Property considerations for rooftop solar for lessees

More and more lessees are asking lessors to permit them to install solar panels on the roof of the building containing the leased premises. While a good idea for reducing power costs and promoting renewable energy there are a number of legal issues which should be considered.

Premises

Who has control of the roof? If the premises are contained in an existing lease the definition of the premises should be considered. If it is a three-dimensional definition it will be easy to determine if the lessee has any rights to use the roof pursuant to the lease. If the premises is merely a horizontal definition e.g. the premises as indicated on the plan annexed to the lease, the lessee may argue that it has a right to use the roof.

Use of the Roof

Provisions should be contained in the lease or a separate licence to provide for a lessee to install solar panels on the roof of the building and a right to use a specific area of the roof for the location and installation of solar panels and/or ancillary equipment (equipment). The provisions need to deal with such matters as:

Fees, term and security

1. the amount of the licence fee (“roof rent”);

2. the term of the licence;

3. bond/bank guarantee for performance security and make good,

Preconditions

1. the lessee obtaining all approvals from all relevant authorities for the location and installation of the equipment;

2. the plans and specifications for the equipment being approved by the lessor;

3. a structural engineers report as to the structural integrity of the building and the roof and the manner of installation/annexation of the equipment;

4. an electrical engineer’s report with respect to any modifications required to existing electrical switchboards and electrical systems/cabling.

Obligations during the term

1. installation of the equipment, repair and maintenance of the equipment, repair and maintenance of the roof and lessors property, removal of the equipment and make good of the roof and lessors property;

2. access for installation, throughout the term and upon the expiry of the term;

3. insurance and risk;

4. liability of the lessee for damage and indemnity for damage arising from the equipment;

5. ownership/charging of the equipment (lessee, third-party, financing);

6. assignment of a licence for equipment;

7. default and lessors rights on default;

8. relocation and cost of relocation of the equipment;

9. hazardous substances/contamination.

Other considerations

1. Is all power generated to be used on the site or is any excess allowed to be exported to the grid.