Option-to-Lease Conversion

Energy developers commonly leverage acreage optioning to secure land rights in advance of a project’s approval. Once a project is ready to move forward, an option-to-lease (or option-to-purchase) conversion is likely to occur, which locks in a long-term hold on the property for the developer.

Steps Involved with an Option-to-Lease Conversion

Specific steps vary depending on the situation, but most option-to-lease (or option-to-purchase) conversions include the following milestones:

Notifying the Landowner: After obtaining all of the necessary approvals, data, and financing, an essential step is to notify the landowner that the option will be exercised. Notification typically occurs in writing, but it may be wise to have land agents reach out and provide personalized communication to address landowners’ questions.

Filing the Lease or Purchase Agreement: A copy of the lease or purchase agreement needs to be filed at the appropriate courthouse.

Keeping the Landowner Informed: The “pre-operation” phase of an energy project can take months or even years, as a variety of tasks must be completed prior to the go-live date. In the case of a solar project, pre-operation could span at least 12 months to prepare the ground and surrounding areas, obtain local permits, and complete construction. Landowners may understandably have questions about potential crop loss, drill site locations, and other factors. Proactive communication is key.

Ensuring Updated Payment Amounts: Payments to landowners usually increase as a project advances from acreage optioning through pre-operation and into operation. Ensuring timely, accurate payments in accordance with signed agreements is key for maintaining healthy relationships.

Partnering for Smooth Option-to-Lease Conversions

Working with a land company like our team at Trigen can help ensure smooth option-to-lease conversions. We offer a variety of on-the-ground services to support energy companies from ideation through project completion and beyond. Contact us to discuss our capabilities for land, infrastructure, and energy projects:

●     Lease acquisition

●     Project management

●     Title work

●     Right of way

●     Due diligence

●     Heirship

●     Abstracting

●     GIS

●     Seismic permitting

Need help with an option-to-lease conversion? Reach out to tell us about your project.