project can also increase rates and land tax — the lease should shift those costs to the developer. If your land is mortgaged, obtain your bank's consent early.
How to protect yourself
Most of these risks can be managed with careful drafting: robust decommissioning security, preserved farming rights, cost-shifting for rates and land tax, strong indemnities, and early mortgagee consent. Developers often contribute to your reasonable legal costs, so independent advice need not be a barrier.
Frequently asked questions
What are the main solar farm lease risks for landowners?
The biggest risks are the very long term, land-use restrictions, being left with infrastructure if the developer becomes insolvent, transfer of the project to unknown parties, and unexpected rate or land tax increases. Most can be reduced through negotiation.
Can I get out of a solar farm lease early?
Generally not easily — these are long-term binding agreements, which is why the terms must be right before you sign.
Who pays to remove a solar farm at the end of the lease?
A properly drafted lease places decommissioning on the developer and backs it with financial security, so you are not left with the cost.
Protect your land with Leyden Legal
A solar lease can be a good decision — but only if the risks are properly managed. Leyden Legal has served rural landholders across Tamworth, Manilla and the North West for three generations and can identify the solar farm lease risks specific to your property.
Contact Leyden Legal today before you sign a solar farm lease.
This article provides general information only and is not legal advice. Every solar farm lease is different. Please seek tailored legal advice before acting.
