Mount Signal, Coordinating Title Insurance and Prescriptive Rights

Transcript

I worked with AES solar and Silverstone and 8Minute energy on a 266-Megawatt solar project in Imperial County California. This was for San Diego Gas and Electric. And this project was almost a billion dollars and had two tiers of debt including a Federal land federal grant. It was one of the most complicated projects that I’ve worked on because typically in a project of this size you would try to mitigate the risk by spreading out the transaction over several days. However, in this case because of the nature of the transaction this project was structured so that the closing had to happen concurrently all in one day meaning that the joint venture partner had to be bought out, the land had to be purchased the leases had to be closed on, the easements had to be recorded, and debt had to be recorded. So, we had this huge, very complicated transaction. My responsibility was to coordinate all the title insurance, to work with all the landowners, get all the documentation together, and to be the boots on the ground with all the real estate and tidal issues to get this closing accomplished. And obviously, it was a very important project that became the basis for the terraform public company and subsequently was owned by SunEdison. There were many different issues on this project besides the nature of the transaction. We had to deal with some unique issues with the local water district. The water district had been active in the community for many years. And as this happens with certain entities, especially governmental entities, sometimes they record their rights.

But in addition to recording their rights, they may also acclaim what we call prescriptive rights. So, in this case, what we found is that we when we went to prepare our site plan, that we had to engage with the local water district and make a decision about the nature of their rights and how we were going to deal with those for purposes of the project. So, a typical right of way might be 50 feet but in the case of the prescriptive rights, they might claim a total of 80 feet. And there is nothing of record. So, it’s not like you could point to a document of record and say OK here it is in the record. This was actually prescriptive which means it was a claim that the water company made but it wasn’t perfected legally in terms of documentation. So, we had to make the decision of how we would address that right in terms of developing our site plan because on a solar project the difference between 50 feet and 80 feet for a right of way means that you lose about 30 additional feet in terms of your area that you can develop. So, the way that we solve this in order to be conservative and cautious was to meet with the water district and understand the nature of all the prescriptive rights and then design around their prescriptive rights and show all of that on our ALTA survey in order to avoid having issues later on with eminent domain and condemnation and that type of thing.