Sell Land With a Solar Development Option Agreement: Stuck in the Waiting Period?
Key Takeaways
- A solar option agreement is not a lease — it's the developer's exclusive, one-sided right to decide later whether to lease your land at all. Once you sign, the developer can walk away at any time during due diligence, but you generally cannot; the option gives them the choice, not you, according to the American Farmland Trust's landowner guide and Michigan Farm Bureau
- The option period is a real holding pattern, typically running two to five years and often extendable, while the developer works through interconnection studies, permitting, and financing — and industry data shows grid interconnection alone has stretched to roughly five years on average for projects reaching commercial operation, so "pending due diligence" can mean longer than the option's own stated term once extensions are counted
- You can still sell the land, but a recorded memorandum of option, any exclusivity clause, and any right of first refusal travel with the parcel to your buyer — a cash buyer reads the actual option agreement, confirms what's recorded and what isn't, and makes a firm written offer on the parcel as it sits rather than requiring you to wait out someone else's multi-year decision first
Can You Sell Land That's Under a Solar Development Option Agreement?
Yes — signing a solar development option agreement does not stop you from selling your land, but it does mean your buyer inherits the developer's exclusive right to decide, sometime before the option expires or is renewed, whether to convert it into an actual lease. An option agreement is fundamentally different from an active lease: no turbines or panels are built, no rent is really flowing yet, and the whole arrangement may still end in nothing. What you're holding instead is a modest annual payment, an exclusivity clause that keeps you from dealing with any other developer, and a recorded document that puts every future buyer on notice of a right that hasn't been resolved yet. The real questions are how long that uncertainty can legally run, what a buyer's title search finds, and whether you have to wait it out before you can sell.
This guide covers what a solar option agreement actually is and how it differs from a lease, how long the option period can realistically last once interconnection and permitting delays are factored in, what shows up on title, what happens to the option if you sell, and why a direct cash buyer is often a faster path than waiting for a developer's decision that may be years away. For the different problem of an already-executed, income-producing renewable-energy lease, see our guide on selling land with a wind or solar lease. If what's recorded against your parcel is actually an option to purchase the land outright rather than an option to lease it, that's a different legal animal — see selling land with an unexpired purchase option held by a third party.
What Is a Solar Development Option Agreement, and How Is It Different From a Lease?
A solar option agreement gives a developer the exclusive right — not the obligation — to enter into a solar lease with you at a later date, in exchange for a modest payment now, while they spend years determining whether the project is even feasible. Solar land-use agreements are frequently presented to landowners as "options to lease": for a modest payment, the solar company holds exclusive rights to lease the property, without any obligation to actually do so, according to the Michigan Farm Bureau. The American Farmland Trust's landowner guide describes it even more bluntly for the landowner's side of the bargain: once you sign the option agreement, you generally cannot back out of the project, but the developer can walk away at any point during due diligence. The option agreement grants the developer the option to enter the lease — not you.
This is the core distinction from an executed lease. A lease means construction has happened or is about to, rent is running at its full rate, and the arrangement is generating income today. An option means none of that has happened yet — the developer is still studying whether your land, and the broader project around it, will actually work. Southern Ag Today describes renewable-energy agreements as typically moving through an option/development phase, then construction, then a long operations phase, and finally decommissioning — and the option phase is the only one where nothing is built and the outcome is still genuinely unknown.
During the option period, developers often use a staged due-diligence structure — for example, a series of defined evaluation windows, each triggering a further payment, before the developer commits to move forward — according to NC State Extension's overview of solar due-diligence practices. Compensation during this phase is usually structured as a lump-sum "bonus" payment when you sign, an annual per-acre payment for the duration of the option, or some combination of the two — and per the American Farmland Trust's guide, per-acre payments during this phase are typically a small fraction of what the same acreage would earn once the project reaches its operating phase and the lease is actually generating rent. We keep this qualitative on purpose: every developer, project, and market is different, and we never publish dollar figures for option or lease payments as if they were a rule.
How Long Does the Option Period Actually Last?
Option terms are commonly two to five years, and most agreements give the developer the right to extend that period one or more times — often for an additional payment — before they have to decide, according to Penn State Extension and the American Farmland Trust's landowner guide. Michigan Farm Bureau describes the typical option as running "at least one year, but can provide for multiple years." The catch for a seller is that the stated term on paper is rarely the whole story.
Interconnection delays routinely outrun the option's own timeline. Before a solar project can be built, it has to clear a utility's interconnection queue — the multi-stage review (feasibility study, system impact study, facilities study) that determines whether and how the project can connect to the grid. Average queue duration has stretched from roughly two years in 2008 to about three years in 2015 to around five years in 2023 for projects that ultimately reached commercial operation, and a project that misses a study-cycle deadline can be pushed into the next cycle, adding a year or more, according to industry data summarized by People's Company, a landowner-facing land management firm. Put together with permitting and financing, overall project timelines that once ran roughly two years now commonly stretch to four to six years or longer. That's why a developer's option period often gets extended rather than allowed to lapse — the underlying grid and regulatory process, not just the developer's own pace, is what's actually setting the clock.
The upshot for you as the landowner: if your option was signed with a stated multi-year term, don't assume it quietly expires on schedule. Read your actual agreement for the extension mechanics — how many extensions are allowed, whether they're automatic or require a new payment, and whether there's any outer limit at all — because "pending due diligence" can legitimately mean a much longer wait than the first number printed on the contract.
What Do You Give Up During the Option Period — Exclusivity, Confidentiality, and Use of the Land?
Signing a solar option agreement typically comes with three obligations that constrain you long before any lease exists: exclusivity, non-interference, and often confidentiality. The exclusivity clause means you cannot engage with a competing solar developer on the same land while the option is active — you've effectively taken your parcel off the market for anyone else's renewable project, according to the American Farmland Trust's guide. A non-interference provision requires you to give the developer access for due diligence — soil testing, sun tracking, surveys — even though nothing has been built. And many agreements include confidentiality clauses covering the financial terms and sometimes even the developer's identity, meaning discussing the deal with neighbors could technically breach the contract, per Michigan Farm Bureau.
You generally keep the right to farm, graze, or otherwise use the land during the option period, so long as it doesn't interfere with the developer's access and testing — the option doesn't fence off the property the way an operating solar array eventually would, according to the American Farmland Trust's guide. But it does mean long-range planning has to account for the possibility that the option gets exercised at any point within its term, and that the specific acreage the developer ultimately wants (the "solar footprint") may not be finalized until well into the process.
Some agreements also grant the landowner — or reserve for the developer — a right of first refusal in connection with the eventual project, which is a separate mechanic from the option itself: an option lets the holder act unilaterally on pre-set terms, while a ROFR only activates once you decide to sell or lease to someone else. If your agreement includes a ROFR component, our guide on selling land with a recorded right of first refusal explains how that piece works and how it's triggered or waived separately from the option.
Does the Option Show Up on Title, and What Happens When You Sell?
Developers typically record a memorandum of option (sometimes bundled with a memorandum of the underlying lease terms) at the county to protect their priority and put future buyers and lenders on notice — because in real estate, recording is effectively a race to the courthouse, and the party who records first generally has the superior claim, according to Carruthers & Roth's discussion of recorded memoranda. Once recorded, that memorandum appears as an exception under Schedule B of a buyer's title commitment, the same section where easements, rights-of-way, and lease memoranda show up. A title company and a prospective buyer's attorney will want to see the actual option agreement — not just the memorandum — to confirm the exercise window, any extension rights, the assignment clause, and whether a right of first refusal or purchase option is layered on top.
Because the option agreement is a recorded, property-related right rather than a personal contract, it generally binds your successors — heirs, an LLC you transfer the land into, or a buyer you sell to — the same way a recorded covenant or easement runs with the land, per Cornell Law School LII's explanation of covenants that run with the land. Selling the parcel doesn't cancel the option; it hands the same exclusivity obligation, and the same wait, to whoever buys from you, unless the option is released, expires on its own terms, or the developer agrees to terminate it. The American Farmland Trust's guide notes that a solar lease (and, by extension, an option folded into one) typically permits the landowner to sell or transfer the property, but only if the buyer agrees to assume the existing obligations, and generally requires the landowner to notify the solar company before the sale closes.
On the developer's side, the option itself is usually assignable — meaning the company that signed you originally can hand the option off to another developer, an independent power producer, or a lender, often without needing your consent, according to attorney commentary from Emens Wolper Jacobs & Jasin. That's worth flagging clearly to any buyer: the party who eventually decides whether to exercise the option against the land may not be the company whose name is on the original agreement. A buyer's attorney may also want an estoppel-style confirmation from the developer — a signed statement on the option's current status, whether it's been exercised, and whether any default exists — the same practice title companies use for confirming active leases, per Cornell Law School LII's explanation of estoppel certificates. Neither party can unilaterally shorten the option's stated term just because ownership of the land changed hands.
Does a Solar Option Agreement vs. an Executed Lease Change How the Sale Works?
The practical difference for a seller is mostly about what a buyer is actually inheriting: uncertainty and a small holding payment, versus a defined, income-producing arrangement.
| Solar Option Agreement (pre-lease) | Executed, Operating Solar Lease | |
|---|---|---|
| What's built on the land | Nothing yet | Fenced solar array, access roads, substation |
| Income to the landowner | A modest annual or lump-sum holding payment | Full operating-phase rent, often escalating |
| Certainty the project happens | Unknown — developer can walk away | Already committed, project is operating |
| What's recorded on title | Memorandum of option | Memorandum of lease |
| Exclusivity for the landowner | Usually yes, for the option term | Not applicable — the lease is already in place |
| Buyer's underwriting focus | Exercise window, extensions, assignment clause, release terms | Remaining term, escalators, decommissioning security, estoppel |
| Typical buyer pool | Narrower — most buyers want either a clean parcel or a producing lease, not a maybe | Somewhat wider — income investors specifically seek these out |
If your parcel already has a signed, operating lease with panels or turbines in the ground and rent being paid, our companion guide on selling land with a wind or solar lease walks through how that transfers, how the memorandum shows on title, and how decommissioning security factors in — a meaningfully different, and usually more straightforward, situation than an unresolved option.
What Are Your Options for Selling Land Under a Solar Development Option?
If a solar option agreement is sitting on your title, you generally have three paths.
Option 1: Wait it out and see if the developer exercises. You can simply hold the land through the remainder of the option period (and any extensions) and see whether the project moves forward. This costs you nothing extra to do, but it also means years of limited marketability, an exclusivity clause that blocks other renewable-energy deals, and no guarantee the project ever gets built at all — interconnection and permitting delays can stretch well past the option's original stated term.
Option 2: List it and disclose the option. You can put the parcel on the open market and disclose the option, memorandum, and any exclusivity or ROFR terms up front. This can work if a buyer specifically wants exposure to a possible future solar deal, but many retail buyers and their lenders will hesitate — or a lender may require the option resolved before financing closes — once they understand the developer, not the landowner, controls whether and when the arrangement converts into anything.
Option 3: Sell directly to a cash buyer, subject to the option. A direct cash buyer like Jerez Land reads the actual option agreement — not just the memorandum — confirms the exercise window, extension rights, assignment clause, exclusivity terms, and any attached right of first refusal, and makes a firm written offer on your specific parcel as it sits. There's nothing for you to terminate or negotiate with the developer first, and you don't have to wait years to find out what someone else decides to do with your land.
Request a no-obligation cash offer and we'll review your property and the option agreement together. There are no commissions or listing fees, and we can move on your timeline instead of the developer's.
Dealing with this alongside other complications? Our guides on selling land to a developer and how much your land is worth cover related questions that often come up around a development-stage encumbrance. For more guides on selling land in less-than-perfect situations, visit our blog.
Frequently Asked Questions
We signed a solar option agreement four years ago and the company still hasn't said whether they're building — can we sell the land in the meantime?
Yes. Signing the option doesn't take your ability to sell away; it means whoever buys the parcel takes it subject to the same recorded option and the same exclusivity obligation you've been living under. Read your actual agreement for the exercise window and any extension provisions — four years without a decision is common given how long interconnection and permitting now take, and the option may still have time left, including extensions, before it lapses. A buyer's attorney or title company will want to see the option itself, not just the recorded memorandum, to confirm what's actually still active. A direct cash buyer can purchase the parcel subject to the option as it stands, without requiring you to wait for the developer's decision first.
My dad signed a solar option agreement a few years ago and has since passed away — are my siblings and I stuck with it until it expires?
Generally yes, at least until the option expires, is exercised, or is released — a recorded option is a property-related right that binds successors, including heirs who inherit the land, the same way a recorded easement or covenant does. That doesn't mean you can't sell; it means whoever you sell to also takes the parcel subject to the option, and you'll likely need to notify the solar company of the change in ownership, since most agreements require that. Pull the actual signed option (not just the county's short-form memorandum) to confirm the exercise window, any extension rights, and the assignment language, and have an attorney confirm how your state treats inherited property obligations like this one. A cash buyer familiar with these agreements can purchase the land as-is, with the option still attached, without you having to resolve it with the developer first.
Is a solar development option the same thing as a right of first refusal on our land?
No — they're different mechanics that sometimes appear in the same agreement. An option gives the holder the unilateral right to act on pre-set terms whenever they choose, within the option period, regardless of whether you've decided to do anything; a right of first refusal only activates once you decide to sell or lease to someone else, and simply lets the rights-holder match that deal instead. A solar development option agreement is primarily an option — the developer alone decides whether to convert it into a lease — but some agreements layer a separate ROFR on top, often tied to a future purchase. If your agreement includes both, read each clause separately, because they trigger differently and are usually released or waived through different processes. Our guide on selling land with a recorded right of first refusal covers that mechanic on its own.
We're getting a small annual payment from a solar company for an option, but nothing has ever been built — does that mean the project is dead, or could it still happen?
An option payment with nothing built usually just means the project is still in its due-diligence window, not that it's dead — developers routinely hold land under option for years while interconnection studies, permitting, and financing come together, and none of that requires visible construction. Grid interconnection alone has averaged around five years for projects that eventually got built, and overall development timelines commonly run four to six years or longer from initial site work to commercial operation. The only way to know your specific project's status is to ask the developer directly for a timeline update, and to read your agreement for any deadline by which they must exercise the option or let it lapse. Until it's formally exercised, expired, or released, the option and its exclusivity clause stay in effect regardless of how quiet the project has gone.
We want to sell our land while the solar option is still active — does the buyer get stuck honoring the developer's exclusivity, or does selling cancel the option?
A sale does not cancel the option — it transfers the same obligations to your buyer, including the exclusivity clause that prevents dealing with a competing developer, until the option expires, is exercised, or is formally released. Because the option (and often a related memorandum) is recorded against the property, it shows up in your buyer's title search the same way an easement or lease would, and most solar agreements require the landowner to notify the developer of any change in ownership. This is exactly why many retail buyers hesitate on a parcel under an active option — they'd be taking on someone else's unresolved, multi-year decision. A cash buyer who understands these agreements can purchase the parcel subject to the option, without needing it resolved first.
How is a solar option agreement different from land that already has a signed, operating solar lease on it?
The difference is what's actually there to inherit. An option means no lease exists yet — nothing is built, income is limited to a modest holding payment, and the entire project could still be abandoned by the developer at any point during due diligence. An operating lease means the array or turbines are built, rent is running at its full rate, and the developer has already committed capital to the project, so a buyer is stepping into a defined, income-producing arrangement rather than an open question. Both are recorded on title and both bind a buyer who purchases the land, but they attract very different buyer pools: an executed lease can appeal to an income-focused buyer specifically, while a live option mostly narrows the field, since most buyers don't want to purchase years of someone else's uncertainty. If your land already has a built, operating project, see our guide on selling land with a wind or solar lease instead.
Disclaimer: This article is for informational purposes only and does not constitute legal, financial, or professional advice. Laws and regulations vary by jurisdiction and change over time. Always consult a licensed real estate attorney before making decisions about leases, options, easements, or property transactions. Jerez Land is not responsible for actions taken based on this information.