How Can You Get Out of a Solar Lease Contract?
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Are you one of those homeowners who signed a solar lease contact in a rush, but now have buyer’s remorse? Do you want to sell your home with a solar lease? Or maybe you’re looking to buy a house with a leased solar panel system on the roof? There are many reasons why you might want to get out of a solar lease, such as moving away to another house, selling the house or that you’re just not happy with the savings.
In this section, we’ll cover the potential reasons for canceling a solar lease agreement as well as possible solutions for getting out of a solar lease contract.
How to cancel the solar lease if you are selling the house?
No doubt going solar is a wise choice, one that brings decades of clean, affordable energy. There’s nothing like the feeling of independence once you begin to generate your own power. Besides, home values increase with an investment in home solar.
Solar brings an abundance of benefits, but there are also new considerations for homeowners. If you end up putting your house on the market You might encounter a few issues during the sales process. If you are trying to sell a home with leased solar panels, familiarize yourself with the lease you have agreed to. Since you are responsible for payments during the full term of the lease agreement, it is very important to know that the lease is tied to a title of a home, and in most cases, this means you are in a bullet-proof agreement for 15 to 20 years.
Getting out of a solar lease:
You can buy out the remaining part of a solar lease payment
Purchase the solar panels system at the market price
Transfer a solar agreement
What happens with a solar lease if you move?
Even though leasing solar panels with no upfront cost is very attractive, trying to get out of a solar contract comes with some additional cost.
Depending on the contract agreement, when selling your house you have a few options for fulfilling the lease obligation before the lease is up:
Buyout of a solar lease agreement
Buyout: In this case, you can prepay the balance on the remaining lease and have the solar panels either removed or left on the house. Most solar leasing companies do include a buyout period and price in their agreement. However, that might not always be the case. Usually, a buyout is allowed after 5 to 7 years of the lease. We suggest you check your contract for more details.
Purchase of the solar system at market-value
Some lease agreements do not clearly state an amount of purchase but indicate that an expert appraiser will specify the fair market value at the time of purchase. You have to take into consideration how long your system has been in use, plus the current market options. Keep in mind that your solar panel system is locked up to a commodity of producing power, and unlike cars that lose value over time, the cost of purchase may be higher.
Transfer of a solar lease
Another way to bail out of a solar lease is to transfer the lease to a new homeowner. For example, some solar companies have a Service Transfer Specialist who will help you throughout the whole process of making sure your lease is transferred to the new homeowners.
Nevertheless, some buyers may be unwilling to accept this solution, but you can always reduce the selling price of the house by the amount of the transfer and complete the sale.
Relocate a solar panels system from one house to another
If you are moving away, some leasing companies have the option to relocate a system from one house to another. Before starting this process, you should make sure the new rooftop is in good enough condition to safely support a rooftop solar system. Many solar leases have a provision for relocating a system from one home to another plus an additional cost to remove and reinstall the solar system. Keep in mind that you will need the approval of your utility company, local government commission or homeowners association in order to install a solar system on a new rooftop.
All in all, if you are planning on selling the house soon, consider a buyout first. If you have the possibility of an early buyout, you can pay for the remainder of your lease and own the system yourself. Solar panels that are fully owned add up to $10,000 to the value of your house. This can sometimes outweigh the cost of the buyout. If the buyout amount is significantly less expensive than monthly payments through the lease period, it is a financially reasonable option to consider.
You signed a solar lease but you’re not happy with the savings
You have signed a solar contract in order to save on your utility bills but after some time you are not satisfied with the savings. One of the reasons why your solar lease is not meeting the bill saving expectations is possibly the fact that it contains the annual escalator. Many leases contain an escalator clause which can go from 3 to 5 percent per year. The problem comes up when the electricity costs don’t rise as fast as lease payments. Nevertheless, with favorable financing and properly installed equipment, a home solar system can save you from 10 to 30 percent on your monthly electrical utility.
Buyer’s remorse? Can I cancel my solar lease before the installation?
If you have regrets and wish to back out of a solar lease, you might be able to cancel it before the installation of the solar system. The time frame to cancel leasing without any penalties depends on the solar company policy but usually, it is a one month period after you sign the solar contract. In case you have signed the solar lease, just to find out later that your roof needs to be repaired, the solar company allows termination of the agreement under the clause of “unexpected and unforeseen additional expenses”.
While leasing a solar system in some cases might not be a bright idea, reducing your carbon footprint and installing solar panels certainly is. According to the National Renewable Energy Laboratory (NREL), homes with solar panels sell 20 percent faster and for 17 percent more than the equivalent non-solar homes.
One way or another, before signing a solar lease you should weigh all options, carefully read the “fine print” and only after that will you be confidently prepared to choose the right path for going solar. Depending on your situation, you may find that leasing, a solar loan or buying the system with cash might make the most sense for you.
One way or another, before signing a solar contract you should weigh all options, carefully read the “fine print” and only after that will you be confidently prepared to choose the right path for going solar.
Depending on your situation, you may find that leasing, a solar loan or buying the solar panels with cash might make the most sense for you.
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