Three Things to Know About Solar Panels & Selling Your Home
Solar panels are a good source of energy and good for the environment. However, they can wreak havoc with the closing process if they are not fully owned by the seller. Here are some examples of the problems that could result:
1. If the solar panels are financed, the seller could be forced to pay the full balance on the loan at closing. They may not be transferrable to the new buyer without the payment. So if the seller is looking to sell in year five of the installation and the loan is a fifteen-year term, the balance of the solar loan which could be several thousand or tens of thousands of dollars must be paid off by the seller at closing. The buyer will get the benefit of the solar panels free and clear and have no electric costs in the future, while the seller who was not able to avail themself of that benefit for the full period has to pay the entire cost.
2. If the solar panels are financed and there is a large balance on that loan, can that loan be assumed by the buyer, or can the buyer roll in the cost of those panels into his primary mortgage loan? Will the buyer’s lender agree to it? Answering these questions will inform and educate the seller and the buyer and will help negotiate the sale transaction smoothly and without surprises.
3. If solar panels are leased, there may be an early termination fee. The seller should review the amount of the fee with their solar company. Will the solar panel lease be transferable at closing to the buyer? In that case, when listing the house for sale, it should be categorically mentioned and the contract for solar panels should be readily available to the buyer for their review with their counsel.
us at 516-570-4016 to discuss any issues in your sale or purchase of your home so we can help navigate these issues contractually.