Unraveling the myths and misconceptions about solar lease and PPA transfers
Every two minutes in the U.S., someone installs a solar panel system. The solar power business created jobs nearly 20 times faster than the overall economy in 2014, making it one of America’s fastest growing industries.
Much of this growth is attributable to solar financing agreements—including solar leases and power purchase agreements (PPAs)—that make it possible for customers to immediately pay less for electricity generated by solar power than they pay for utility bills. Nearly three out of every four residential solar installations in 2014 was made possible by a solar lease or PPA.
Yet, despite their growing popularity, myths about these solar service agreements abound.
Some of the most persistent myths focus on what happens when a solar home is sold. Over the past year, a handful of articles have appeared on the Web suggesting solar agreements actually hinder sales.
Truth is, these articles have been based on isolated anecdotes. For the vast majority of home sellers and buyers, transferring a solar agreement can be as simple as signing up for cable TV, or transferring a utility to a new name.
A strong selling point
SolarCity provides approximately one out of every three new solar panel systems in the U.S. If you see panels on a roof, there’s a decent chance the homeowners are our customers.
We offer customers the option to purchase the system directly or finance it via a loan, lease the system, or purchase the solar power via PPA. All of these options include support if the homeowner decides to sell the home with solar panels, and that includes transfer of the solar agreement if the customer used a loan, lease or PPA. We’ve transferred more than 5,000 solar agreements, and now average more than 20 transfers per day.
If a buyer qualifies to purchase a home with solar from one of our customers, he or she also qualifies to assume the solar service agreement. More than 98 percent of the time, that’s exactly what happens. A small number of sellers choose to move the system to the new home.
An education problem
In 2014, we surveyed home buyers and sellers who had participated in a transfer of a solar lease or PPA agreement. Two things stood out.
First, roughly half of buyers and 29 percent of sellers said that realtors, lenders and other real estate professionals did not understand the solar transfer process.
Second, about 70 percent of both buyers and sellers thought that having solar added to the overall appeal of the home.
The bottom line? When real estate professionals unravel the myths and misconceptions, they discover that solar energy systems are a strong selling point.
Tips for buyers and sellers
We recommend solar home buyers and sellers keep just a few things in mind when considering a transfer. These tips apply whether the provider is SolarCity or another company.
Look for a fixture filing. A fixture filing is not a lien, and should never prohibit a home sale or refinance, it simply prohibits anyone other than the solar provider from taking ownership of the solar power system without permission. Our solar agreements do not require a lien on the home, and never take priority over the lender’s mortgage interest in the real property. Solar systems provided under leases, loans or PPAs should be classified as personal property that is transferrable between buyers and sellers.
Buyers should always be eligible to assume a solar lease, PPA or loan. If a buyer qualifies to purchase a home with solar from one of our customers, he or she qualifies to assume the solar service agreement.
Sellers should contact the solar provider early in the process. The provider can educate the seller’s agent on the transfer process and buyer benefits. A five-minute conversation can prevent confusion and ensure a simple transfer.
As the number of solar homes grows, solar agreement transfers will become business as usual. Until then, it’s important that everyone involved take time to understand how they work. Most importantly, realtors, buyers and sellers should be on guard against sensationalized accounts of difficult transfers. The fact is, selling and buying a solar home is easy.
SolarCity’s team of professionals can be reached every business day at 888-765-2489, or 650-963-5916.