Buying a house with leased solar panels certainly adds a layer of complication to the traditional home purchase, but don’t let it scare you!
By the end of this post you’ll know exactly what to watch out for, what the process is, and how to decide if you should proceed with purchasing a home with leased solar panels.
If this is your first time here, welcome! My name is Lindsay and I‘m a proud Anthem resident and your local REALTOR® with the Wise Move AZ Team at Realty ONE Group. On our YouTube Channel and blog we have a lot of fun talking about all things Anthem and real estate, and we would love to have you along for the ride.
First Things, First
Before we start, there are a couple of things I want to be very clear on. I am not against solar, and I don’t want this post to come across that way. I am simply in favor of doing any and all due diligence before assuming a solar lease, or any lease for that matter. In fact, personally, I think it’s really important that we explore and invest in renewable sources of energy. Additionally, with nearly 300 days of sunshine each year, I think Arizona is perfectly suited to making the most of solar power.
Lease vs. Buy – A Topic for Another Day
I also know that purchasing solar panels is not cheap, and that for many people leasing solar panels is the only way they can incorporate them into their lives. The point of this video is not to go down the rabbit hole of whether you should buy or lease solar panels, we can cross that bridge another day. The point of this video is provide valuable information for anyone considering purchasing a home that has a solar lease in place, in Arizona.
In this video I am going to run through 6 tips that will outline the process of purchasing a home with solar, how to do it properly, and what to watch out for.
Let’s jump in!
Tip #1: Use the AAR Solar Lease Addendum
If you’ve watched our videos in the past, you’ve probably heard me talk about just how much I LOVE the forms that Arizona Association of REALTORS® puts together. They are incredible resources! The proper name for this form is the Solar Lease/Solar Loan Assumption Addendum. Try saying that 3 times fast…
Anyways, this two-page form is designed to protect the Buyer and the Seller by clearly laying out their contractual obligations where the assumption of a solar lease is involved.
This document lays out the timelines that both parties will be required to adhere to, recommended due diligence for the Buyer, and resolutions for possible problems that could crop up as the result of the Buyer trying to assume a Solar Lease.
Include it in your Offer
This Addendum is essential when purchasing an Arizona home with leased solar panels, so make sure you are including it in your offer package. I won’t bore you by reading it here, but I have dropped a link to a sample copy of the form here and encourage you to download it and read it on your own time.
If you have questions about the form, please don’t hesitate to contact me using the form below.
Tip #2: Review the Solar System Documents
As outlined in the Solar Lease Addendum, the Solar System Documents include the following:
- The most recent version of the System Lease/Loan
- Any other Solar System documents in the Seller’s possession
- The name and phone number of the Lessor. The Lessor is usually the solar company, like Tesla, for example.
As soon as you receive these documents, READ THEM CAREFULLY. Did you catch that? Read them carefully, even though they’re boring, even though there is a bunch of legal mumbo-jumbo, please, please, please promise me you will read them.
Make Notes & Follow Up
As you are reading these documents, make note of anything that doesn’t make sense or makes you uncomfortable. It is your job to know enough to decide if you want to proceed with the purchase of the house with the solar lease.
Bring in Professionals
If you have questions, I encourage you to call the Lessor directly to discuss them. If you are not satisfied with the answers you receive, or if you have more questions, let your REALTOR® know. Although we’re not qualified to give advice on Solar panels, many agents will be able to connect you to experts in that field. Alternatively, if your concerns are with respect to the terms of the contract, you may want to consult a lawyer.
Either way, you need to get all warm and fuzzy with these documents. If you proceed with the purchase, this lease will be YOURS.
Tip #3: Request Electricity Bills
It is really important that you request and receive copies of the Electricity bills from the Seller within your inspection period. Ideally, you want to receive a full year’s worth of electricity bills so that you can see how it fluctuates.
What do you know about the Sellers?
Additionally, it’s valuable if you can know a few things about the Seller, like how many people lived in the home over the course of the year, and if they occupied the home all year. For example, if you’re buying the home from a couple who were snowbirds, the stats aren’t going to be that helpful if you’re a family of five who will be living in the house year round.
Compare their usage to yours
That being said, any bit of information you can get is helpful. You may want to compare the Seller’s usage to your current usage, just for comparison. The key here is that you want to understand the relationship between the solar panels and the grid, and how much you can expect to pay for electricity in addition to the monthly solar lease payment. Make sure that you are comfortable with that amount and that you can afford it.
Tip #4: Know your Timelines
As with any part of the real estate transaction, it is really important to know and understand your timelines. If you are working with a REALTOR®, they will be watching all of the timelines closely for you. It’s kind of our thing!
With respect to the solar system, there are a few dates you need to watch out for:
- The Seller has 3 days after contract acceptance to deliver all of the Solar System Documents to the Buyer.
- The Buyer can disapprove of any items within the Solar System documents within 5 days of receipt, or within the inspection period, whichever is later.
- Buyer must obtain Lessor approval to assume the Solar Lease/Loan no later than 3 days prior to close of escrow.
Your REALTOR® will be able to walk you through the ramifications of what will happen in the event that any of these timelines are not adhered to, on a case by case basis.
Tip #5: Qualify for the Lease
Assuming that you want to proceed with the purchase, it is your job to qualify for the Solar Lease. The requirements to qualify varies from lease to lease.
My best advice is to call the Lessor as early on in the process as possible, learn what their requirements are, and start compiling any information they require.
The earlier you can finalize your ability to qualify, the better. If you can’t qualify for the solar lease, your purchase will more than likely fall through. So, get it done!
Tip #6: Research, Research, Research
This could just have easily be Tips #1-#5, it’s that important, but I thought I would save the best for last. My best, best, best, piece of advice when it comes to buying a home with leased solar panels is to do your due diligence. You need to understand completely what it is that you are buying in to. If you’re not sure about something ask, if you’re still not sure, bring in a professional. Whether that’s talking to solar experts or getting lawyers involved, just DO IT! Keep asking questions until you are completely satisfied with the answers, good or bad.
Some of the things you want to research are:
- Insurability of the home with the system in place
- The age of the system
- Any maintenance requirements and recommendations
- How well the system has been maintained, to date
- Monthly fees and how they change over time
- Any transfer fees
- The nature of the grid tie-in
- The lease terms
- Any output and production guarantees
- Tax implications
- Any warranties
There are reminders to research all of these things in the Solar Lease Addendum. Didn’t I mention how awesome these forms are?! So, if you’d like to snag a sample copy of that form, just click here.
So, there you have it! What do you think? Are you ready to go through the process of buying a home with leased solar panels?
Also, if you want to make sure you’re truly prepared to buy an Arizona home then you’ll want to click to watch this video of Common Home Inspection Findings you need to watch out for, or this video that talks about the benefits of virtual house hunting in today’s market.
Enjoy those and I’ll see YOU next Thursday!