When the Seller Has a Solar Lease

Real Estate

With both utility costs and environmental concerns on the rise, it is not surprising that the commitment to solar energy is growing. A study by the U.S. Department of Energy predicts the number of homes with rooftop solar panels could reach 3.8 million in 2020; a trend that is helped along by the California state mandate, effective January 1, 2020, requiring rooftop solar panels on new single-family houses and low-rise multifamily complexes.
Solar panels give consumers the ability to save money by creating a natural source of energy to power their homes - and one of the most affordable ways for consumers to purchase solar power is by leasing the equipment from an independent solar energy producer. The homeowner signs a contract, usually for a 20-year term, and documents confirming the provider’s interest in the leased equipment are filed with the county recorder’s office.
When the property is listed for sale, the recorded documents confirming the solar lease are reported in the Preliminary Report, and the lease/contract must either be bought out on or before closing or assigned to the buyer who is purchasing the property.
The new owner must be willing to take on the benefits and any remaining costs for the lease, subject to the same or sometimes stricter requirements as the original owner and must be approved by the solar energy producer.
As the listing agent, it is very important to know in advance if a solar power lease is in effect on your listed property, and what the requirements will be assigned to the new owner. In some cases, when buyers have balked at assuming such a lease, sellers have chosen to save the sale by crediting the buyer with funds to offset the remaining costs.
Your escrow/title partner will notify you immediately when evidence of a newly discovered solar lease turns up. Avoid closing delays by making arrangements for the required transfer or buyout procedure in a timely manner.

Source: RISMedia