Need Help: Family Looking at home purchase with existing Solar Lease

[w00dy]

I have offered some family members a little help with regards to a potential house purchase in AZ with an existing Solar Lease.

I want to make sure I have everything lined up to help them as much as I can, and I don't want to miss anything.

Here are some preliminary details I have - I have asked for more details:
* Leased from Solar City
* Age - 2011 (not certain of this)
* Lease 20 years
* Size - waiting for more details - looks like 24 panels on Google Earth (16 SSW facing, 8 SW facing)
* Monthly Lease Payment - $125 (seems low waiting for confirmation)
* Will be grandfathered in on APS Net Metering - looks like till 2031
* APS bill ranges from $35-$120 over last 2 years.
* Home Recently was updated ("flipped") including new low-e windows, new HVAC etc...so home energy use could drop - which means the system might be a little over-sized...

They are down sizing and retiring in their mid 70's and currently lives nearby in a 35% larger home. They average $375/mo for APS saver choice max!

The House in question is a flip and the "owner", or flipping investment company, will NOT entertain buying out the lease.

Based on their current use - the historic home use and the history of the current panels on the house - it looks like it may save them $200 per/month or so IF things stay the same.

They are perfectly happy paying the lease amount, if it saves them money over what they have been paying, and they WANT the house!!!

I am hoping to get the lease paper work and the details on the panels, system size, inverters, warranty, future buyout price, end of lease terms and anything else.

Due to their age this is going to be their last home purchase - and surviving family (read me and others!) will probably be involved in any future sale of this home, and any extra lease hassles then.

SO - what should I look for - what am I missing? Thanks! I want to make sure I can educate them as much as possible since I am the only family member who has solar!

p.s. I am not sure I could talk them out of this, so lets not go that direction - they have placed an offer on the house that could be accepted at any time.

[J.P.M.]

For a lot of reasons, I believe what they are doing is a mistake. However, I'll respect the request to not go there. NOMB. Good luck.

[Sunking]

Ditto, I would walk away.

[w00dy]

Thanks for the responses - not far from what I expected, and certainly not my choice of what I would do - but I would like to help out as much as I can, even if the choice is not the correct one or the best option.

With that in mind, what are some areas I can "help" them if this is the road they are now headed down...

[discodanman45]

If you want to help tell them to find another house. Flipped houses sell at too high of a premium anyways. Dealing with solar leases are a PITA and it seems like you might have to deal with it in the future again. People fall in love with houses but there will be one just as good next month without having to deal with Solar City renting your roof.

[Mike90250]

I would avoid a lease as much as I would avoid a house with black mold. As stated in a well known movie "Run Away, Run Away".

[emartin00]

Get the lease paperwork and have a lawyer read through it for you.
I know they put a lot of clauses in there to get them out of anything that would cost them money. Also, I believe a lot of the leases had payments that increased every year, so in 10 years you may be paying more than the utility price.

[azdave]

Until you know the full financial details of assuming the lease you can't really make a decision yet. I would not assume a lease but that is me. Some people are very happy to overpay for their dream home. When I sold my rental home last fall I got $26 more per ft2 above any home sold in the same neighborhood. When people love a home they will often pay much more. Nothing wrong with that if they go into the deal with open eyes and understand the decision.

[J.P.M.]

Until you know the full financial details of assuming the lease you can't really make a decision yet. I would not assume a lease but that is me. Some people are very happy to overpay for their dream home. When I sold my rental home last fall I got $26 more per ft2 above any home sold in the same neighborhood. When people love a home they will often pay much more. Nothing wrong with that if they go into the deal with open eyes and understand the decision.

Emotion over logic always costs money. Just the way the world works. Seeing emotion in action is easy to do. Examples abound. Trying to understand what and why it happens is probably impossible. As long as people understand that they will always get screwed by their emotions, so be it.

[w00dy]

I am back - I now have the lease agreement, and the transfer details.

At this point it looks like they will be getting this home and the leased system, as they are under contract and moving forward.

The lease details are a bit different than my original post and some details make it a tiny bit less objectionable in my mind at least. So I figured an update was useful.

It is 24 panels - listed size is 5.88 kW - Trina 245 Panels

Original Install was 2013 - so almost 5 years and $5800 will have been paid at transfer time. The original lease total was $24,600 over life of the lease or $4.18/watt.

Monthly Payments are at $102 per/month. Their remaining payments will total just over $18,000 - or around $3.06 per watt - except that they will not own the system when the 20 year term is up...This is the real downside.

There is no buy out clause.

There are no price increases or escalator clauses over the life of the lease.

For what it is worth (or isn't) they offer a production guarantee - 9.,44 KWH year 1, and declining to 8,667 KWH in year 20 - PVWatts Calculates 10,799 KWH for all south facing panels so I expect it will continue to easily meet the minimum as it already has for the past 5 years.

I am not sure what will really happen in 2033 when this lease is up and we tell them to come take it off the roof! Will Solarcity be around to do it? Maybe that will be Elon's new job then....

I have told them the cons of the system, but they are OK with it as it will save them money over not having a system. I have also told them they could install a new owner owned system for nearly the same price - with upfront costs of close to $3.00 per watt and that they would get a federal tax credit on 1/3 of that. However, since at this point they can't get out of the Tesla/Solarcity lease on this particular house...it is what it is, c'est la vie.

[J.P.M.]

I am back - I now have the lease agreement, and the transfer details.

At this point it looks like they will be getting this home and the leased system, as they are under contract and moving forward.

If so, what's the point of further discussion ?

[Mike90250]

You can't say they were not warned away. No buyout, no ownership. it's an albatross hanging over their heads that they can do nothing with, except accept their terms.

[w00dy]

I was updating the finer details like I said I would when I learned more, nothing else. Hopefully it helps someone else in the future.

I had no written numbers in the original post just second hand numbers from the agent. Nothing in the final documents were enough to turn them away from this purchase at this point.

[azdave]

Thanks for the update. It is a good wrap-up for others to learn from if they are thinking about buying a home with an existing solar lease.

[ImInPhxAZ]

Just tell then don't worry you're paying your real estate agent way more than you'll ever pay on the lease and they'll be comfortable with the solar then.