What happens to my home solar lease or purchase agreement when I move?

Understanding Your Solar Agreement When Selling

Selling a home with a solar energy system involves an additional layer of planning compared to a traditional sale. The path forward is primarily determined by the type of financial agreement you have-whether it's a purchased system, a lease, or a power purchase agreement (PPA). Proactively addressing this detail prevents last-minute hurdles and can even enhance your home's market appeal. The first and most critical step is to review your original contract's terms regarding transfer or buyout.

Options for a Purchased Solar System

If you own your solar panels outright, either by paying cash or financing them with a loan, the process is generally more straightforward. The system is considered a permanent fixture of the home, much like a renovated kitchen or a new roof.

• Transfer with the Property: This is the most common and attractive option for buyers. You can market the home as having a pre-installed, owned solar system that will reduce the new homeowner's electricity bills from day one. Industry data suggests that owned solar systems can increase a home's value.
• Settling the Loan: If a solar loan is not fully paid off, the outstanding balance must be settled at closing, just like a traditional mortgage. You can use proceeds from the home sale to pay off the loan, ensuring a clear title transfer to the new owner.

Navigating a Solar Lease or Power Purchase Agreement (PPA)

Leases and PPAs are contractual agreements with a third-party provider who owns the equipment. Transferring this contract to the buyer is typically the preferred outcome for the provider and often for you as the seller.

• Buyer Qualification: The solar company will require the prospective buyer to undergo a credit check and formally assume the lease or PPA. The terms, including monthly payment and escalator clause, remain the same.
• Seller Incentives: If the buyer is hesitant, you may need to offer an incentive, such as a closing cost credit equivalent to one or two years of lease payments, to facilitate the transfer.
• The Buyout Option: Your contract will include a buyout clause, which allows you to purchase the system outright before the sale. This can be expensive, as the buyout price is designed to cover the provider's expected future revenue. You must then decide whether to absorb that cost or attempt to add it to the home's sale price.
• Contractual Obligations: It is vital to understand that you cannot simply abandon the contract. If a transfer or buyout does not occur, you remain financially responsible for the payments, which can complicate or even derail a sale.

Key Steps for a Successful Home Sale

To ensure a smooth transaction, follow this practical sequence of actions.

1. Review Your Contract Immediately: Do this before listing your home. Locate the sections on "transfer," "assumption," "buyout," and "relocation."
2. Contact Your Solar Provider: Inform them of your intent to sell. They will explain their specific transfer process, required forms, and timeline.
3. Disclose Everything to Your Real Estate Agent: Ensure your agent fully understands the solar agreement so they can market the home accurately and prepare potential buyers.
4. Disclose to Potential Buyers Early: Include information about the solar system and its financial agreement in the home listing and disclosures. Transparency from the start avoids surprises during negotiations.
5. Factor it into Negotiations: Be prepared to negotiate around the solar agreement, whether it involves pricing, credits, or handling the transfer fees that some providers charge.

Remember, local real estate regulations and solar provider policies can vary. Always consult with your real estate professional and review your binding contract for the definitive terms that will govern your specific situation. Proactive communication with all parties involved is the most reliable strategy for a successful transition.