Wind Energy In Iowa (03/2010)

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Discussion of Wind Energy Projects and Leases in Iowa. Real estate related issues to watch for in wind energy leases.

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Wind Energy In Iowa (03/2010)

  1. 1. REAL ESTATE RELATED ISSUES TO WATCH FOR IN WIND FARM LEASES DRAKE LAW SCHOOL REAL ESTATE TRANSACTIONS MARCH 2010 BY Rachelle L.K. Johnson Johnson Law Firm, P.C. 204 E. Liberty Street, PO Box 69 Montezuma, IA 50171-00069 641/623-2889 [email_address]
  2. 2. Allocation of Liabilities <ul><li>Hold harmless provisions </li></ul><ul><li>Liquidated damages clause? </li></ul><ul><li>Include defense attorney and expense provision </li></ul><ul><li>Roads </li></ul><ul><ul><li>Responsibility for maintenance/repairs </li></ul></ul><ul><ul><li>Who can use? (e.g., farm machinery, etc.) </li></ul></ul>
  3. 3. Allocation of Liabilities <ul><ul><li>Nuisance suits </li></ul></ul><ul><ul><ul><li>sound, wind effect, light-blocking, flicker shadow, interference with tv/radio/communication reception, view-blocking, effects on wildlife, property values, safety, electromagnetic radiation </li></ul></ul></ul><ul><ul><li>Trespassers </li></ul></ul><ul><ul><li>Personal injury </li></ul></ul><ul><ul><li>Criminal activity – forfeiture </li></ul></ul><ul><ul><li>Environmental impact </li></ul></ul>
  4. 4. Assignment of Contract Rights <ul><li>Can either party assign? </li></ul><ul><li>Do we want to require Landowner approval prior to assignment? </li></ul><ul><li>Make original Developer liable if Assignee fails to uphold agreement? </li></ul>
  5. 5. Title Issues <ul><li>Proof of title </li></ul><ul><ul><li>Make Developer pay all title expenses </li></ul></ul><ul><ul><li>Make Developer pay all title-clearing expenses </li></ul></ul><ul><li>Liens and encumbrances </li></ul><ul><ul><li>Any subsequent sale will be subject to the agreement unless wind rights retained </li></ul></ul><ul><ul><li>Developer will require notice if landowner defaults on mortgage </li></ul></ul><ul><li>Recording of Agreement </li></ul>
  6. 6. Remedies for Damage <ul><ul><li>Roads </li></ul></ul><ul><ul><li>Soil compaction </li></ul></ul><ul><ul><li>Structures & improvements </li></ul></ul><ul><ul><li>Crop damage </li></ul></ul><ul><ul><li>Livestock </li></ul></ul><ul><ul><li>Drainage tiles </li></ul></ul>
  7. 7. Insurance Issues <ul><ul><li>List Landowner as a co-insured </li></ul></ul><ul><ul><li>Proof of insurance annually </li></ul></ul><ul><ul><li>Notice if failure to pay premium </li></ul></ul><ul><ul><li>Liability limits </li></ul></ul><ul><ul><li>Separate policy from remediation bond </li></ul></ul>
  8. 8. Termination of Agreement <ul><ul><li>Developer will want right to terminate at any time for any reason </li></ul></ul><ul><ul><li>Landowner can only terminate if good cause </li></ul></ul><ul><ul><ul><li>What is “good cause”? </li></ul></ul></ul><ul><ul><li>Termination if material default of terms of agreement </li></ul></ul><ul><ul><li>Process for termination </li></ul></ul>
  9. 9. Remediation of Site <ul><ul><ul><li>What must be done to remove or remediate turbine site, roads, underground cables, cement foundations? </li></ul></ul></ul><ul><ul><ul><ul><li>Take before photos </li></ul></ul></ul></ul><ul><ul><ul><li>Common to just bring in 4 feet of dirt to cover the cement foundations </li></ul></ul></ul><ul><ul><ul><li>Maximum time frame </li></ul></ul></ul><ul><ul><ul><li>Bonding/escrow requirements at beginning of project set aside for remediation – annual proof and notice if lapse </li></ul></ul></ul>
  10. 10. Dispute Resolution <ul><li>Most require binding arbitration </li></ul><ul><ul><li>Who pays? </li></ul></ul><ul><li>References from Landowners in other projects? </li></ul><ul><li>Due diligence – financial background of Developer </li></ul>
  11. 11. Miscellaneous <ul><ul><li>Utilities to site </li></ul></ul><ul><ul><li>Signs on site </li></ul></ul><ul><ul><li>Tours of project site </li></ul></ul><ul><ul><li>Noise control </li></ul></ul><ul><ul><li>Notice before commencement of due diligence </li></ul></ul><ul><ul><li>Reimbursement for all costs, including attorney’s fees </li></ul></ul><ul><ul><li>Interest on late payments </li></ul></ul>
  12. 12. Miscellaneous <ul><li>Employing licensed, bonded, insured contractors </li></ul><ul><li>Installing security devices/fences </li></ul><ul><li>Distributing proceeds in case of condemnation </li></ul><ul><li>Procedure for modifying agreement in the future </li></ul><ul><li>Noxious weed control </li></ul>
  13. 13. Miscellaneous <ul><li>Need for/use of gates </li></ul><ul><li>Topsoil/tree removal </li></ul><ul><li>No non-wind easement use w/o Landowner approval (e.g., cell phone towers, cable, etc.) </li></ul><ul><li>Notice of all Assignees? </li></ul><ul><li>Notice of all Lenders? </li></ul>

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