I currently possess mineral rights in 40 acres located in Kings Co. and have recently been offered a one time payment to sign a 40+ year contract of subordination and waiver of surface rights for a solar project in the area. Oil exploration has occurred on the property in the past, but I don’t believe they have ever discovered much, if any.
I am not against solar development, but the contract seems to give the solar developer all the freedom and me all of the liability and restrictions. For example, I have been provided a map of “potential” drill set asides, though that binds them to nothing. Also, there is a phrase in the contract that seems to hold me liable should any future drilling operation disturb the solar project. This makes me very uneasy.
My inclination is to try to sell the mineral rights and be done with it, though I am not sure of the right way to proceed (attorney? real estate agent? do it myself?). Or is this all just par for the course for these types of contracts? 40 acres seems like small potatoes, so if I don’t sign I imagine they just work around me.
This is not a DIY situation. Involve an attorney licensed in the state where the property is located. A solar array without specified set asides could seriously damage the value of your mineral interests.
This post is not legal, investment or tax advice, it is for discussion purposes only. Reading or responding to this post does not create an attorney-client relationship.
What you describe is very typical of the solar developers and I suspect that I even know the development. The type of waiver the solar companies want do not have limits, even if they never develop the solar project. You are correct that they want indemnification if you utilize your mineral interests from the drill islands (the set-aside land that they offer). On that topic, there needs to be a provision granting you access to those drill islands if you intend to waive your surface rights.
They typically do not want to buy mineral interests, but you could try, knowing that you are selling a real property asset. On the 40 acres, depending upon where it is located in their development plans, they may not be able to work around you.
Sometimes they will offer to reimburse for attorney fees to cover a review. They will limit the total amount, which may not cover it all but might help defray the costs of such review.
Hope this helps.
Jean
Thank you @Jean_M_Pledger for this feedback. I would ask for them to cover the cost for a review by an attorney, but it hardly seems worth it for the amount they are offering to compensate for the waiver. This is an inherited asset and not something I have actively managed. The long term waiver could make it difficult for those who inherit my rights to benefit form them. My preference is to sell, but now I wonder if the solar project increases or decreases my ability to sell or likelihood of getting a fair price.
Concerning a sale, while the solar company may not be interested, there are other owners in the area that might be so willing. You might try contacting @Roger_McNitt who is a part of this forum,