Rooftop solar panels are increasingly common, and summer, with its long sunny days, is when they shine. For a buyer, a home with solar can mean lower electricity bills. It can also mean paperwork, contracts and questions that do not come up with other homes. The most important question is a simple one: who owns the panels?
Owned, financed or leased
Solar systems generally fall into a few categories:
- Owned outright: the seller paid for the system, and it typically transfers with the home like any other feature.
- Owned with a loan: the seller financed the purchase. The loan may need to be paid off at or before closing, and some solar loans are recorded in public records in a way that can surface during the title search.
- Leased or under a power purchase agreement: a solar company owns the panels, and the homeowner pays for the equipment’s use or the electricity it produces. In a sale, the buyer may be asked to take over the agreement, usually subject to the solar company’s approval, or the seller may need to buy out or otherwise resolve it.
Ask the seller, through your agent, which applies, and request copies of all solar contracts early.
Questions to ask about any system
- How old is the system, and who installed it?
- What warranties cover the panels, the inverter and the installation work, and do they transfer?
- Can you see recent electric bills and production data from the monitoring app?
- Has the system needed repairs?
- How does the local utility credit power sent back to the grid? Policies vary, so check with the utility directly.
Do not forget the roof
Panels sit on the roof for many years, so the roof’s age and condition matter more than usual. If the roof will need replacing before the panels reach the end of their life, the panels will likely have to be removed and reinstalled, which adds cost and coordination. Ask when the roof was last replaced, and have your inspector evaluate it carefully. Ask too whether the installer’s warranty covers roof penetrations and leaks.
Leases deserve a close read
If the system is leased, review the agreement carefully with your agent and, if needed, a real estate attorney. Look at the remaining term, the payment amount and any scheduled increases, what happens at the end of the term and who is responsible for maintenance and removal. The solar company will usually need to approve the transfer, which can involve an application and a credit check, so start early to avoid delaying closing. Tell your lender about the arrangement as well, since lease payments may factor into your loan approval.
Appraisal and insurance
How solar affects a home’s appraised value can depend on whether the system is owned and how much information is available about it. Leased systems are generally not counted as part of the home’s value, because the homeowner does not own them. Let your insurance agent know about the panels too, so you understand how they are covered. With the right questions answered early, solar can be a welcome feature rather than a last-minute complication.
A Step-by-Step Plan for Buying a Home With Solar
Solar adds several tasks to a purchase. Organizing them early keeps the transaction on schedule.
- Identify the ownership type right away. Ask for the solar contract, loan documents or proof of purchase as soon as you are under contract, or even before you make an offer if possible.
- Share the documents with your lender. Your loan officer can tell you whether any lease payment or recorded filing affects your approval or the closing timeline.
- Coordinate with the title company or closing attorney. If a solar loan or filing appears in the title search, they can explain what needs to happen before closing.
- Start any transfer application early. If you are taking over a lease or power purchase agreement, contact the solar company to learn its transfer process and timeline.
- Inspect the roof and the system. Ask your home inspector to evaluate the roof carefully. A solar professional can look at the panels, inverter and wiring if you want a more detailed assessment.
- Review production and bills. Compare monitoring data and electric bills to understand how the system has actually performed.
- Talk with your insurance agent. Confirm how the panels are covered under your policy.
- Get logins and paperwork at closing. Make sure you receive the monitoring app access, warranty documents and installer contact information.
Red Flags and How to Respond
- The seller cannot find the contract. Ask the seller to contact the solar company for a copy. Without it, you cannot know what you are agreeing to.
- The lease has payment increases you did not expect. Calculate what the payments will look like over the remaining term and compare them with your current electric costs.
- The roof is near the end of its life. Ask for estimates on removing and reinstalling the panels for a future roof replacement, and discuss with your agent whether to request a credit or repair.
- The system has not been producing. Monitoring data showing low or no production could point to an inverter or wiring issue. Have it evaluated before closing.
- The installer is no longer in business. Warranty support may be harder to get. Ask whether the panel and inverter manufacturers offer their own warranties.
Questions Buyers Ask About Solar Homes
Will solar panels eliminate my electric bill?
Not always. Production depends on the system’s size, orientation, shading, the season and your household’s usage. Many solar homes still have a monthly utility bill, even if it is lower.
Can I refuse to take over a solar lease?
You can negotiate, and it is worth raising early. Depending on the agreement, the seller may be able to buy out the lease or prepay it. Talk with your agent about how to address it in your offer.
Do panels need maintenance?
Panels generally need little maintenance, but they should be checked periodically, kept clear of heavy debris and monitored for drops in production. Follow the manufacturer’s or installer’s guidance on cleaning.
Are there tax benefits for me as the buyer?
Tax rules for solar can be complex and depend on who purchased the system and when. An accountant or tax professional can explain whether anything applies to your situation.
