What You Need to Know about Solar Leases

bigstock_Solar_Panel_Installation_9354038With the rising cost of electricity, it’s no wonder we are seeing more creative ways to acquire energy through solar power. According to the Solar Energy Industries Association, 2015 was the biggest year yet in solar-use history, and the industry is set to more than double the amount of installed capacity in the United States in 2016. As expected, California leads the way, accounting for nearly 50% of the annual residential installations in the U.S.

With competitive solar prices and existing tax incentives, chances are you will be dealing with a real estate sales transaction involving a solar lease, sooner rather than later.

One of the most affordable ways to purchase solar power is through an independent solar energy producer who leases the solar energy equipment to a homeowner. In most cases, when homeowners enter into an agreement with an independent solar energy producer, they sign a contract or lease and/or a UCC financing statement, and the documents are made of record through the county recorder’s office. The term of the lease may vary, but many are at least 10 to 20 years. These documents will be reported on the Preliminary Title Report ordered through escrow when the home is being sold

When a homeowner sells a home that is subject to a lease or contract for solar energy, the lease or contract will need to be bought out or assigned to the buyer who purchases the property before the close of escrow. It’s important to note that the solar energy producer must approve the new owner prior to closing escrow, and that their requirements may be similar to or even stricter than a lender’s requirements.

When a solar lease or contract is discovered through our escrow, we will notify you immediately so that you can contact your clients and make arrangements for the assignment.

To avoid delays in closing, it will be helpful to know in advance whether there is a lease for solar power and what the lease transfer and buyout options are, so that you and the homeowner will be ready to address the issue with prospective buyers.

By Kari Bodine


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