Seller Wants Me To Assume Solar Lease

Tip #: Review The Solar System Documents

As outlined in the Solar Lease Addendum, the Solar System Documents include the following:

As soon as you receive these documents, READ THEM CAREFULLY. Did you catch that? Read them carefully, even though theyre boring, even though there is a bunch of legal mumbo-jumbo, please, please, please promise me you will read them.

Make Notes & Follow Up

As you are reading these documents, make note of anything that doesnt make sense or makes you uncomfortable. It is your job to know enough to decide if you want to proceed with the purchase of the house with the solar lease.

Bring in Professionals

If you have questions, I encourage you to call the Lessor directly to discuss them. If you are not satisfied with the answers you receive, or if you have more questions, let your REALTOR® know. Although were not qualified to give advice on Solar panels, many agents will be able to connect you to experts in that field. Alternatively, if your concerns are with respect to the terms of the contract, you may want to consult a lawyer.

Either way, you need to get all warm and fuzzy with these documents. If you proceed with the purchase, this lease will be YOURS.

Get Advice From The Cres Legal Team

If you have a legal question related to solar panels, a problem with anMLS listing, or anything else, wouldnt you be relieved to know you have access to free legal advice? CRES clients can call the CRES ClaimPrevent® Hotline 7 days a week and receive a response from an experienced attorney within 4 hours or the next business day. Every recommendation is confirmed in writing. Its just one of the things we do to help clients prevent claims.

What challenges have you come across when selling property with solar panels?

What If I Bought My Sunrun Solar System

If you bought your solar system up-front or with a solar loan, how you handle the transfer will be up to you. While you can uninstall your solar system and take it to your new home, this can be complicated and costly.1 We recommend that you sell it with your home and include the cost of the solar system in your homes selling price. Recent studies show that rooftop solar panels not only increase the value of a home but may also help it to sell faster.2

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How Will A Solar System Affect The Sale

I have good news and bad news.

Good news many buyers want solar systems! Market demand may vary around the world, but in southern California, many buyers do want solar. Be sure to include details such as solar system size, output, and other characteristics in the marketing materials. Buyers want to know by how much the solar system could reduce their energy bills.

Bad news selling might be expensive, or difficult. Selling with solar can be expensive, if you have to pay off a solar loan or lease prior to the sale.

Even if you dont have to pay it off, it might be difficult to find a buyer who can assume the lease or loan. Most home buyers need to take out a mortgage to buy a house. In addition to qualifying for the mortgage, they will also need to qualify for any solar lease or loan payment.

Are Solar Panels A Selling Point

For most homebuyers, solar panels are indeed a selling point.

In addition to the fact that solar panel systems dont require much maintenance, they can also lower or eventually eliminate utility bills, increase home value, and allow the homeowner to take advantage of money-saving tax rebates and credits.

According to the National Renewable Energy Laboratory, homes with solar panels sell 20% faster and for 17% more than those without.

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Do Leased Solar Panels Save You Money

Yes, in most cases, leased solar panels will save home and building owners money on utility expenses. Solar panel leases are created to disperse the low investment costs of a modern solar energy system over its multi-decade lifespan. With this, fractional monthly payments are almost always lower than power purchased from the electric utility.

What Is A Solar Lease

There are two ways to install a solar electric system on your home: to purchase the system outright, or to lease a system from a company that specializes in that business. Solar leases are an attractive option for those who want the environmental benefits that come along with solar energy but do not want the large cash outlay that may come with purchasing a solar system outright.

When you lease a system, you sign a contract often 20 years with a company that purchases and installs a system on your roof. You then pay that company a monthly fee for the electricity you use, and that company sells any extra energy back to the utility. In many cases you will not receive the benefit of extra electricity generated. That company also reaps the full benefit of the tax credit when purchasing a system currently a 30% credit on your taxes.

In turn, the solar leasing company maintains the system if it breaks, and promises a set fee for electricity, shielding you from increases in the cost of electricity for a decade or more.

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Buy Out Your Solar Lease To Add Value To Your Home

Some solar lease contracts include an early buy-out option, allowing you to buy-out the remainder of the lease and own the solar panels outright. When you own the solar panels, you remove the solar lease from the home sale equation and boost your homes market value.

To decide if buying-out the panels is a practical option for you, compare the purchase offer to the estimated value owned solar panels add to homes in your market. For instance, if the buy-out offer is $6,000 and the solar panels are likely to add $8,000 to your listing price, it might be worth purchasing the panels for a more straightforward selling process.

Consult your real estate agent to assess how much value owned panels would add to your home to help you make the decision.

Pros:

• Selling and negotiation is straightforward without the complication of an attached solar lease
• Potentially sell your home for more with owned solar panels, using the extra profit to cover your buy-out costs
• Widen the scope of qualified buyers buyers can apply for any mortgage with a broader range of lenders without the complications of qualifying for a solar lease
• No extra paperwork for transferring a solar lease
• Reduced time to close home sale

Cons:

How Solar Leases Work

Solar leases and solar PPAs are similar to renting a solar panel system for the home. The owner enters into an agreement with the solar leasing company that entitles the owner to the benefits of the system for the term of the contract, which is generally around 20 years. Under these arrangements, the solar leasing company owns and maintains your solar panel system so it, not the homeowner, is entitled to all the rebates, tax breaks, and financial incentives that are available for the solar panel system. Consumers may indirectly benefit from those savings through lower electricity rates.

While the terms solar lease and solar PPA are often used interchangeably, there is a difference between the two arrangements. With a solar lease, the lessee agrees to pay a fixed monthly lease payment, which is calculated using the estimated amount of electricity the system will produce, in exchange for the right to use the solar energy system. With a solar PPA, instead of paying to rent the solar panel system, the lessee agrees to purchase the power generated by the system at a set per-kWh price. Many of these agreements call for zero money down, with an expected average savings of 10-30% on utility bills. In most cases, the rate will increase by 1%-3% every year. All of this is fine if an owner is planning on staying in the home until the end of the lease term in 20-25 years, but what if the owner wishes to sell the home?

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Buying A House With Pace

PACE financing refers to a means of funding energy efficiency upgrades through residential, commercial and industrial property renewable energy installations.

PACE financing is attached to the property, not the person who took out the loan, since the homeowner makes payments through property taxes. Therefore, the solar equipment payments become your responsibility when you purchase a home that has PACE financing. If youre thinking about taking on PACE financing payments with the purchase of a new home, review the financing terms before you make a purchase.

Worried about affording your panels?

If you find that a solar panel system wont work for your finances, there are alternatives for you. For instance, you could buy into a community solar project. If you invest in a project controlled by the utility company, you could get your electricity at lower rates without having to deal with the financing problems.

Leased Solar Wont Stop You From Selling Your House

Leased solar panels add a dimension to your home sale, but they wont stop your home from attracting buyers or receiving attractive offers. A recent study on homes sold with solar leases by Lawrence Berkeley National Laboratory found that 77% of the leases were successfully transferred to the new property owner, while only 20% of study participants said the leasing agreement scared off potential buyers.

Early on, maybe five, six years ago when those solar leases were a bit newer to people, I think buyers were a little shy when it came to dealing with those types of homes and those types of contracts. But now, I feel like buyers are a lot more receptive to solar leases than they used to be, Morales reassures.

With this in mind, remember theres no need to stress so long as you take the necessary steps to educate buyers when selling your home.

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Educate Prospective Buyers On Your Solar Agreement

Research shows that todays buyers desire energy efficient homes and are attracted to green features. According to a recent survey by the National Association of Realtors , 59% of real estate agents said clients were interested in energy efficiency and sustainable housing features. Another 69% said that promoting energy efficiency in the home listing was very or somewhat valuable.

Nurture buyers go-green instincts by supplying them with the specific benefits of your houses solar system. Give your real estate agent these persuasive details for their sales pitch:

• The total you paid for utilities last month
• The difference between your energy bills before and after you installed solar
• If the buyer is interested in buying-out the lease at a later time, inform them of the estimated value solar panels add to homes in the area
• An overview of the little maintenance required to maintain leased solar panels. Typically in a solar lease, the solar company provides routine maintenance on the panels including repairs covered by the warranty. The homeowner can easily wash dirt and debris off the panels with a hose if needed.
• The coverage the transferable warranty provides if applicable
• Environmental benefits of solar energy

If youre transferring the lease, youll also need to provide buyers with the following information:

• Quantity of energy the leased solar panels produce
• Lease payment amount and schedule
• Rate of payment escalation as per the escalator clause in your solar contract

Selling Your Home With Solar Panels Can Be Easy

If youre planning to sell a home with solar panels, youll likely be pleasantly surprised by how easy it is. In addition to the fact that buyers love solar panels, a residential solar system may also boost your homes value and make it more attractive to new buyers.

To learn more about selling a home with solar panels, contact Sandbar Solar today. As the largest residential and commercial solar installer in Santa Cruz County, Sandbar Solar & Electric has been locally owned for 13 years. You can count on our professional commitment to quality work, ethical solutions, community sponsorship and environmental stewardship.

Were proud of our reputation for designing and installing the most efficient solar panels available across the Central Coast. We invite you to look through our online portfolio of Recent Projects. Our work areas include Santa Cruz and Monterey counties as well as San Jose and the Bay Area.

Did you like this post? Dont forget to share it with your friends!

About the Author

Scott Laskey is the founder of Sandbar Solar & Electric. With a Bachelors Degree in Economics from UC San Diego, Scott has an NABCEP certification, and has lectured on and taught many high-tech construction practices and solar PV technical concepts to education institutions, including Stanford University and state-recognized electrician apprenticeship programs. Scott enjoys sharing his knowledge of the evolving renewable energy space and making a difference in his community.

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Leased Solar Panels Cause Confusion Between Seller Buyer

Q: I’m confused about when sellers are supposed to shut off utilities and how these get transferred. I thought that, typically, within a day or two post-settlement, the buyers would transfer utilities into their name, establish new accounts, etc.

Here’s what happened to me. I recently sold a home that included a leased solar system. The buyer was required to assume the lease, similar to the normal utilities for the property. The buyer switched the rest of the utilities into his name but failed to assume the solar lease. A short time after settlement, one of the buyers had a stroke, which may have overtaken other mundane matters like the assumption of the lease.

Since the lease was part of the sales agreement, is there a default on the part of the buyer? Am I required to continue making payments? If so, do I have any recourse?

A: Here’s the bad news: While your sales contract may have required the buyer assume the lease on your solar panels, the obligation on that lease is yours. You entered into a lease with the solar company to lease the panels. Under that agreement, they’re your landlord and you’re the tenant.

If you try and they still won’t take action to change the name on the lease, talk to an attorney that litigates cases to sue the buyer to enforce the terms of the contract.

Contact Ilyce Glink and Samuel J. Tamkin through her website, ThinkGlink.com. 2019 Ilyce Glink and Samuel J. Tamkin

Pros Of Buying A Home With Leased Solar Panels

With easy-access sustainable energy gaining popularity all over the world, there are more homes with leased solar panels than ever on the modern housing market. Almost always, people are not selling their homes because of their solar lease, so there are still many great benefits of continuing the contract as a new buyer.

Aside from the carbon offset of adopting clean, renewable energy, purchasing a home with leased solar panels may provide buyers with the following benefits:

• Low, expected electricity costs for the remainder of the lease agreement
• Home purchasing power from a lower potential pool of buyers dissuaded by complicated lease agreements
• No future system maintenance costs or concerns, as everything is handled by the lessor

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Selling A House With Leased Solar Panels

If youve leased a solar system from your local solar installer, selling your home may be a bit more difficult than if you owned panels.

In addition to the fact that many would-be buyers are unfamiliar with the process of taking over a solar lease, you may have to buy yourself out of the solar contract if youre unable to find someone to take it over.

According to additional research by Lawrence Berkeley National Laboratory, though, leased panels probably wont impact your homes value. According to the data collected by the study, people who sold homes in Southern California equipped with leased solar panels didnt see a negative impact on their homes value.

In fact, 77% of the solar leases in the group were transferred successfully to new owners, and only 20% of homeowners reported that would-be buyers were scared off by the solar lease process.

Leased Solar Panels And Mls Listings

Lets take a look at an actual example of a sale of a home with leased solar panels gone awry.

Recently, an agent who represents a buyer of a home with solar panels contacted the CRES ClaimPrevent® Legal Team about the following: the listing agent on MLS didnt state that the solar panels on the unit were leased and implied the solar came with the unit. In addition, the transfer disclosure statement didnt say that the panels were leased. The seller did note the leased solar panels in the Seller Property Questionnaire , but the buyer didnt sign it until after entering into the contract.

The buyer believed the solar panels were included in the sale.

In this case, the buyer wanted to complete the purchase, but they were very upset with the listing agent for what they considered misinformation. Upset buyers often lead to lawsuits. How do you avoid that as a listing agent or as the buyers agent?

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What If Im Selling A Home With A Leased Solar Pv System

Many homeowners wonder what will happen if they choose to install a leased solar PV system and then sell their home before the end of the lease term. Generally, you have two options when selling a home with leased solar panels: