Selling A House With Solar Panels: The Definitive Guide
Solar panels are an excellent way to be more environmentally friendly while also saving on energy bills. Some homeowners even generate enough electricity to sell power back to their utility company.
However, how the panels are purchased, whether they are owned outright, leased, financed, or under a Power Purchase Agreement (PPA), will greatly affect the value they add to your home when it comes time to sell.
To help you better understand solar financing options and how they may impact resale, we will look at the different types of ownership and what they mean for selling a house with solar panels.
Is It Harder to Sell a House with Solar Panels?
It depends entirely on ownership. A fully owned system is an asset and usually makes the home easier to sell. A leased system, on the other hand, adds paperwork, buyer hesitation, and can slow down or complicate the transaction.
To get a better understanding of what can make a home with solar panels easier or harder to sell, we first have to look at the different types of ownership.
How Solar Panel Ownership Can Affect a Home Sale
Ownership plays the biggest role in how smoothly a home with solar panels can sell.
Fully Owned Solar Panels
If solar panels are fully owned, they are treated as a fixture of the property and sold as part of the real estate.
Solar panels cannot be the only source of electricity. All major mortgage investors, including Fannie Mae, Freddie Mac, the VA, and the FHA, require the property to have another source of electricity in case the solar system fails.
Appraisers may give credit for the system, but only when ownership is proven through contacts, payoff statements, and utility records.
In summary, here’s what it means to have a fully owned solar system:
- Homeowner owns panels
- Higher upfront costs (cash or loan)
- Higher long-term savings
- Treated as a home upgrade
- Easier to sell
This is what it can mean for the seller:
- Adds about 4.1% to the property value
- It usually sells sooner
- Similar to other home improvements, such as a deck, kitchen, or sunroom
And, this is what it can mean for the buyer:
- Reduced or no utility bills
- Added value
- Similar to other home improvements, such as a deck, kitchen, or sunroom
Leased Solar Panels
When a third party owns the panels, the system is leased. This often creates challenges during resale.
Ben Zook, founder of Belmont Solar, makes it clear that solar leases are not always a negative. He explains that they can work for both buyers and sellers if three main conditions are met:
- The buyer is willing and able to assume the lease, or the seller can buy out the lease at a fair value before selling.
- The system is well-designed and installed.
- The lease agreement does not include a “riser,” or escalator clause, that increases payments faster than the cost of electricity.
In an interview with Realtor.com, Zook specifically added that there are essentially two options when a home with leased solar is sold: “You assume the lease as the buyer, or the seller buys out the lease before selling the home.”
Let’s explore the options in more detail:
- Buy Out the Lease
- Costs money upfront and is often priced higher than the system’s current value
- Limitations apply depending on the contract, so be sure to read the fine print
- This can take additional time and slow down the sales process
- After that, it’s the same as selling an “owned” system
- Transfer the Lease
- Limits your pool of potential buyers
- Does not add any value to the property
- Requires approval from the solar company
- Buyer’s credit must be checked
- It can extend the timeline of closing
This directly affects buyers. If the seller buys out the lease, the lien or UCC filing must be cleared before closing. If buyers assume the lease, they must review the fine print carefully and pay attention to escalators. The reduced utility costs may not outweigh the added lease payment.
Power Purchase Agreements (PPA)
A power purchase agreement (PPA) is similar to a lease. You do not own the panels but pay monthly fees based on the kilowatt hours consumed.
Selling a home with a PPA usually involves the same hurdles as leases: Transfer Agreements, buyer credit checks, and added delays.
Legal Considerations When Selling a Home with Solar Panels
If you’re selling a home with leased solar panels, there are a few key legal considerations to keep in mind.
Uniform Commercial Code (UCC) Filing
Solar loans, leases, and PPAs are usually submitted as a Uniform Commercial Code (UCC) filing. This serves as an official public notice stating a creditor’s interest in a piece of property, such as solar panels, as collateral for a debt.
What This Means When Selling a Home: The title company must clear or subordinate the UCC so the mortgage remains in the first lien position. Without this, lenders will not fund the loan, and title insurance will not be issued.
Solar Lien
The UCC filing creates a lien. It gives the solar company or lender a legal right to the panels until repayment is complete.
What This Means When Selling a Home: Any lien connected to the panels must be subordinated to the mortgage at closing or temporarily removed and refiled afterward. This ensures the mortgage is senior. If the solar loan is still being paid off, the lien remains until it is satisfied.
Solar Panel Lease Transfer Agreement
If the solar loan or lease is not paid off, it must be transferred to the buyer. This requires approval from the provider and a review of the buyer’s credit. The title must also verify any UCC tied to the panels.
What This Means When Selling a Home: This added complexity limits the buyer pool, since not every buyer is willing to assume ongoing payments.
Problems With Selling a House with Solar Panels
As with any home sale, many parties are involved, which can lead to complications if everyone isn’t on the same page. It can be especially complicated when a solar lease or PPA is involved.
Here are some common problems and how to combat them to ensure a smooth transaction.
1. Valuation and Pricing Issues
- Owned systems add value, while leased or financed systems usually do not
- Missing documentation or unresolved liens prevent appraisers from assigning value
- System age and roof condition can reduce or cancel value
How to combat this: Provide proof of ownership, lien clearance, warranties, and production records. If possible, buy out the lease before listing.
2. Transaction and Closing Issues
- Lease transfers add time and risk due to provider approval and credit checks
- UCC filings can delay or prevent funding if not cleared
- Payoffs and buyouts must be carefully timed to avoid last-minute issues
How to combat this: Have the UCC subordinated and lease transfer paperwork completed early. If possible, pay off the system before listing.
3. Financial Burdens For Sellers
- Lease buyouts may cost more than new panels
- Buyers often resist homes with escalating leases
- Roof replacement costs reduce net proceeds
- Liens and disclosures add time and expense
How to combat this: Evaluate before installing solar if you plan to sell soon. Buying outright usually adds value, while leasing often complicates resale.
4. Communication & Disclosure Issues
- Unclear ownership creates confusion and distrust
- Missing contracts or UCC details stall approvals
- Lenders require complete lease, loan, or PPA documentation
How to Combat This: Be upfront with all documents and ensure clear communication between agents, buyers, lenders, and title.
FAQs About Selling A House With Solar Panels
Things to Consider Before Going Solar
With the solar financing issues raised above and changes with the One Big Beautiful Bill, there are a couple of things you may want to consider before going solar:
- If you may sell in the next few years, avoid leases and PPAs.
- Buying panels outright provides the strongest resale value.
- Understand that the One Big Beautiful Bill and the type of solar financing you choose may impact your actual solar savings.
If you have any questions about these considerations, Belmont Solar would be happy to discuss your options!
Install Solar Panels Today & Increase Your Home’s Value
If bought outright and fully owned, a home with solar panels is actually easier to sell. It’s considered a home improvement project, like a deck, sunroom, or kitchen renovation, and actually adds value to your home. Plus, if planned with experts, it can save you and future buyers money on their electricity bill.
If you’re interested in adding value to your home and lowering your energy bill, reach out and schedule a free consultation with Belmont Solar. They’ll work with you to achieve your desired solar savings and walk you through solar financing options so you can avoid potential pitfalls when selling your home.
Contact them today to be one step closer to your solar savings!