Driving around the streets of our towns, you may have noticed more and more residences sporting solar panels. With incentives and promotions, many homeowners in the past 10 years or so have added solar panels to their homes, achieving savings in electric bills.
With the very active real estate market this past year, Cramer & Anderson real estate attorneys saw the “first generation” of sales involving solar panel leases.
Solar panels have added a wrinkle to real estate closings that can cause serious delays, however, because of the issues and potential complications involved in the transaction.
A homeowner who had solar panels installed two years ago, for example, may still owe $25,000 to $30,000 on the remaining balance. That owner must determine at the time of listing the property whether the lease on the solar system can be bought, assigned and transferred, or whether it has to be paid out.
Having it assigned and transferred so the homebuyer takes over the payments is the optimal outcome, as you don’t want to have to pay the balance in full at the time of closing if you’ve only had the benefits and cost savings of solar for a few years.
While a Zillow study showed homes with solar panels sold for 4 percent more than non-solar homes, the market value of your property depends to some degree on whether you sell with the lease, meaning it is transferred to the buyers, or you buy out the lease.
A buyer who agrees to take on the lease, meanwhile, has the obligation of getting approved by the solar company for the assignment of the lease, which involves making an application.
Given this wrinkle, it’s important for buyers who may have no experience with solar panels to be educated about the value they provide and their effect on increasing home values.
Attorneys and real estate agents who have experience handling transactions involving solar panels can be critical to a smooth and successful sale of property, as well as the most favorable terms for the seller.
The more educated you are concerning the benefits of solar panels and the details of your arrangement, the better positioned you will be to persuade buyers they are entering into a positive situation, thus improving the terms of your sale.
The time to think about selling a home with solar panels is before you even list your home with the real estate agent. We recommend:
- Knowing the terms of your own solar agreement
- Pulling out all the paperwork you have and rereading sections of the lease agreement dealing with transfer
- Choosing a real estate agent familiar with solar panel leases and sales of homes with solar panels; this may pay off in the long run.
- Discussing the situation with the broker
- Deciding if you are buying out the solar lease or selling the property with the solar lease to be assigned to the buyer
- Notifying your lease company
- Including a disclosure report as part of the property condition
- Having data ready for buyers on the benefits of solar panels, including detailing the advantages of assuming the lease
Transactions of properties with solar panels also raise other issues, including the type of equipment and its condition, which fall into the home inspection category.
We have learned a lot in the past year about these issues and others related to selling or buying a home with solar panels. Contact me using the button below to learn more, or get in touch with any of the firm’s highly-experienced real estate attorneys.