You’re ready to put your home on the market, but there’s a 20-year solar agreement attached to it. Is that system on your roof a powerful selling point or a major liability that will scare away buyers? The answer depends entirely on one critical factor that your original salesperson may have glossed over: whether you own your system or lease it.
Understanding how your solar agreement impacts the sale of your home is essential. The difference between a smooth closing and a deal-killing nightmare often comes down to the fine print in your original contract. This guide will explain how selling a house with solar panels works with the different types of financing.
The Clear Advantage: Selling a Home with an Owned System
If you purchased your system, either with cash or through a traditional solar loan, you are in the best possible position.
- It’s a Proven Asset: Numerous studies from sources like Zillow and the Lawrence Berkeley National Laboratory have shown that a fully owned solar system can significantly increase a home’s resale value. You are not just selling a house; you are selling a house with lower, predictable energy costs, which is a major draw for modern buyers.
- A Simple Transaction: The process is straightforward. The solar panels are considered a fixture of the property, just like a renovated kitchen or a new deck. The value is baked into your home’s appraisal. If you have an outstanding solar loan, it will be treated like your primary mortgage—the loan is simply paid off and closed out from the proceeds of the home sale, and the title is cleared for the new owner.
The Major Hurdle: Selling a Home with a Solar Lease or PPA
This is where the dream of an easy sale can turn into a nightmare. If you have a solar lease or a Power Purchase Agreement (PPA), you do not own the system on your roof. You are simply renting it from a third-party company. You cannot sell what you do not own.
This creates two significant challenges:
- The Lease Transfer: To sell your home, the new buyer must independently apply for, be financially approved by, and agree to assume the remainder of your 20-25 year lease agreement. Many potential buyers are unwilling to take on a long-term liability created by someone else. They may not have the credit score to qualify, or they may simply be scared off by the complexity of the contract and its annual payment escalator clauses. This can shrink your pool of potential buyers dramatically.
- The Lease Buyout Trap: If a buyer is unwilling or unable to assume the lease, your only other option is to buy out the remainder of the contract to terminate it. The buyout price is not based on the system’s current value, but on the future value of all the payments the solar company will lose. This can be an astronomical sum—often $15,000 to $20,000 or more. This unexpected cost can wipe out a huge portion of your home’s equity.
The Lien Problem: A Final Hurdle
Even if you have a solar loan, you must ensure the lien is handled correctly. The UCC-1 lien placed on your property by the finance company must be paid off and formally released for the new buyer to receive a clean title. While this is a standard part of any real estate closing, it’s crucial to ensure your solar lender is responsive and processes the termination paperwork promptly to avoid delays.
Conclusion: Understand Your Agreement Before You List Your Home
The way your solar panels affect your home sale comes down to ownership. An owned system is a clear asset; a leased system can be a significant liability. If you are preparing to sell your home and are just now discovering the complications of your solar lease or an unexpected lien, it can bring your entire transaction to a halt. Our case review process can help you understand the terms of your agreement and your options for dealing with a difficult solar company during the home sale process.