Increased Landowner Sophistication Ramps Up Lease Negotiations In Texas

Husch Blackwell LLP
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Texas property owners are becoming more knowledgeable on renewable energy as wind and solar projects continue to thrive in the state of Texas. In the early stages of renewable development, leases were not heavily negotiated and were executed swiftly, at little cost to developers. Today, the expectation is quite different.

Landowners in Texas have become extensively familiar with the renewable industry as wind and solar projects pop up across the state. With that knowledge comes increased interest, and with increased interest comes more attorneys specialized in the business of representing landowners in the renewable field.  Over the last few years, we have seen more and more landowners engage specialized renewable attorneys to review their leases, and we have ourselves received far more requests to represent landowners than we ever have in the past. Due to the increased involvement of attorneys on behalf of the landowners, lease negotiations are now a more drawn out, involved, and intricate process. Landowners are increasingly leveraging their knowledge on what has been agreed to by a developer in the past and the favorable terms obtained by neighbors. Additionally, as landowner attorneys gain experience, they build a solid database and can advise on what has become the new “market” standard, which may be very different than what works for a developer under its financial model for their project.

Due to the increased sophistication of landowners and their attorneys, it is has become increasingly important for developers to engage or involve legal counsel early in the process to advise on revisions that can be made without jeopardizing future sale, loan, or equity transactions. We have unfortunately seen developers agree to unfavorable and unfinanceable terms in order to get a deal done and to meet deadlines, which ends up causing more delays and costs on the back end when legal counsel needs to come in and rectify.  Legal/local counsel has the experience and knowledge to know what can and cannot be accepted when negotiating leases, which will end up saving a developer a good deal of time and money in the long run.

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