Solar Panels Present Specific Issues When Selling a Home
More and more issues are popping up as properties with solar panels change hands. Understanding the implications of the solar panels on a property sale is important, especially with leases. If the Solar Panels are leased, the homeowner should contact the Solar Panel Company and find out how the lease is structured. All leases vary in terms and conditions and transferring the Lease may not be an option.
In addition, the specific lease terms will need to be reviewed by the buyers and their lender. Depending on the terms, buyers may be unwilling to take on the lease. In some cases, the lease is structured so that it creates an added monthly expense and increases the buyer’s debt-to-income ratio so they aren’t able to qualify for the Mortgage. Another concern is that there may not be a Transfer option on the Lease. If that is the case, the Lease will need to be paid in full before the home can be sold, which can be handled at closing if necessary.
This is why it is important for real estate agents and home owners to understand how the lease is structured prior to listing the home. Exploring the options and the terms of your Lease with your Realtor will help to determine how to Market and price your home. This includes understanding how other homes in the area with Solar Panel are being handled. An experienced real estate attorney should assist with this contract review as well. Remember, only an attorney can provide legal advice.Every perspective buyer needs to tell their Lender the monthly fee and terms to obtain a new Mortgage Pre-Approval. Additionally, they need to complete an application from the Leasing Company and qualify for the Lease.
For the right buyer, Solar Panels can add value to a home, just as with an in ground pool or a newly remodeled kitchen. But you can’t add $50,000.00 to your asking price for this feature and, more importantly, the home may not appraise. Sellers should realize the benefits that their Solar Panels provided, including low monthly energy bills, and for many the Energy Tax Credits. Sellers should consider paying off the Lease in advance if possible, which will add even more value to the home and may help it sell quickly. Proactively understanding how the Solar Panel lease is structured, what the options are and what options are best for each situation will avoid heartache and confusion once a home is listed.
WHAT BUYERS SHOULD THINK ABOUT ?
So, you saw a home with Solar Panels and you want to make an offer. Ask your Real Estate Professional to find out if the Solar Panels are owned or leased. If the Seller has a lease you should find out the terms and conditions, and then speak with your Lender.
Thanks again to our guest blogger, Andrea Ryan, Managing Partner, Turnkey Title. Turnkey has seen more issues occurring with solar panels. We thought sharing some of these concerns would be helpful. As always, if you have questions regarding a transaction with solar panels or other issues, please give us a call at Posternock Apell, PC.
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