Selling a Home with a Solar Lease

One of the biggest “Gotchas” of buying or selling a home with a rooftop solar system has to do with who owns the system. The solar panels may be on the homeowner’s roof, but this does not necessarily mean that the system belongs to the homeowner.

Our sellers at 2232 Portsmouth Way recently signed a solar lease in 2016 to save money on their energy bills.  In 2018 they decided to sell as they were moving out of the area. The problem was that they had 18 years left on a 20-year lease (approximately $18,900 in remaining solar lease payments). The solar company had also filed a UCC-1 financial statement on the title of their home.

(UCC1 financing statement  (an abbreviation for Unified.Commercial Code-1) is a legal form that a creditor files to give notice that it has or may have an interest in the personal property of a debtor (a person who owes a debt to the creditor as typically specified in the agreement creating the debt).

Sellers are responsible to pay off any loan tied to their property prior to selling (transfer of ownership).  Solar is no different. These sellers were responsible for paying off their solar lease obligation as part of the sale or through other means IF the buyer(s) were not willing to assume the lease.

It was essential that we attract buyer(s) who saw the benefits of solar energy and were willing to assume the lease. In preparation to going on the market, we collected the following information to have available in our disclosures for prospective buyers.

Solar Power Agreement
Lease options

Buy out options
PG&E Bills demonstrating the savings and credits

Another hurdle we had to consider was a buyer getting a loan to purchase the home and also taking over the lease. The lease obligation could affect their debt-to-income ratio, therefore, it was important that we discuss the solar lease with the buyer’s lender prior to making the decision to accept the buyer’s offer. 

Purchasing a home with a solar lease may add time to the transaction, since you must allow up to 15 business days to complete the transfer. Buyers wanting to assume the solar lease must go through a credit approval process, just like they would for a loan on the home. Our preparation with the multitude of solar documents proved to be well worth the effort. The buyers were able to take advantage of all the benefits of solar with virtually no up-front costs and the sellers were able to sell their home for $100,000 over the asking price.

When you work with a good agent, lender and title company familiar with rooftop solar panels you can expect an outcome like this one!

Thinking of selling or buying, The Chris Eckert Team can help you through it all!

2232 Portsmouth Way, San Mateo
(Fiesta Gardens neighborhood)
 SOLD for $1,550,000 – $100K over asking price
with $18,900 solar lease

4 Bed | 2 Bath | 1530sqft home with Solar