A few months ago, I wrote a hypothetical article about how a solar lease can impact the sale of a home. This month I got the real-life lesson. Pebbles and Fred were looking for a home in the Chandler area. We found what we thought was a perfect home until we read the house had a solar lease. This brought up a lot of questions like how much is it, how many years left and, the most important one, how much does it save? The seller provided a copy of the solar lease and electric bills. The key points were:
1) Term – The term of the lease was for 20 years. The seller had entered into the lease in October 2011. There were ~16 years remaining on the lease. The lease states the solar equipment would be returned to the solar company at the end of the lease period. The owners had to have a high-speed internet connection installed so the solar lease company could monitor the output and make sure the panels were working correctly. The owner was responsible for keeping the panels cleaned and in good working order. The lease could be transferred if the buyers qualified. The panels could be relocated to a different house for an additional fee and the owner would be responsible for all relocation costs.
2) Costs – The monthly lease payment for the solar panels is about $85.00. This is nearly $1000 per year or $16,000 over the remainder of the lease.
3) Energy Produced – The lease contained a Energy Production Guarantee. Over the 20 years the guaranteed kWh started at 8,608 and declined to 7,113 in year 20. If the kWh were less than guaranteed the owner would receive a refund of the difference at the end of each year. (Note the lease specifically prohibits heating a pool.)
4) Electric Bills – April was $106.02 for 91 kWh. July was $295.18 for 2128 kWh. November was $61.20 for 456 kWh. The buyers thought this did not reflect a significant savings when the monthly lease amount of $85 was added. In reviewing the monthly usage for 2013, 2014 and 2015 the usage had increased every month. Does this mean the occupants were less conservative because of the solar? Or had something else made the usage increase?
Ultimately my buyers decided not to purchase the house because they did not see the benefit of the solar and therefore felt it was not worth $16,000 in additional payments. So what recourse does the seller have to get the house sold? None of them are pretty. The seller can reduce the price of the house to reflect the additional $16,000 cost. But the buyers could still want more of a discount due to the solar lease. The seller could relocate the panels to a new property which could be expensive. (In this case the seller was moving out of state so this was not an option.) The seller could pay off the $16,000 remaining on the lease. This is probably the cleanest solution.
The moral of this story is homeowners should think carefully before encumbering a property with a 20-year solar lease. Everyone thinks they will stay in a house forever but that rarely happens. No one can predict what will happen 20 years in the future. Be careful not to do something that will make it difficult to sell a house or will hurt the resale price.