(March 25, 2022) Solar panels on a home can be a great selling advantage, one that provides very affordable utility bills.
This type of technology is called a solar photovoltaic (“PV”) panel system or “Solar System.” Solar Systems may include all components, solar panels, inverters, charge controllers, batteries, battery charge controller, backup generator, solar array disconnect, power meter, power converter and cables, if applicable, that are presently in place on the property.
But, the finances of a Solar System can be complicated so full disclosure on the system and any remaining loan payments, lease payments, transfer fees, or warranties should be fully disclosed when a property is listed.
The financial status of a Solar System can be any of the following:
• Owned by seller free and clear (not subject to an existing lease, power purchase agreement or loan).
• Subject to an existing lease agreement, power purchase agreement (PPA) or financed by an unpaid loan.
An agreement in the contract of sale needs to be specified as to who will be paying for any remaining balance left on a solar loan, or whether an existing lease agreement needs to be assumed by the buyer.
This is a negotiable element of a contract of sale, so it is possible that the seller pays off the Solar System financing or buy-out/pre-pay the remainder of the Solar System lease or PPA and shall include the Solar System as part of the sale of the property and convey the Solar System to buyer at closing.
The other option is the seller can require that the buyer pay any remaining loans or lease agreements.
But, it is important that the seller delivers to the buyer the most recent version of the Solar System lease, PPA, or Solar System financing and all of the Solar System documents in seller’s along with the contact information to the Solar System company or loan servicer, as the new buyer will need to obtain approval to assume the lease or loan. This process can be time consuming, so starting this early in the sale process is essential.
Buyers can also impose a buyer review period or due diligence to give them time to review the documents and terms of the Solar System.
This is the timeframe that the buyer can review the costs, insurability, operation and/or value of the Solar System. This may include, but is not limited to: age, maintenance, solar company or loan servicer fees, end of lease terms, output and production guarantees, utility bills, grid tie-in, payment increases, warranties, homeowner’s insurance coverage, and taxes.
— Lauren Bunting is an Associate Broker with Keller Williams Realty of Delmarva in Ocean City
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