Solar panels are an excellent option for both the environment and a homeowner’s pocketbook. While they can be pricey to install, the return on investment can be substantial over the product’s life. This is especially true if you live in an area with high energy rates. Solar owners may also be entitled to tax breaks or rebates.
Many homeowners elect to lease or finance solar panels, so if you’re selling a home that already has them installed, there are some considerations. Here is some information and tips on how to ensure a smooth closing.
The solar provider will want to make sure they continue to receive payment if the house is sold. For this reason, a UCC (Uniform Commercial Code) Financing Statement is recorded by the solar company, which creates a lien on the title. Before escrow can close, the solar company will have to release (terminate) their lien. The process of obtaining a termination for a solar lien can be complicated.
Here are some of the best ways to avoid delays:
- Listing agents—review the seller’s contract with the solar company. Since the buyers will need to be in contact with the solar company, it is recommended that you disclose the terms of the agreement before escrow opens.
- Disclose whether the equipment is leased, paid, or being paid.
- Understand what is owed if a lien or loan was taken out and provide a statement.
- Selling agents—it is essential that you and your clients take a proactive approach to avoid closing delays.
- Notify the solar company of the pending transfer at the open of escrow. An application and credit check may be required.
- Obtain early approval for assuming the solar agreement from the lender.
- If the solar equipment is leased or financed, the buyer will need to qualify to assume the agreement.
- Be on time with solar/energy efficiency liens. Communicate the terms to the buyer and seller that they have agreed to at the open of escrow.
If you have any questions about this topic or anything related to escrow, please reach out. Our team is here to serve you!