What You Need to Know About Buying a House with Leased Solar

Buying a home is a significant investment, and in today’s eco-conscious market, homes equipped with solar panels are increasingly attractive. However, if you’re considering purchasing a house with leased solar panels, there are several important factors to keep in mind. This guide will help you navigate the complexities and ensure you’re making an informed decision.

Understanding Solar Leases

A solar lease involves the homeowner renting solar panels from a leasing company. The homeowner pays a monthly fee for the use of the panels, while the leasing company retains ownership. This can be beneficial for the original homeowner, as it allows them to enjoy the benefits of solar energy without the upfront costs of purchasing the panels outright.

Key Considerations When Buying a House with Leased Solar

1. Lease Transfer

One of the most critical aspects to address is the transfer of the solar lease. The lease agreement must be transferable to you, the new homeowner. Here’s what you need to check:

• Lease Agreement Terms: Review the lease agreement thoroughly. Ensure there is a clause that allows for the transfer of the lease to a new homeowner.
• Approval from Leasing Company: The leasing company must approve the transfer. This often involves a credit check and possibly an application process.

2. Financial Implications

Understanding the financial aspects of a solar lease is crucial:

• Monthly Payments: Determine the monthly lease payment and factor this into your overall budget. Ensure it is something you can comfortably afford.
• Escalator Clauses: Some leases include an escalator clause, which increases the monthly payment over time. Be aware of how this will impact your finances in the future.

3. Energy Savings vs. Lease Cost

Compare the cost of the lease payments to the potential savings on your energy bills. Ideally, the savings should outweigh the lease payments, providing a net positive financial benefit. Analyze past energy bills and the expected performance of the solar panels to get a clear picture.

4. Maintenance and Repairs

Since the leasing company owns the solar panels, they are typically responsible for maintenance and repairs. However, confirm the specifics:

• Maintenance Coverage: Verify what maintenance services are covered under the lease agreement.
• Responsibility for Repairs: Understand who is responsible for any repairs and how quickly they will be addressed.

5. Impact on Property Value

Solar panels can increase the value of a property, but the presence of a lease can also complicate the sale process. Consider the following:

• Buyer Perception: Future buyers might be hesitant about taking over a lease, potentially affecting resale value.
• Real Estate Market: In some markets, leased solar panels are viewed positively, while in others, they might be a deterrent. Research your local market trends.

6. Tax Incentives and Rebates

When it comes to tax incentives and rebates, the situation with leased solar panels can be different from owned systems. Here’s what you need to know:

• Federal Investment Tax Credit (ITC): Typically, the ITC benefits go to the owner of the solar system, which in the case of a lease, is the leasing company. As a buyer, you likely won’t receive these tax credits directly.
• State and Local Incentives: Some state and local incentives might still apply, but they often go to the system owner. However, some benefits might indirectly affect you through lower lease payments or rebates factored into the leasing company’s pricing.
• Property Tax Exemptions: In some areas, solar panels can increase property value but might also be exempt from additional property taxes. Check local regulations to see if this applies and how it might benefit you.

7. Legal and Tax Implications

Consult with a real estate attorney to understand any legal implications of taking over a solar lease. Additionally, explore any tax benefits or implications related to the lease and ownership of the home.

Questions to Ask the Seller

• When was the solar system installed?
• What is the duration of the lease term?
• What is the monthly lease payment and are there any escalator clauses?
• Has the lease transfer process been initiated with the leasing company?
• Are there any existing issues with the solar system?
• Can you provide past energy bills to assess the savings?
• Are there any tax incentives or rebates currently applied to the lease?

Purchasing a home with leased solar panels can offer significant benefits, including reduced energy costs and a smaller carbon footprint. However, it’s essential to thoroughly understand the lease agreement, financial implications, and responsibilities before making a decision.

If you’re considering a move or investment and require a trusted Real Estate Broker, we’re here to assist you. Contact us via email at TEAM@McDanielCallahan.com, complete the form below, or give us a call at 925-838-4300. We are ready to provide expert guidance and support for all your real estate needs. Terry McDaniel DRE License #00941526