Check Solar Panel Agreements as Part of Home Sale

The issue of solar panel leases on residential properties is beginning to come up in relation to home sales. SAMCAR members are advised to check out the details of the solar panel agreement—if it is a lease agreement—as part of their due diligence.  SAMCAR and its members encourage energy conservation and alternative methods for generating power, but  this emerging issue suggests that for some transactions, solar leases can be a liability.

For example, in a San Leandro transaction, the seller—instead of owning the solar panels—leased the panels from an alternative energy company which requires the new owner of the house to assume the contract. In this case, the solar panels were a relatively new addition and the lease had almost 19 years remaining. Due to this added cost, the seller was forced to drop his sales price three times.

For people who own rooftop power systems, solar can add value to the home—up to $25,000 for the average installation in California, according to a study by the Lawrence Berkeley National Laboratory.

Leased systems are a different entity, though, because they're considered personal property rather than part of a house. Leasing is driving a boom in solar sales because most require no money upfront for systems that cost thousands of dollars. That's made solar affordable for many, helping spur a 38 percent jump in U.S. residential installations in the past year. Since the business model has only gained serious traction in the past two years, the details embedded in the leases are only starting to emerge.

There is also one more hurdle: to take over the lease, most alternative energy firms have to approve the new leaseholder. However, less than one percent of buyers who take over as solar panel lease are denied. In the vast majority of leases, buyers who qualify for a mortgage will also qualify to take over a solar lease.