New York Real Estate Lawyer Blog
People generally view the advent of solar panels positively because the beneficial impact on the environment and expected savings from lower electricity bills. Traditionally, homeowners have two options: buying or leasing solar panels. Buying solar panels is often prohibitively expensive for the average American; so many homeowners now consider leasing solar panels instead. While initially seeming like the more attractive option, solar panel leases often complicate homeowners’ lives due to hidden problems that many do not consider when initially signing the leases.
To begin with, as mentioned in this article, there are many unanticipated costs that may arise when undertaking a solar panel lease as a homeowner. Before installation, homeowners might incur roof repair costs because solar panel leases last for, sometimes, longer than twenty years, while roofs last only thirty years. Leasing often means that the homeowner does not get the benefits often available to owners because they are only the lessee of the panels.
For example, as mentioned in this article, Solar Panel leases can complicate the real estate transaction because solar panel companies place liens on homeowners’ properties to ensure payments are made. A lien can stall refinance and real estate transfers because they must be satisfied or transferred. In particular, when homeowners use property-assessed clean energy (PACE) loans to finance the use of solar panels at their properties, the company often requires a lien to secure the repayment of the loan. Another issue with solar panel leases is the difficulty in transferring ownership of the solar panel lease to buyers. If you cannot make the transfer of ownership, some states require the seller to pay any future solar panel expenses, as well as court fees associated thereof, according to the article. Solar panel leases have many unintended consequences for homeowners who might plan to sell their homes in the future.
Additionally, according to this article on JD Supra, if you are buying a home out of foreclosure the Solar leases may run with the land meaning that the new purchaser of the property at a foreclosure sale would not obtain legal title to the solar panels because the lessor owns them.” This could complicate the resale process for foreclosed homes because it is unattractive to potential buyers for a home to have leased solar panels to which they would not receive the rights. While this is a downside of leasing solar panels, one benefit according to the article is that solar panels boost your home’s value is $15,000 from the study from the Lawrence Berkeley National Laboratory. It’s important to consider the hidden costs to a seemingly positive idea before you enter into a solar panel lease.
The Bottom Line—you should hire a real estate attorney to review the lease and advise you of the potential pitfalls of leasing solar panels. At Klose & Associates, we can offer you a flat fee to review the lease with you.