What is a Land Lease Agreement?

A land lease agreement isn’t that difficult of a concept to grasp, I promise you! Just like an apartment owner would rent their apartment to a tenet, people can do the same thing with land! What the land tenant does with the land is subject to the terms of the land lease agreement. In the case of mobile home parks, for example, a land lease might allow the tenant to actually build structures on the property for a variety of years. There are a variety of intriguing industries can lease land too. Solar energy companies like to lease property and so do event hosts for outdoor music festivals!

What it boils down to is that a land lease is an agreement between two people, one owns the land, and one wants to use it for a specific purpose. You might not be in the business of writing a land lease, and we don’t suggest you do so without the appropriate council, but having a guide to help you understand the overarching theme of land lease will help you in your journey

1. The Most Important Thing a Land Easement Should Contain

EXPECTATIONS. This is extremely important. For instance, the idea that the land leaser will need to return the land back to its original state. This might be something that is highly important to you as a landowner. However, it might not, it might be that your property is zoned for industrial use and so a solar power company would not need to do much to return it to a condition whereby it could be used for another industrial purpose. How the land is used and managed should be included as well, never leave anything up to assumptions.

2. The Details of the Land

Describing your properties attributes within the lease is a great way to avoid any pitfalls. Include the size in acres of the land you are leasing or if you are only leasing a portion of it, then that should be defined in the contract as well. Make sure to include your property lines so that the other party doesn’t encroach on land that isn’t yours. If you happen to have a map of your property or any drawings or representations, these can be a good thing to add to the contract to establish how things were before the lease.

3. How the Property Will Be Used

This seems to go without saying but including the exact PURPOSE of the land developer will help keep them from overstepping their boundaries. You wouldn’t want a farmer with a grazing lease on your property to come in and build a fair ground! Easements are arranged for a variety of industries.

  • Farmers need land to expand their operations without having to invest a lot of up front capital.
  • Solar and wind power developers need large tracts of land to develop on without having to pay enormous prices to purchase undeveloped land.
  • Hunters like to lease other people’s property for hunting season.
  • Cell phone tower companies need small portions of a property or even a rooftop to develop their cellular network infrastructure.
  • Outdoor advertising companies need portions of property to erect billboards or small signs.

Essentially, it is important to delineate in the contract what the land will be used for specifically and outline what the property cannot be used for.

4. Who Should Maintain the Property?

A solid contract would also denote who is responsible for maintenance and improvements to the land being leased. For instance, maintaining the access roads onto the property or the utility infrastructure. If improvements to the property are allowed, and you would like to keep those improvements on the property after the lessee’s agreement is absolved, then a sincere agreement would figure out a way to reimburse a portion of the lessee’s investment on any improvements they leave behind.

5. Length of the Property Easement

There should be a specified term duration with start and end dates. Each industry has an average term duration. You can choose to add a section that will allow the lessee to extend their lease beyond this for a certain amount of time if the lessee meets your requirements (which should also be outlined in the agreement). There should also be terms defining the terms that would allow you to terminate the lease if you so wish.

Average Lease Term Duration By Industry

How Long does a Wind Lease Usually Last?

Wind easements averages about 50 years.

How Long does a Solar Lease Term Last?

Solar power leases can last from 35 to 45 years

What is the average length of a Cell Tower Lease?

The average telecommunications lease can be anywhere from 35 to 50 years.

How Long do Farming/Grazing Leases Last For?

Agricultural easements can last anywhere from 10 – 20

How long does a Billboard Lease run for?

Outdoor advertising leases average about 35 years.

How long is a Traditional Energy Lease Term?

Traditional energy easements can last anywhere from 20 to 40 years.

6. NOW the Important Stuff: The Financial Terms

How much you should be paid and when you should get paid. These. Are. Crucial. The person renting your property needs to also provide you with proof that they have liability insurance for anything that takes place on your land. You might be smart to take out your own liability insurance in case the lessee lets their insurance lapse or fails to provide the kind of coverage required in any unfortunate events.

7. Don’t Go At it Alone

Like I said at the beginning of the article, I don’t suggest attempting to lease your property on your own from A to Z. You should definitely have a skilled individual with knowledge in the legal language of a land easement to help you. But you can’t have just any ‘ol lawyer review it. Industries like the Outdoor Advertising business have lawyers specifically trained in lease agreement contract language, and they are on the side of the lessee. That means they are trying to do what is best for THEIR client. Not you.