Determine the System
When buying a home with solar, the first step is to determine what type of solar system is present. Is it is owned, leased to own, or a power purchase agreement? In the case of an owned system, does the seller fully own the system or did they take out a loan which is not yet paid off? Is there a lien against the home for the solar system? Alternatively, a power purchase agreement is when a company owns and maintains the system attached to the roof and sells the power back to the homeowner at a discount. You should educate yourself on these differences before entering into a home purchase agreement.
The second step is to review the tax records to see if there is a lien on the home. If there is a lien on the home, or a solar loan, ask the seller for a current copy of the loan statement. You want to note the balance and pay off terms. Find out if there are any restrictions for property transfer. Pay attention for penalties, early purchase buy-out options or other issues that could harm or delay your home purchase. Will loan payoff be required prior to transfer, or is the loan transferable to a buyer? It is crucial to understand the transfer process and timeline involved before you open escrow. The solar loan payoff can be a negotiation between buyer and seller.
Discuss the Contracts
The third step is to discuss the solar system with your lender. If you are buying a home with solar, it is important to discuss the solar system details up front with your lender because there may be restrictions. If there are monthly lease payments that a buyer is willing to assume, the monthly figure needs to be calculated into the loan qualification. You should ask if your lender will allow a loan to be assumed. You should also find out when the loan will be paid off. The extra monthly payment may push you out of your loan qualifying range.
The fourth step is to review the solar contract. Ask the seller for the complete contract. Call the energy provider with specific questions. Inquire about who maintains the system and the recommended maintenance. Is there a warranty? What is the contract length? If a power purchase agreement, is it renewable? Can you purchase the panels at the end of the contract?
Analyze the System
Lastly, request a copy of the production history. You want to know how many panels there are on the home, what type, and how much power the panels actually produce. Another consideration is how much power the home typically uses. It is in your best interest to understand how much energy a solar system is producing to know if the system can support the home. Knowing the age of the system is also important. Is the system brand new, or near the end of its’ useful life? Solar system warranties average 20-25 years, so be aware that parts may soon need replacement.
Real Estate transactions involving solar systems can be complex. A good listing agent will assist the seller in pulling together and presenting the disclosure information. The agent should be informed about the system before putting the home on the market. Likewise, a good buyer’s agent will know what to ask and how to guide the buyer in their solar research before making an offer.
If you have any further questions about how a solar system can affect your real estate sale or purchase, or help with real estate in general, feel free to contact me at 760-644-1652 or www.MarcieSandsREALTOR.com