Selling a house with solar: leased, financed or owned panels

Solar can help a home sale or slow it down, and which one usually depends on who owns the panels. A lease that surprises a buyer in escrow can delay closing while the solar company runs a credit check. A little paperwork before you list can avoid that.

Start by finding out which of the three situations you are in. Your contract will say.

Owned outright (paid in cash or a loan that is paid off). The panels are part of the house and go with it. Solar United Neighbors notes that owned systems add value, and suggests working with an agent and appraiser who know how to account for solar. Have warranty papers and production records ready for buyers.

Financed with a solar loan. You own the panels, but the lender may have rules about a sale. Call the lender before you list and ask for the payoff amount and their sale procedure, so the payoff can be planned into your numbers.

Leased or on a power purchase agreement (PPA). The solar company owns the equipment and you pay for its use or its power. These companies commonly record a UCC-1 fixture filing, a public notice that the equipment on the roof belongs to them. Title companies and lenders will see it, so it will come up during the sale whether you raise it or not.

If you have a lease or PPA, you usually have three paths:

Step 1: Transfer it to the buyer. This is often the simplest. The solar company has the buyer apply, often with a credit check, and the buyer takes over the payments. Tell your agent at the start, disclose it in the listing information, and consider making the transfer approval part of the purchase contract so nobody is surprised.

Step 2: Buy it out. You pay the solar company the remaining contract value and then sell the house with an owned system. Ask for the buyout figure in writing. Solar United Neighbors notes this tends to work better once the system's early ownership period, often five years, has passed.

Step 3: Move the panels. Some companies allow removal and reinstallation at your new home, but the new roof needs similar sun, there are fees, and the new utility has to approve the connection.

For example, if a lease has 10 years left at $120 a month, a buyer would be taking on $14,400 in future payments in that example. Showing that buyer a year of electric bills from before and after solar helps them judge whether the payment is worth it.

Documents to gather before listing: the full solar contract, the warranty documents, the installer's contact information, 12 months of production data from your monitoring app, and 12 months of utility bills.

Every contract is different, and real estate and lien questions depend on your state and your documents. Your agent, escrow or title officer, or a real estate attorney can tell you how your specific contract will be handled.

Your next step today: find your solar contract and look for the words "transfer," "assignment" or "sale of home." That section tells you what the company requires.