The decision to transition to solar power is a significant step towards sustainability and financial savings. However, when it comes to selling a home with a solar power purchase agreement (PPA) or loan in place, homeowners might have questions about how to navigate this situation seamlessly. In this article, we'll explore what happens when you have a solar PPA or loan and want to sell your house.

An important aspect to remember is most home buyers will find assuming a solar power purchase agreement (PPA) or loan an attractive proposition if it results in cost savings compared to traditional utility bills. Solar power offers long-term financial benefits by providing clean and renewable energy at a fixed or potentially lower rate than standard utility rates. By taking over an existing solar PPA or loan, buyers can immediately enjoy the advantages of reduced energy expenses, contributing to significant savings over the life of the solar system. This financial benefit, coupled with the appeal of sustainable living and the positive environmental impact of solar energy, makes assuming a solar PPA or loan an appealing choice for discerning home buyers. Clearly showing any potential home buyers their electricity savings will turn your home into a more attractive purchase than someone that has no solar and therefore no protection against current and escalating energy costs.

Let’s dig into the specifics on how to deal with PPA’s and Loans when selling your home.

1. Understanding Solar PPAs and Loans

A. Solar Power Purchase Agreement (PPA):

A solar PPA is an agreement where a solar company installs and maintains solar panels on your property. You agree to purchase the electricity generated by these panels at a predetermined rate, typically lower than your current utility rates.

B. Solar Loans:

Solar loans are financial arrangements where you borrow money to purchase and install solar panels. You then pay back the loan in installments over a set period.

2. Transferring a Solar PPA

A. Consult the Solar Company:

If you have a solar PPA and intend to sell your home, contact the solar company to discuss options. Some PPAs can be transferred to the new homeowner with their consent and qualification. This was typically clearly laid out in the original PPA you signed.

B. Inform Potential Buyers:

Ensure potential buyers are aware of the solar PPA terms and benefits. Highlight the cost savings and sustainability advantages associated with the PPA. Many sellers do a write-up to be included with the flyers showing the homes cost advantages over utility company costs.

3. Dealing with a Solar Loan - Options

A. Pay off the Loan:

One option is to pay off the remaining solar loan balance before selling the house. This way, you'll own the solar panels outright, and the home sale can proceed smoothly. Since studies show that solar adds 3-4% to your home value (a Zillow study states 4.1% average), most likely, the value can be added to the home price.

B. Transfer the Loan:

Transferring the solar loan to the new homeowner is another possibility. However, this transfer will depend on the lender's policies and the buyer's creditworthiness. If the buyer qualifies for a home loan, its highly likely their credit will be good enough for the solar loan as well.

4. Effect on Home Sale

A. Increased Property Value:

Solar installations often increase property value. Buyers are attracted to the potential energy cost savings and the positive environmental impact.

B. Energy Savings Disclosure:

Ensure that you disclose the details of your solar PPA or loan to potential buyers. Being transparent about the benefits and financial implications of the solar agreement can instill confidence in buyers.

5. Consider Legal Assistance

A. Legal Consultation:

If you feel unsure or your real estate agent is not used to dealing with solar loans or PPA’s, you can always seek legal advice to ensure compliance with state laws and regulations regarding solar PPA and loan transfers during a home sale.

B. Draft Clear Agreements:

Work with a lawyer to draft clear and comprehensive agreements outlining the responsibilities of all parties involved in the solar PPA or loan transfer. Most PPA companies will draft this for you or will require it to come from their organization.

6. Conclusion

Navigating solar PPAs and loans when selling your home should be straightforward and you will most likely get the careful assistance of your PPA provider or loan company, however careful planning and clear communication with all parties involved is prudent. Understanding the terms of your solar agreement and exploring available options, such as transferring the agreement or paying off the loan, can help facilitate a smooth home sale process. Additionally, being transparent with potential buyers about the benefits of solar installations can add value to your property and make the transition more attractive to them. Ultimately, integrating solar power into your home can be a significant selling point, promoting energy efficiency, cost savings, and appealing to eco-conscious buyers.

Authored by The Energy Independence Foundation