The solar industry is booming. There are currently more than 1.5 million residential solar installations in the US 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 US 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 currently own a home with a solar agreement, a good agent can help you navigate complications with the sale before questions come up during showings and the escrow process. While every situation is different, here are a few steps to consider:

1. Start early. If you have solar panels, make sure you tell your agent 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. If you don’t have a copy of the agreement, you should request it from your solar company. Your agent will want a copy to answer questions and it will need to be part of the disclosure package.

3. 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 consult with an attorney first.

4. Cover all your bases. When selling a home subject to a solar agreement, it helps to work with an agent who is partnered with a trusted Title company. Who 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.
5. Keep lines of communication open. Early in the process, provide your agent 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 we can help guide the sale of a home subject to a solar agreement, please don’t hesitate to reach out. We are here to help.