As the Florida sun keeps shining bright, more homeowners are tapping into its power. Solar energy is heating up across the Sunshine State, helping reduce those sky-high summer AC bills while offering a more eco-friendly way to live. But when it comes time to sell a home with solar panels, things can get a little more complex, especially depending on whether the system is leased or owned. The same goes for items like propane tanks and hot water heaters, which may look like they come with the home but are often leased as well.
When solar panels are leased, typically over a 20 year term, the homeowner agrees to make monthly payments to the solar company. To protect their investment, the solar company files a Uniform Commercial Code Financing Statement, often recorded publicly, which secures their interest in the system and places a lien on the property. This filing will show up during a title search and must be addressed before closing.
So what happens if a Seller decides to sell while still under that lease? Like most things in real estate, it depends. Most solar leases offer a few options:
- Assignment: The buyer takes over the lease and continues the monthly payments
- Prepayment: The seller pays off the remaining lease balance, and the buyer takes on the system without monthly payments
- Buyout: The seller purchases the system outright and conveys the panels as a fixture to the property, which may still require a payoff if the Seller financed the buyout when they purchased them
Depending on how far into the lease term the Seller is, the costs can vary significantly. For example, a recent transaction included a $47,000 buyout or a $35,000 prepayment option.
As a realtor, when selling a home with solar panels, here are a few key tips to keep things smooth:
- Confirm whether the solar panels are leased or owned
- Obtain a copy of the solar panel lease, if applicable, and make contact with the solar panel company
- Review the lease terms carefully to determine the best option for parties or the option the seller prefers
- Clearly outline the chosen option in the contract so the closing agent knows how to proceed
- Every solar panel company proceeds with assignment and prepayment differently. Some companies take thirty (30) days to provide a payoff or provide the necessary paperwork for the transfer of the lease.
- It is prudent for the closing agent, seller, and buyer to initiate contact with the solar panel company immediately.
As always, should you have further questions on solar panels (or other leased fixtures) and how they could impact a real estate closing, please reach out to your trusted real estate attorney.
