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New to solar - buying house with paid-off solar lease?

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  • New to solar - buying house with paid-off solar lease?

    Hi everyone, a house we are prepared to put an offer on has a solar panel setup. It was a lease with SolarCity, however the lease is fully paid off. I have read around here about the perils of buying a house with a lease, and to either make sure that the lease is fully paid, or to reduce the selling price of the house to compensate.

    Is there anything specific I should be aware of by buying this house with a fully paid lease? I believe we will still have to sign paperwork with SolarCity, but not owe them any payments. What about warranties? Are they transferable? (inverter, etc). The system was installed in 2012. The owners considered bringing it with them (?) but decided to leave it behind.

  • #2
    Get a lawyer. This will end up being complicated and may not get sorted out till you find a lien on your house after you close escrow.

    if it were I, I'd insist it be paid off, and own it free and clear before close of sale. And make sure your home insurance knows about it,
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    • #3
      Originally posted by Mike90250 View Post
      Get a lawyer. This will end up being complicated and may not get sorted out till you find a lien on your house after you close escrow.

      if it were I, I'd insist it be paid off, and own it free and clear before close of sale. And make sure your home insurance knows about it,
      It is paid off. The lease that is.

      What are examples of complications? (I don't ask that as a statement that it's not complicated, but rather my not knowing what the complicating factors are). It's easy to say something is complicated, but what about it specifically is complicated? The end of the lease term?

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      • #4
        If you have proof in writing it is fully paid off, there isnt much more but to get the original contract in hand and read it in entirety searching for loopholes. Im not an installer or lawyer, but IMHO a feasible possibility (however unlikely) is one or more parts of the system stop working and SC doesnt come out to repair it as they should since they own the system. Less likely, but perhaps more critical, is if the system burns down your house. IIRC they are supposed to carry insurance to replace the entire system since they own it. But i dont remember if there was a sliding scale for lets say year 19 of 20 that allowed them an alternate payoff vs. Replacement. The orignal contract should give you ideas for what could go wrong. Or post it here and we can help more.

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        • #5
          Find out how much it would cost to remove it, get free and clear of the contract, and then subtract those cost from your offer.
          MSEE, PE

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          • #6
            Originally posted by ironcondor View Post
            Hi everyone, a house we are prepared to put an offer on has a solar panel setup. It was a lease with SolarCity, however the lease is fully paid off. I have read around here about the perils of buying a house with a lease, and to either make sure that the lease is fully paid, or to reduce the selling price of the house to compensate.

            Is there anything specific I should be aware of by buying this house with a fully paid lease? I believe we will still have to sign paperwork with SolarCity, but not owe them any payments. What about warranties? Are they transferable? (inverter, etc). The system was installed in 2012. The owners considered bringing it with them (?) but decided to leave it behind.
            Why would you need to sign any paperwork with SC? If the lease is paid off then the current owners of the house should be the only party you'd need to be talking to. Am I missing something?

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            • #7
              Originally posted by max2k View Post

              Why would you need to sign any paperwork with SC? If the lease is paid off then the current owners of the house should be the only party you'd need to be talking to. Am I missing something?
              The SC lease contracts i read were standardized between normal, prepaid, and esrly payoff. The "normal" appropriately carried the clause for transferrence that required new homeowner to be preapproved, even pass their credit check, to takeover as lesee. It was left in contract as a remnant for prepaids..

              I saw a non SC lease lster that specidically said the credit checks and preapprovals were npt required if the lease payments were fulfilled, just notificstion was required..
              Last edited by cebury; 07-16-2017, 08:56 AM.

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              • #8
                Originally posted by cebury View Post

                The SC lease contracts i read were standardized between normal, prepaid, and esrly payoff. The "normal" appropriately carried the clause for transferrence that required new homeowner to be preapproved, even pass their credit check, to takeover as lesee. It was left in contract as a remnant for prepaids..

                I saw a non SC lease lster that specidically said the credit checks and preapprovals were npt required if the lease payments were fulfilled, just notificstion was required..
                All this assumes the new owner wants the array. More than some would not. Either way, it's not a good idea to simply assume everyone is chomping at the bit to have an array on their roof, particularly one that's probably inappropriately sized for the new owners and their needs, and especially a leased one from SolarChitty.

                Whatever a homebuyer's opinions about that might be, once the lease is paid off, unless the terms of the contract so state, the equipment still belongs to the lessor. If so, the new home buyer will be getting a home with someone else's equipment on it. Hence, the suggestions about lawyering up.

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                • #9
                  Originally posted by J.P.M. View Post

                  All this assumes the new owner wants the array. More than some would not. Either way, it's not a good idea to simply assume everyone is chomping at the bit to have an array on their roof, particularly one that's probably inappropriately sized for the new owners and their needs, and especially a leased one from SolarChitty.

                  Whatever a homebuyer's opinions about that might be, once the lease is paid off, unless the terms of the contract so state, the equipment still belongs to the lessor. If so, the new home buyer will be getting a home with someone else's equipment on it. Hence, the suggestions about lawyering up.
                  Max2k asked why would anyone need to sign anything for a SC lease contract when the lease was fully paid. I answered him with a possible scenario based on a SC lease i had a seen. I didnt suggest the OP should or wants to keep it or that he shouldnt lawyer up.

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                  • #10
                    Originally posted by cebury View Post
                    Max2k asked why would anyone need to sign anything for a SC lease contract when the lease was fully paid. I answered him with a possible scenario based on a SC lease i had a seen. I didnt suggest the OP should or wants to keep it or that he shouldnt lawyer up.
                    Not sure it requires a Lawyer or not. His Real Estate Agent should be able and required by Law to disclose all the details. It will be in the Closing Documents for sure. The Title cannot be cleared otherwise.
                    MSEE, PE

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                    • #11
                      IronCondor, you do need to have a lawyer read the SC contract and all appurtenant documentation. What, exactly, does "lease paid off" mean? Does seller own the installation? Possibly so, because SC needed cash recently and quit making leases. They may have sold leased systems to homeowners or to third parties. You need to know what's what, and realtors are not competent to interpret contracts for you.

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