Should I assume seller's Sun Power lease?

[solar?]

I am considering purchasing a home. The home has a 50 panel solar system with roof work and install the seller paid 50K after tax credits and rebates of $26K...Seller is wanting me to assume their 20 year lease with fixed payments of $370 for 19 years with Buy Out Option after year 6 at $60k and year 20 at $20K respectively.

Does this sound right? Is the system not part of the purchase price of the home where by the seller would need to pay it off during escrow? Does it seem like a fair lease? The house has $1 utility bill from SCE puts power back on the grid when excess and draws more if needed.

Here is the info on the system:

System Information
System Size 12.0 kW DC (STC)
System's CEC Rating 10.4 kW AC (CEC)
Estimated Annual Production 19,323 kWh/yr

Cost Information
System Cost per rated Watt $6.58 per DC (STC) Watt
Current Utility Rate Average 25.3 ¢/kWh

Thank you,

[Ian S]

I am considering purchasing a home. The home has a 50 panel solar system with roof work and install the seller paid 50K after tax credits and rebates of $26K...Seller is wanting me to assume their 20 year lease with fixed payments of $370 for 19 years with Buy Out Option after year 6 at $60k and year 20 at $20K respectively.

Does this sound right? Is the system not part of the purchase price of the home where by the seller would need to pay it off during escrow? Does it seem like a fair lease? The house has $1 utility bill from SCE puts power back on the grid when excess and draws more if needed.

Here is the info on the system:

System Information
System Size 12.0 kW DC (STC)
System's CEC Rating 10.4 kW AC (CEC)
Estimated Annual Production 19,323 kWh/yr

Cost Information
System Cost per rated Watt $6.58 per DC (STC) Watt
Current Utility Rate Average 25.3 ¢/kWh

Thank you,

That is a GREAT question! And the answer is .... it all depends. That Sunpower system will be high quality no doubt but get a copy of the signed lease agreement to peruse and make sure you understand every obligation on your part as well as the lessor. If it's anything like mine, it's quite understandable and clear if you make an effort to read it carefully. I assume that the end of lease terms also permit you to require the lessor to remove the system at no cost to you and the lessor can either do that or, if they don't, abandon the system in place making you the new owner. Many of us believe 20 y.o. system may not be worth much but who really knows.

You also need to see a full set of utility bills both before and after the solar was installed. It sounds like a brand new system (19 years left on lease.) You want to get an idea of how much are the actual $$ savings provided by the lease. It may not be much. Is there an escalator i.e. the monthly lease payment gets bumped up on an annual basis. That would be a major negative.

Assuming you are indeed saving money, then I don't see a big problem but you may want to act very worried about the whole thing to see if the owner might knock a few thou off the price of the house to close the deal. You can refuse to accept the lease takeover but in that case, the current owner would be responsible for paying it off and he's likely going to just wait for another buyer who will assume the lease.

[russ]

This is one potential problem with the leases - getting a buyer to take it over.

As Ian pointed out - get their old utility bills to understand what is really happening - preferably for even a year before the system was installed.

How is the roof under the solar system? Any leaking problems in the attic? These can be expensive fixes.

With a 370$ monthly lease fee you sure don't want escalators in the contract.

You are in Southern CA it sounds like?

[Hyacinth]

Gives me something to think about when deciding purchase or lease.

[Sunking]

Seller is wanting me to assume their 20 year lease with fixed payments of $370 for 19 years with Buy Out Option after year 6 at $60k and year 20 at $20K respectively

Run do not walk away. They are looking for a sucker.

[crotalus]

It would appear that the real utility bill is the $1.00 plus the $370.00 equaling $371.00 a month. Maybe I am missing something here? That is a steep utility bill. My calculator may be wrong but $370.00 X 12 X 20 = $88.800.00 for 20 years. Then to buy out at the end of 20 years is an addition $20,000.00 for a grand total of $108,800.

[Ian S]

It would appear that the real utility bill is the $1.00 plus the $370.00 equaling $371.00 a month. Maybe I am missing something here? That is a steep utility bill. My calculator may be wrong but $370.00 X 12 X 20 = $88.800.00 for 20 years. Then to buy out at the end of 20 years is an addition $20,000.00 for a grand total of $108,800.

Well, if you assume the system was sized to 100% of usage, then annually, the house uses 19,323 kWh which @ $0.253 per kWh yields an annual electric bill of $4889. The annual lease cost would be $4440. So the solar saves around $41/mo. That's not a lot for such a big bill. I'd want to see lots of electric bills prior to and after installation to see how it's really doing. That's why I suggested the OP try to cut the price of the house more. Since the OP has never responded, I suspect he already ran away from the deal.

[SilverLEAF]

I have a friend who recently put in a 13+ kW system, under a Sunpower lease with Sunpower panels and Sunpower (SMA) inverters. They opted for a one payment lease for 20 years. Total out of pocket was under $20k. Your lease on this house seems really, really high. This lease is in AZ, where the utility companies also contribute credits to the project, and the state contributes an additional $1k.

I'd suggest you contact some Sunpower Premier dealers and get a ballpark lease payment.

I have a Sunpower system with their panels and inverters that's 7.6 kW and cost me about 15k after rebates and credits in a no lease, outright purchase. My system is 2.5 years old, and there were no good lease options at the time.

[KRenn]

I have a friend who recently put in a 13+ kW system, under a Sunpower lease with Sunpower panels and Sunpower (SMA) inverters. They opted for a one payment lease for 20 years. Total out of pocket was under $20k. Your lease on this house seems really, really high. This lease is in AZ, where the utility companies also contribute credits to the project, and the state contributes an additional $1k.

I'd suggest you contact some Sunpower Premier dealers and get a ballpark lease payment.

I have a Sunpower system with their panels and inverters that's 7.6 kW and cost me about 15k after rebates and credits in a no lease, outright purchase. My system is 2.5 years old, and there were no good lease options at the time.

How long ago did your friend sign their contract? Based on today's pricing and current low rebate levels, that price is likely invalid. Much has changed in the leasing market since last year in Arizona. In many cases the prepaid lease prices are almost double of what they were in May of 2012