Those you who know me, know that I am a raving fan of anything each of us can do to protect and improve our environment. One of the tools available to all of us are solar panels for our roofs that subsidize our electrical energy needs and lowers our utility bills. However, the decision you make to either enter into a solar lease agreement or to actually purchase them can have significant future consequences when you sell your home.
Here is our story of representing a family in the East Bay who found a home they wanted to purchase which had a leased solar panel system on its roof. A purchase price and terms were agreed to for the home. And, the buyers were excited about having a solar panel system on the home to assist with their electric bills.
The sellers provided our buyers all of their disclosures about the home which included the “Solar Panel System Lease Agreement”. The 18-page solar panel lease agreement outlined all of the terms and conditions. We were all surprised that the 25 year lease, if every month’s payments were paid totaled over $77,000.00 with a lease interest rate of close to what you pay on your credit card! We also learned that the home could not be sold to our buyers unless they financially qualified to take over the lease. In fact, the title report showed a lein on the property from the solar company for the entire value of the lease.
Our buyers were now having second thoughts about what they were actually getting into regarding their responsibility to a lease that they did not have any say in. The financial commitment they were being asked to make did not make sense at all. After careful analysis our buyers determined that the financial savings for the electric bill over the 30 year term of the lease was not worth accepting a solar panel lease program.
So, we contacted the agent representing the sellers with a proposal. It cost approximately $45,000.00 to buy out the lease and then actually own it. Our clients proposed that the sellers contribute $22,500.00 towards the buyout and they would pay the other half of the cost. After further investigation our buyers learned they could have had the top of the line solar panel system installed for under $25,000 before any of the incredible tax benefits available were applied for those who purchase the a solar panel system.
The seller agreed to split the cost of the solar panel system buyout. We then learned that the seller had not even read the 18-page lease agreement. They had been very impressed with the salesperson who showed them all the benefits of a system, and it could even be installed with “no money down”. What a great “deal”. So, they signed up. They had never done their homework regarding the consequences of their decision to lease the system instead of purchase it when it was time to sell their home. The only thing they remembered from their time with the salesperson is they would pay less for their electric bill over the term of the lease.
Now, I am not claiming that all solar company lease programs are so erroneous. And, for certain homeowners it may be the best alternative. However, we have concluded that given the choices available we would recommend that those considering having a solar panel system installed on their home think twice and maybe three times before they sign a lease agreement.
Contact us for any of your real estate questions. We are always available. Until next time… Jim Walberg