Before You Sign Anything
Energy leases are 25–40 year commitments. The seven items below are the ones most often missed or weakly written. Walk through every one with your attorney.
- 1Independent attorney review
Hire a Michigan attorney experienced in energy leases — not the developer's attorney. The cost (usually a few thousand dollars) is small relative to the value of a 30-year contract.
- 2Annual escalators
Confirm that lease payments increase each year. 1.5%–2.5% annually is common; without an escalator, your real income falls every year of the contract.
- 3Drain tile protection
Require the developer to map existing tile, repair damage at their expense, and maintain functional drainage for the life of the project. Get it in writing with specific timelines.
- 4Crop and soil compaction damage
Per-acre payment formulas for crops damaged or unfarmable during construction, and soil decompaction commitments after construction.
- 5Property tax clarity
Spell out who pays incremental property taxes resulting from the improvement, and confirm the project does not jeopardize agricultural assessment on un-leased portions.
- 6Decommissioning bond
A financial assurance instrument — bond, letter of credit, or escrow — sized to fully cover removal of equipment and restoration of the land at the end of the project's life.
- 7Assignment & change-of-control clauses
Limit the developer's ability to assign the lease to weaker parties, and require notice and continued performance of all obligations by any successor.