Back in 2013 when solar panel installations were beginning to take off, I wrote an article warning that deciding to go solar is not the most important decision to make. The most important decision is how you go solar: Whether to lease or to buy. What we were seeing were many problems with leased systems as opposed to purchased systems.
Since that time, solar installations have skyrocketed. The problems with leased systems for homeowners have also skyrocketed. So it’s really necessary to shout out our warning again.
I’m going to focus here on just one problem and that is what can happen if you have a leased solar system and then decide to sell your house. I’m going to use an example of what actually happened when we represented a buyer in the purchase of one of these.
At first everybody thought the solar system was an additional benefit. That is until, during the escrow process, it was discovered that the solar system was leased and the solar company had placed a lien against the home title for nearly $30,000. That would be the cost if the system was purchased. With this claim to the property, the lender did not want make the loan to the buyer. The deal was about to die.
After thinking about it though the buyer decided he would willing to pay a bit more for the house but not $30,000! We began negotiating with the solar company. They said they would be willing to remove the lien temporarily if they were paid the full amount due on the lease. The lease was a seven-year lease and the balance was $8,000.
Finally, the buyer decided the system would be worth that much to him, so the sales price of the property was increased by that amount and the solar company received their payment, removed the lien and the deal closed, whereupon a new lien was placed on the property with the new owner.
In seven years, the new owner will either need to do a new lease or pay to purchase the system or have the system removed.
After this experience, we did some checking and found that some solar companies do this and some do not. Too many do though. With a different buyer, this could easily have killed the deal. Both the seller and the buyer could have suffered because of it.
Leasing has a number of other downsides as well. Here’s an article in the LA Times titled “Leased Solar Panels Can Complicate – or Kill – a Home Sale”
Another downside with leased panels is the homeowner doesn’t get the tax credits, the solar company does.
So our warning to all who are considering a solar system or to those who have one is this; really, really, really read the fine print! Know what you are getting into so you don’t face a very nasty surprise down the road.
I’m out of space for now. Be sure to read our next issue as I will have some very good information on the ins and outs of purchasing a solar energy system and ways in which it can be done for no money out of pocket.