Key clauses in a long-term land lease for a project

A long-term land lease for a solar plant, wind farm or industrial facility will outlast many of the people who sign it. The terms agreed today will govern how the land is used, how payments are made and what happens at the end, often for decades. This guide explains the clauses that matter most — for landowners and developers alike. It is not legal advice; both sides should have their own lawyers review any lease.

1. Parties

Who is leasing to whom. For landowners, every co-owner should be a party, or properly represented. For developers, the lessee is often a project company set up for that specific project. See jointly owned land and co-owner consent.

2. Property description (schedule)

The leased land should be precisely described:

• District, taluk, village
• Survey numbers and subdivisions
• Extent
• Boundaries on all sides
• A sketch or map, ideally based on a boundary survey

Vague descriptions cause disputes. See FMB sketch explained.

3. Purpose and permitted use

What the land may be used for — a solar plant, wind turbine, access road, substation, industrial facility — and associated activities. Landowners should understand exactly what is allowed.

4. Term

• Start date — signing, or a defined commencement event
• Duration — often aligned with the project life
• Renewal or extension — options to extend, and on what terms
• Early termination — when either party can end the lease

5. Rent and payments

• Amount — upfront payments, annual rent, or both
• Payment schedule — when payments are due
• Method — directly to each owner's bank account
• Late payment — interest or consequences
• Construction vs operating periods — different rates, if any

6. Escalation

How rent increases over time — fixed periodic increases, or linked to an index. Without escalation, inflation erodes the real value of rent over a long lease.

7. Taxes and charges

Who pays land revenue, property tax and other charges during the lease. Clear allocation avoids disputes.

8. Access

• Developer's right to enter and use the land, and access routes
• Landowner's access to the rest of their land
• Access for maintenance, including heavy vehicles

See wind project right of way.

9. Crop and damage compensation

How crop damage during construction and maintenance is assessed and paid. Important where farming continues on adjacent land.

10. Restrictions on the landowner

Limits on what the landowner can do — such as building near turbines, planting tall trees near solar arrays, or granting rights to others over the leased area.

11. Transfer and assignment

Project leases usually allow the lessee to transfer the lease to another company — for example, when the project is sold — and to lenders as security. Landowners should understand that the lessee may change, and that obligations pass to the new lessee.

12. Lender rights

Lenders often require rights to step in if the lessee defaults, to cure defaults, and to receive notice before termination. These are standard in project financing but should be understood by landowners.

13. Landowner warranties

Landowners typically confirm that they own the land, have the right to lease it, and that there are no undisclosed encumbrances. Inaccurate warranties can create liability, so be accurate.

14. Restoration and decommissioning

What must be removed at the end — equipment, foundations, roads, cables — to what depth, and to what standard the land is restored. Ideally with some security for costs. See wind turbine decommissioning and end-of-life solar modules.

15. Insurance and indemnity

Who insures what, and who bears liability for injury or damage connected to the project.

16. Succession

What happens if a landowner dies — the lease binds heirs, and payments go to them. Clear succession terms help heirs and lessees alike. See patta transfer after inheritance.

17. Dispute resolution

How disputes are resolved — negotiation, mediation, arbitration or courts — and where. Practical, accessible mechanisms benefit landowners.

18. Registration and stamp duty

Long-term leases generally need registration and stamp duty. Who pays these costs should be stated. Check current requirements with the Registration Department.

A quick checklist

Common mistakes

• Signing with vague property descriptions
• No escalation over a very long term
• Ignoring restoration because it seems far away
• Not understanding transfer and lender clauses
• Not taking independent legal advice

How we help

Through land documentation and due diligence and our work with landowners, we help prepare accurate property schedules, organise supporting documents and explain common lease terms. Drafting and legal advice should come from qualified lawyers acting for each party.