Never Lease Solar Panels - Perhaps Buy Instead
What are the pros and cons of leasing versus purchasing solar panels for your home? Our recommendation? Don’t lease solar panels; however, purchasing panels instead could be a better option.
I am a real estate broker in Illinois, and I was at a real estate closing recently. The 78-year-old purchaser (we’ll call him ‘Joe’) was moving from a state in the South to live near his daughter, and the sale was contingent on him selling his home. He stated that he had to pay off a solar panel lease in order to sell his home. The payoff amount was $73,000. The story Joe told was that for years he had turned down door-to-door solar panel salespeople who were trying to sell him leased solar panels. He stated that he finally agreed “in a weak moment” to sign a contract for the installation of leased solar panels. Joe was told the installation was free, and the savings would be about $40 to $50 dollars per month on his electric bill. This sounded good to him at the time.
What Joe did not do was thoroughly read through the lease. Solar leases are usually for 20 to 25 years. The solar company Joe went with had him sign a 25-year lease. It stated in the lease that if Joe wanted to remove the solar panels from his rooftop, he would have to pay the balance of the lease off. In this case, the balance of the lease (24 years remaining) was $73,000. Joe was forced to pay this fee because he could not find a buyer that wanted to assume the lease.
I have found this to be the case in many transactions where my business is located, in Illinois. When a person puts leased solar panels on one’s home, it instantly becomes a harder home to sell. Buyers can be lost because of solar panels. Many home buyers are not against solar power; they just do not want to be trapped with a lease that would affect any future sale of their home.
There are other concerns with leased solar panels as well. One factor to consider is the cost of removing the solar panels when a person is putting a new roof on their home. Eventually, a house needs a new roof because of age, hail damage, or other reasons. The question one needs to ask is: Who is allowed to take off the panels and put them back on the roof, after the new roof is installed? Most times, only the solar panel company is allowed to do this. Many companies charge very high fees to do this.
Another thought to consider about leasing is whether the solar company has an escalator clause in the lease. Is the cost of leasing going up every year? Homeowners should examine the lease closely. Additionally, is your home a good candidate for solar panels? Is there too much shade? If so, solar might not be the way to go.
As a real estate broker, I would never recommend installing leased solar panels on a rooftop. Now, if one is purchasing solar panels for cash, that is a different story. We are fortunate in Illinois to have a non-profit organization called the Citizens Utility Board (CUB). CUB vets solar contractors and also gets buyers discounted prices. Combined with solar credits, net metering, and utility rebates, the cost of a solar panel system comes down considerably. We will leave the machinations of purchasing a solar panel system for a future article!