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Whose Solar Is It?

Heads Up to Homebuyers and Sellers

Deanna Devey Sep 12, 2018

To get the benefits of clean energy, lower utility bills and self-reliance, Utahns are using solar panels more than ever and making the Beehive State one of the fastest-growing spots for solar installations.

“Utah is the seventh-sunniest state,” says Elias Bishop, government affairs director for Auric Solar. “We have a tremendous solar resource people are taking advantage of.”

What homeowners might not know, however, is that panels can potentially cause problems when it’s time to sell their house.

“The industry is watching a current lawsuit where the seller assumed the buyer was going to start making payments on the solar equipment, but it wasn’t discussed as part of the real estate contract,” says Shane Norris, general counsel for Summit Sotheby’s International Realty. “Meanwhile, the buyer assumed the solar was included because it’s attached to the house. The seller stopped making payments and the solar company’s only option was to repossess the equipment.”

To avoid similar problems, homeowners should ask questions before installing solar and clearly communicate with buyers when selling. 

“Originally, solar panels were complicating selling a house,” Norris says. “Now it’s becoming easier as long as everybody’s on the same page.” 

Ownership Options

The simplest option for getting into solar is to pay cash to own a system outright.

Another option, and the most common choice, is using financing to purchase solar equipment. Homeowners make payments until the loan is paid in full.

A third scenario is a lease. Homeowners don’t own the solar equipment installed but receive the power it produces.

A final option is a power purchase agreement in which homeowners don’t own the solar system but buy the energy it generates. 

Solar Homework

When considering solar panels, it’s important to do your homework and understand what happens if you need to sell your house.

For sellers who own solar equipment outright, the process is simple. They convey ownership of the equipment to the buyer as part of the real estate transaction. If there’s an outstanding loan, sellers either pay off the debt or have buyers assume the loan payments. Similarly, homeowners with a lease either buy it out or transfer it to the homebuyers. 

Before signing up for any solar program, know whether there are fees for canceling or transferring the agreement.  

“You need to know if the loan, lease or power purchase agreement is assumable,” Bishop says. “The vast majority are, but it’s smart to verify.”

Also look at the process for transferring a loan or lease. If it takes a month to preapprove a buyer, that could delay a real estate transaction. 

“Make sure you’re dealing with a reputable company that’s been in business a long time,” Norris says. “Understand how much you have to pay and for how long. Understand how it’s going to affect your power bill and ability to sell your house. Make sure you read everything before agreeing to anything.”

Resources for Homeowners

As chairman of the Utah Solar Energy Association, Bishop is working to educate consumers. The association currently has a Solar Buyer’s Guide available at UTSolar.org. Additionally, Bishop is creating a form to help contractors provide homeowners with details about their solar system — important information owners will need when selling the house.

The real estate industry is also making it easier to transfer properties with solar panels. Utah Realtors have new forms to help both parties negotiate whether the seller will pay off outstanding balances or whether the buyer will take over payments.

“The forms and disclosures we’re putting together with the Utah Association of Realtors will really help streamline the process and protect consumers,” Bishop says. “From what I’ve seen, there’s nothing in other states as robust and thorough as what we’re doing.”

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