After the Lease Buyout?

[Mr. Curious]

I've searched and while many topics slightly address this, I don't think I have a clear answer, so apologies if the post seems a little redundant/covered.

I'm considering purchasing a home with a solar panel lease (15 yrs left). I have no interest in taking over the lease, so I'm considering negotiating the cost of a buyout into the offer.

My question is, what happens after the buyout. Do I own all of the equipment outright? Is there typically any type of existing obligation to the solar company?

Thanks very much for any insight.

[J.P.M.]

I've searched and while many topics slightly address this, I don't think I have a clear answer, so apologies if the post seems a little redundant/covered.

I'm considering purchasing a home with a solar panel lease (15 yrs left). I have no interest in taking over the lease, so I'm considering negotiating the cost of a buyout into the offer.

My question is, what happens after the buyout. Do I own all of the equipment outright? Is there typically any type of existing obligation to the solar company?

Thanks very much for any insight.

First, know that you are under no obligation under a lease you did not sign. Next, get a copy of the lease. Buyout terms are in there, at least the beginnings of them. Next, read it. Come back w/ any remaining questions after that.

[Mr. Curious]

Thanks for the quick reply.

I'm clear on the fact that I don't have to sign the lease. My preference would be that the homeowner conduct the buyout and remove the panels at their cost. They as you can imagine don't love that idea, so in the interest of not just walking away, I'm exploring what my responsibility would be if I negotiated a buyout.

I've read the lease and have the buyout amount. What's not clear, at least to me looking at the lease, is what happens as a customer after the buyout takes place. Does the customer walk away scott free and then reap the rewards of the solar system or is there typically (I understand you can't say for sure) and ongoing obligation of some type between the customer and the solar company?

Thanks again.

[Mr. Curious]

Standford MBAs. As a potential buyer my experience has only scratched the surface, so while I don't think a call would be helpful, here's a rundown of what I've learned and my experience.

1. It's clear that in the marketing solar panels leases companies make it seem as though the panels will add value to the home and that IF you every move, it's a super easy switch to the new owner who will be so excited and appreciative of their ability to save money.
2. In fact some companies make upbeat promotional videos that you can find on youtube tube if you search "what if I sell my solar home" where they use language like "if you move the the system and agreement are fully transferable to the new homeowner who will love saving money as much as you do." which paints a very misleading picture to the experiences I'm seeing from this forum and many articles online.
3. While nice in theory, if you do even a little bit of searching online, you'll find that this is actually not the norm and that potential buyers have very little interest in getting involved with a complicated 10-20 year lease for a product they don't fully understand, at a price that may fluctuate, for a benefit they can't see or appreciate yet or may not even need.
4. As such you get people such as myself who are interested in a home, but don't want to assume the responsibility and homeowners who are stuck in a tough situation where they either have to find someone who appreciates, wants and understands solar, leases and the positive/negative ramifications or they need to payoff the lease and have them removed at their own cost.
5. Based on all of this, I (at least in my research) am seeing lots of homeowners who bought in on the promise of solar and the benefit of no money down on a lease, decided or are forced to move and are now for lack of a better term imprisoned by said lease and the hardware bolted to their roof.

It's a bummer for everyone involved.

Good luck with your research.

[StanfordMBAs]

Thank you, Mr. Curious, that's very helpful. It would be helpful to understand why you, as the buyer, were reluctant to take on the solar agreement?

--Were you concerned about not saving money? Was the seller able not able to show you good data about their savings? Was there a concern that your energy use would be different from theirs and that you wouldn't save money?

--Was there a concern about financing the home purchase if you took on a Power Service Agreement payments? Would the bank have considered this an additional bit of debt, and reduced your borrowing capacity? Or was this not really part of the concern?

--Or was it just the hassle and headache of having to learn about and deal with another contract, company, hardware, market, etc? What seemed to be the most complicated?

Many thanks!

[StanfordMBAs]

Mr. Curious--we have begun to recognize that the uncertainty over how credible the solar company's savings projections may be a major problem in the home sale process.

For this reason we are considering launching a service that would allow a seller or a buyer to enter basic info on their recent utility bills and their solar contract and get an independent estimate of solar savings (or losses) moving forward. Can we send you a prototype for your thoughts? Please call, text or email if you can offer quick thoughts. 562.537.0186. kkuran@stanford.edu. Thanks. Kent

[inetdog]

Unless the lease is actually a Power Purchase Agreement, you have no obligations to the installer/lessor once you make the buyout. And their only obligation to you after that would be any remaining warranty from the manufacturer, for which they would have only the obligations of any other installer/dealer for those products.

You could then use it for as long as it lasts with no obligation of any sort to them. You probably will also be able to take over the existing Net Metering or other interconnect agreement with the POCO (POwer COmpany). POCO will probably want you to sign a new agreement with the same terms.

[Mr. Curious]

I feel a little naive in saying this, but as I read the lease it's kind of hard to tell. The language they use is "Power Service Agreement" vs PPA. There are details laid out for cost per KWH per year with an annual increase on the amount. Apologies for the lack of clarity, but it's a little confusing for the uninitiated.

[inetdog]

I feel a little naive in saying this, but as I read the lease it's kind of hard to tell. The language they use is "Power Service Agreement" vs PPA. There are details laid out for cost per KWH per year with an annual increase on the amount. Apologies for the lack of clarity, but it's a little confusing for the uninitiated.

What you have is NOT an ordinary simple lease, and so the details of what happens in the case of a buyout may vary from normal too.
Unfortunately the PSA may be considered to be attached to the properly with a potential lien, so you would not necessarily be able to walk away from it upon purchase of the property.
You may need to consult an attorney.

[Mr. Curious]

I'm not so wed to the property that I feel it's sensible to take on the potential risk. It also doesn't bode well that despite speaking with a customer service agent at said solar company who told me she would have an agreement transition specialist call me, who I then followed up with after not hearing back and still hasn't reached out to me.

Thank you again for your insight...very helpful.

[J.P.M.]

I'm not so wed to the property that I feel it's sensible to take on the potential risk. It also doesn't bode well that despite speaking with a customer service agent at said solar company who told me she would have an agreement transition specialist call me, who I then followed up with after not hearing back and still hasn't reached out to me.

Thank you again for your insight...very helpful.

That sounds like something SolarCity might do, but I'm sure they are not the only 3d party ownership slug capable of such shenanigans.