In Maryland, the solar industry is booming day by day. Solar companies are approaching homeowners and business professionals with attractive benefits of leasing solar panels. It can cover important details such as monthly payments, contract length, and what happens when you sell your home.
That’s why you should carefully review and understand the solar lease terms and conditions before signing the agreement.
This blog discusses some of the key legal issues to think about when reviewing and negotiating solar leases.
Issues to Watch During Lease Negotiation
Negotiating does not always mean changing every part of an agreement. It means knowing what you are agreeing to and asking questions about solar lease terms that could affect your finances. This includes:
1. Transaction Structure
First, you must understand how the transaction is structured before signing. A solar lease may begin as a ground lease with a due diligence period. Review when the developer can terminate, when the lease becomes binding, and how long due diligence lasts.
An option to lease agreement gives you exclusive rights, for a monthly fee, to enter a ground lease transaction. It typically includes permit cooperation and property access for site assessment. You should carefully review the attached ground lease terms.
2. Property Boundaries
The solar lease agreement should clearly identify the property and the developer’s rights. While negotiating, you should check who decides the project boundaries and whether your approval is required. The agreement should identify areas that must remain untouched. Also, make sure the chosen boundaries do not prevent access to or effectively isolate the remaining property.
3. Lender Rights
Solar developers often rely on financing, so Maryland lenders may receive rights under the lease. These rights can include curing defaults or transferring the agreement after a financing problem. Landowners should consider requiring any replacement developer to assume all existing obligations. This includes unpaid rent, demonstrating relevant solar operating experience, and providing a new decommissioning bond. These conditions can provide additional protection after an assignment.
4. Removal Duties
The agreement of solar lease in Maryland should clearly state what happens when the term ends. The developer should be responsible for removing solar equipment-related infrastructure and underground components. The contract should specify how deeply underground materials must be removed and who pays the costs. Clear removal requirements can help protect the landowner from being left with equipment and material after termination.
5. Decommissioning Bond
A decommissioning bond can protect landowners if the developer cannot fulfill removal obligations. The lease should require the bond before construction begins and name the landowner as an obligee. Its amount should reasonably cover the estimated removal costs at the end of the lease. A trusted solar company in Maryland can provide the cost estimate, helping establish an appropriate financial safeguard for decommissioning responsibilities.
6. Due Diligence Payments
Furthermore, the developer should review how payments work during the lease option or due diligence period. They may offer reduced rent while evaluating the property, obtaining permits, or preparing the project. These payments compensate the owner for having the property tied up during that period. Check whether the agreement allows those payments to be credited against future rent before accepting the proposed terms.
End Note
Negotiating a solar agreement starts with knowing which terms deserve attention. You should carefully review the leasing terms and commitment before installation begins. If you are looking to lease solar panels in Maryland, consult Solar Brokers. We offer PPA solar lease options available for homeowners at a less expensive rate. Talk with our team to learn more and decide which is right for you.