This week we wanted to talk about solar systems on properties. These are becoming increasingly common and can come with a long list of issues. We always recommend a full solar inspection with our buyers to assess the system’s efficiency, condition, and overall functionality. Many times, we find problems that reduce the system’s capacity.
The bigger issue we run into is that solar loans are recorded against the home. Sellers will often claim they’re paid off but can’t provide proof. This has to be negotiated in the offer and addressed in escrow to ensure the lien is removed from title. The complication is that many solar companies have gone bankrupt, shut down, or sold their loans for pennies on the dollar—yet homeowners still owe large amounts.
This is just one of the details we manage for clients. Recently, we closed a deal representing the buyer where the seller had been stuck with a terrible solar agreement that included tricky financing. It was nearly a $100K loan on a $900K house. In our negotiations, we always require that solar be paid in full with a lien release from title. In this case, the seller had no idea what they signed and ended up netting much less on their sale. Because the payoff was negotiated upfront, they had no choice but to cover it in escrow.
The lesson: don’t be a buyer who unknowingly assumes someone else’s solar contract. Sellers also need to know about any solar payoffs to properly calculate their net proceeds. You’d be surprised how many people, and even agents, don’t realize this has to be addressed.
If you already have solar on your home and want to make sure it’s operating properly, reach out to The Solar Detective.
