Flipping The Switch: Protect Your Solar Lease Before The Power Flows

In California, recording a Memorandum of Lease is key to protecting a solar operator’s lease from being extinguished (and a Power Purchase Agreement from being impacted) when a lienholder, junior in time to the lease, forecloses. Some operators of solar projects on leased land may forgo this simple step, relying on the landowner to record the Memorandum or the visibility of the project itself to notify any would-be lender. However, without a recorded Memorandum of Lease, a foreclosure could extinguish the lease, forcing the solar operator to remove the project prematurely and potentially incur fees under any outstanding revenue agreements or, worse, resulting in default under such agreements. By recording a Memorandum of Lease, an operator can protect its project from most junior foreclosures.