Selling with a Solar Agreement

An image of a neighborhood and one house having solar panels with the text "Selling With a Solar Agreement" and "5 Tips for guiding Your Clients"

5 Tips for Guiding Your Clients

The solar industry is booming. There are currently more than 1.5 million residential solar installations in the U.S. and that number is projected to reach nearly 4 million by 2023. Solar panels have become such a popular energy solution that in May 2018, California regulators approved a plan to mandate solar panels on all new home construction beginning in 2020. Soon, this type of legislation could come to other sunny states to reduce environmental footprints.

One way builders and homeowners are looking to install solar systems is through a lease or power purchase agreement (PPA) (i.e., a “solar agreement”) with a third-party solar provider. These solar agreements are currently available in a little over half of all U.S. states, and provide homeowners with a way to use solar panels without the upfront cost of purchasing a system. But solar agreements are known to create unique challenges when selling a home.    

Some issues that sellers have experienced so far include:

  • Buyers shying away from a house because of the solar agreement (due to things like lease length, lease payment, lease contracts, maintenance considerations, technology obsolescence and more)
  • Buyers who may not meet the solar company’s qualifications to lease
  • Potential issues involving the proper transfer of the solar agreement

If you’re working with a seller who currently owns a home with a solar agreement, you may be able to help them navigate complications with the sale. While every situation is different, here are a few steps to consider:

  1. Start early. If you represent the seller, ask them early in the selling process whether the property is tied to a solar agreement. The terms for transferring a solar agreement may impact the marketability of a property, and disclosure to potential buyers is important.

  2. Request a copy of the solar lease agreement. Ask your client for a copy of the current solar agreement. If they don’t have a copy, they should request it from their solar company.
  1. Seek advice. Unfortunately, misconceptions about solar agreements are common. It’s important that buyers and sellers fully understand the terms of their solar agreement, including its transfer rights and requirements at the time of the sale of the home. Many solar companies have dedicated representatives to assist with the lease transfer process, but you may wish to advise your clients to consult with an attorney first.
  1. Cover all your bases. When selling a home subject to a solar agreement, it helps to work with a trusted company like Old Republic Title. We can alert you to potential title problems, such as an unrecorded solar easement and other possible title issues that need to be addressed prior to closing.

  2. Keep lines of communication open. Early in the process, provide your closing team with as much information as possible about the transaction. What they don’t know could cause delays to the closing process.

If you would like to learn more about how you can guide the sale of a home subject to a solar agreement, or find out what information your closing team might need, contact your Old Republic Title representative today.


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