This home was beautiful. Great layout, open kitchen, fantastic backyard...and a leased solar system already in place on the roof. The seller had entered into a solar lease agreement a few years prior for a 20-year term. The solar array had generated power to offset their cost of their monthly utility bills, which the seller had loved...and at the time of sale, the solar lease was transferable to a new homeowner.
Sounds good, right? Almost.
The buyer loved the home. They were especially excited about the idea of lower energy bills and sustainability. But once they got their hands on a copy of the actual solar lease agreement and dug into the fine print, the mood shifted.
The terms weren’t a dealbreaker on the surface, but the buyer had some questions. The monthly solar lease payment increased slightly each year. The agreement required the new owner to formally assume the lease through the solar company’s process, which involved a credit check and added paperwork. At the conclusion of the 20-year term, the homeowner did not actually own the solar panels...instead they had the option to extend the lease, or have the panels removed, or IF they wanted to buy those panels there was a balloon payment option at the end of the term. The buyer wasn’t thrilled about the idea of being locked into a third-party agreement they hadn’t chosen. On the upside, not owning the panels meant they did not have responsibility for maintaining the panels. The buyers were torn...
Rather than walk away, the buyer made an ask: they loved the idea of having a home with solar panels, but only if they could own them outright. After a little back-and-forth, both sides reached an agreement: the seller agreed to pay off the solar agreement at closing, which converted the system from a leased asset to an owned one and gave the new owner full ownership of the solar array from day one.
So many homeowners in Sacramento are now installing rooftop solar systems (and rooftop solar is actually required on new construction homes!), but not everyone realizes how it can affect a sale. The reality is that many buyers will happily assume a solar lease from a seller, while other buyers will not love it and want to negotiate with the seller to pay off the solar to own it outright.
Leased Solar vs. Power Purchase Agreement Solar vs. Owned Solar: What sellers and buyers should know...
Leased Solar Systems are owned by a third party. Homeowners pay a monthly amount for the use of the solar system. These leases often last +/-20 years and are usually transferable, but buyers need to qualify and agree to the lease terms.
Sounds good, right? Almost.
The buyer loved the home. They were especially excited about the idea of lower energy bills and sustainability. But once they got their hands on a copy of the actual solar lease agreement and dug into the fine print, the mood shifted.
The terms weren’t a dealbreaker on the surface, but the buyer had some questions. The monthly solar lease payment increased slightly each year. The agreement required the new owner to formally assume the lease through the solar company’s process, which involved a credit check and added paperwork. At the conclusion of the 20-year term, the homeowner did not actually own the solar panels...instead they had the option to extend the lease, or have the panels removed, or IF they wanted to buy those panels there was a balloon payment option at the end of the term. The buyer wasn’t thrilled about the idea of being locked into a third-party agreement they hadn’t chosen. On the upside, not owning the panels meant they did not have responsibility for maintaining the panels. The buyers were torn...
Rather than walk away, the buyer made an ask: they loved the idea of having a home with solar panels, but only if they could own them outright. After a little back-and-forth, both sides reached an agreement: the seller agreed to pay off the solar agreement at closing, which converted the system from a leased asset to an owned one and gave the new owner full ownership of the solar array from day one.
So many homeowners in Sacramento are now installing rooftop solar systems (and rooftop solar is actually required on new construction homes!), but not everyone realizes how it can affect a sale. The reality is that many buyers will happily assume a solar lease from a seller, while other buyers will not love it and want to negotiate with the seller to pay off the solar to own it outright.
Leased Solar vs. Power Purchase Agreement Solar vs. Owned Solar: What sellers and buyers should know...
Leased Solar Systems are owned by a third party. Homeowners pay a monthly amount for the use of the solar system. These leases often last +/-20 years and are usually transferable, but buyers need to qualify and agree to the lease terms.
Often confused for a solar lease is a "Solar Power Purchase Agreement" (PPA). A solar lease charges you a monthly fee to use the solar panels, while a solar power purchase agreement (PPA) charges you based on the actual electricity the system produces. With a lease, you pay for the equipment; with a PPA, you pay per kilowatt-hour of energy. In both cases, the 3rd party solar company owns the system and typically handles maintenance.
Owned Solar Systems, whether paid in cash or financed and paid off, are treated like other fixtures. They generally add value to a home and are simple to transfer because there’s no lease to assume.
What to do if you are selling a home with Solar...?
Pull out your solar contract before you put your home on the market...buyers will want to review it. They likley also will ask for copies of your energy bills...be prepared and download 12-months of your bills so buyers can evaluate the seasonal fluctuation of power production and utility billing, AND so they can look at your "true-up" bill if you have one. In California, you will also want to complete the "Solar Advisory and Questionnaire" Disclosure.
Be upfront about whether the system is leased, on a power purchase agreement, or owned (with or without a loan). And be prepared to discuss options: Are you willing to pay off the lease? And how much does it cost to pay off the lease? Can the lease or power purchase agreement be assigned? Will the buyer need to apply to assume it?
In my case, the seller closed the sale, and the buyer got a great home and a fully-owned solar system. But it was only possible because we had the right conversations upfront, read the fine print, and stayed flexible.
So yes, you can absolutely sell a home with solar in Sacramento. But whether it’s smooth and seamless or unexpectedly sticky depends on many factors.
Owned Solar Systems, whether paid in cash or financed and paid off, are treated like other fixtures. They generally add value to a home and are simple to transfer because there’s no lease to assume.
What to do if you are selling a home with Solar...?
Be upfront about whether the system is leased, on a power purchase agreement, or owned (with or without a loan). And be prepared to discuss options: Are you willing to pay off the lease? And how much does it cost to pay off the lease? Can the lease or power purchase agreement be assigned? Will the buyer need to apply to assume it?
In my case, the seller closed the sale, and the buyer got a great home and a fully-owned solar system. But it was only possible because we had the right conversations upfront, read the fine print, and stayed flexible.
So yes, you can absolutely sell a home with solar in Sacramento. But whether it’s smooth and seamless or unexpectedly sticky depends on many factors.
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