Purchasing a home with solar panels requires additional consideration since there are several types of agreements and contracts. They can be owned outright, financed, or leased.
If the panels are “leased” they are owned by the solar company and installed on the property. The property owner pays a fee to the solar company for a contracted utility rate as a benefit. The monthly fee is usually lower than a power company bill. When the property is being sold, the Buyer must transfer the solar agreement to their own name, which is a fairly straightforward process. At the end of the lease, the property owner usually has the right to extend the lease, have the panels removed (at the Solar company’s cost) or to purchase the solar panels.
If the panels are financed, the property owner takes out a loan guaranteed by a lien on the property. The lien can be transferred to a potential buyer, but the buyer must have credit that qualifies them to do so. The power that is generated from the solar panels is used by the homeowner, with any excess sold back to the power company with the owners of the home receiving the profits as SREC-2 credits (in a way like a stock that can be sold). Once the payments are complete, the solar panels remain the property of the homeowner, and may be transferred with the property free and clear of any lien. They will continue to generate power for the property as long as they continue to operate.
If the panels are owned outright, they are simply included with the sale of the home, not subject to an agreement with the solar company or any additional financing.
At Petriello Law, we have experience working with individuals purchasing or selling homes involving all types of solar panel agreements. We are happy to share our experience to help you as you prepare to make your next transaction.