Should you get a solar panel or not is a good question to ask considering the global switch to clean and green energy. However, not everyone may have the kind of money needed to pay for solar panels upfront. This is why you get a solar loan or a solar lease. A solar lease makes it somewhat difficult to sell a house as opposed to a solar loan that adds value to the property. So the question that comes to mind is should I buy a house with leased solar panels or is it better to get a loan and fund it myself? You also might wonder does buyer have to assume solar lease. Continue reading this blog to get answers to all such questions.
Should I Buy A House With Leased Solar Panels?
There’s no doubt that you should go ahead and get a solar panel if you can afford one or get a lease or loan for the same, however, when the question changes to should I buy a house with leased solar panels then the answer to it becomes a bit tricky. A house with a solar lease is difficult to sell because the new owner needs to get the lease transferred to their name or the seller needs to buy out the lease. For this reason, you must consider the following reasons before purchasing a home with leased solar panels.
1. A home with a leased solar panel doesn’t necessarily have any downside but it is better to get a solar loan to fund a solar panel since it can significantly add value to your property.
2. If the previous homeowner is ready to end the lease by paying it off then there is nothing to worry about, however, if they want to transfer the lease to you then check the terms and conditions before proceeding because even though a solar lease will help you save money on utility bill at the end of the lease the solar panel won’t belong to you.
3. Buying a home with a leased solar panel can have a more affordable price than a home with loaned or owned solar panel and so the property might be inexpensive comparatively.
4. A home with a leased solar panel or PPA will get you the benefit of solar panels without the burden of having to pay its maintenance or repair costs which might not be much anyways but an important factor nevertheless.
So all in all it comes down to weighing down the various costs associated with a leased and a loaned solar panel. In the end, some may prefer short-term savings over the long-term goal of your property gaining significant value and so those people will prefer a home with a leased solar panel over getting a solar panel financed by a solar loan.
Does Buyer Have to Assume Solar Lease?
When a house has a loaned solar panel it is similar to an owned solar panel in the sense that this solar panel will add significantly to the value of the property, however, depending on the loan being secured or unsecured the stipulation changes. If the solar panel is financed through a secured loan then the loan needs to be repaid before the house can be sold while a solar panel funded with an unsecured loan can be settled even after the house is sold.
However, what happens when a solar lease is involved? Does the buyer need to sign up for it or can they avoid it? A solar lease, as well as PPA, can both be passed on to the next owner but it is easier said than done. Firstly, the buyer needs to be willing to take up the additional payments while also being capable of paying off the sum. Secondly, the solar company and the lender involved in the contract must accept the transfer.
To make matters worse, solar companies may ask you to have at least a pre-specified FICO score to be eligible to take up the lease. Having a low credit score may result in your application being rejected. And the monthly lease payment needs to be calculated in the house payment calculation. So the buyer will not just have to have adequate income and assets to pay off the mortgage but also to pay the solar payment. And so if you ask here if should I buy a house with leased solar panels then the answer might be more of a no than yes.
Can I Break the Solar Lease after Buying the House?
So from what we have seen above it is possible to assume a solar loan but the buyer doesn’t necessarily have to go for it. There is always an option of asking the seller to pay it off or to avoid buying a home with a leased solar panel. So the real question is can you break the solar lease or are you stuck with it if you didn’t deal with it before the deal for the property went through?
If you have signed a solar lease contract in a rush then make sure to first go through its terms and conditions once again because the contract is not just bulletproof but also a long-term commitment. A solar lease runs for 20 to 25 years and is tied to the home and so you can do either of the following to help your situation.
1. You can buy out a lease by paying upfront all at once. Depending on the contract you might not have this question or you may get to practice this option after 5 to 7 years on the lease have passed depending on the financing company. Post this you can get the solar panels removed or leave them with the home.
2. You can pay off the lease and then opt to buy them. However, unlike a car, the solar panel is not a depreciating asset and so they might not devalue as a car or machine might. For this reason, an expert appraiser will intervene to decide the fair price of a solar panel by factoring in several things such as the current market price of a solar panel and more.
3. The lease can be transferred to the new owner before the sale takes place. However, not many people are willing to take on this option and so you might have to reduce the home price to accommodate the lease payments and that way you can move on with the sale.
4. The last option is to relocate the panel to your new property which might bring additional charges into the picture. To make things more difficult you might even have to get a lot of permissions sorted from a lot of concerned parties while the warranty on the panel may also become thanks and void.
Again the answer to the question, should I buy a house with leased solar panels, comes to a no, however, if you are planning to get a new solar lease and end up deciding in a hurry then know that it is possible to get a lease canceled in such a case.
Also Read: Is My Roof Suitable for Solar Panels?
What are Pros and Cons of Buying A House With Leased Solar Panels?
So far it hasn’t looked like a very good option to go ahead and get a home with a leased solar panel, however, before we can reach a final verdict it is better to consider a few pros and cons of buying a house with leased solar panels so that we can finally make up our minds about it.
- The home costs less than what a home with an owned or loaned solar panel would cost and also the electricity bill gets eliminated as you are now living off the grid.
- The buying pool becomes small as not many people want to get tangled in a complicated solar lease agreement. This improves your chance of getting home quicker.
- Since the solar panel is leased you don’t own the system and so you are not liable for its maintenance or repair costs. However, you still get to enjoy the benefits of the system which is a win-win.
- Not only does buying a home with a leased solar panel bring in more paperwork it also brings in certain potential transfer costs that might be included in the contract.
- The monthly payment for a low electricity user might end up being increased as the lease payments add up to the home mortgage or other costs.
- There are a lot of ways to get disqualified from getting such a home and also a credit check might take place that might affect your credit score.
Now that the pros and cons have been considered it is safe to say that the negatives still outweigh the positives of buying a home with a leased solar panel and so there you have our verdict on the subject.
So your answer to should I buy a house with leased solar panels is a no from what we have seen throughout the blog. The question you have to ask yourself is can I break the solar lease after buying the house, the answer to it is yes and so it is better to get a lease yourself or consider getting one rather than getting a house with a leased solar panel. Most of the benefits of a home with a leased panel can be obtained by signing up for a lease rather than dealing with an existing one and so only if you want a home quickly or for a cheaper price only then should you buy a home with a leased solar panel.
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