Selling a Solar Home? Here’s What You Need to Know
At present, the global solar energy industry will reach a value of $422 billion by 2022, according to Allied Marketing Research. In the United States, solar energy accounts for 2.3% of domestic energy consumption. It may seem too small a share, but with solar technology becoming even more accessible to American homeowners, the country is expected to lead the global market for solar energy systems alongside China and India.
According to the Office of Energy Efficiency and Renewable Energy, over “one million solar energy systems (are) installed on residential rooftops across the country.” This would explain the popularity of solar homes in local real estate markets.
So far as going green is concerned, homeowners can significantly reduce their energy consumption, increase the market price of their homes, and pay less in utility costs. However, installing such systems may come with bothersome trade-offs.
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Understanding UCC-1 liens
Installing a solar system in your home adds value. Solar panels, for one, are considered as upgrades that increase a home’s resale value by $15,000. However, this will also add another layer of complexity to future transactions.
This would be the case if homeowners willingly enter into a leasing program with a solar company. Writing for Forbes, green technology contributor Jeff McMahon reports on how such an agreement could prevent homeowners from selling their properties or acquiring new loans.
This is due to the fact that “the panels remain the property of the solar installer” by way of a UCC-1 Lien or what is commonly referred to as a fixture filing.
When a homeowner leases a solar system, a UCC-1 lien is placed on the system to show that it remains to be the property of the installer. In the event of foreclosure when the homeowner is no longer capable of writing off debts, the UCC-1 protects solar systems from getting repossessed along with the property itself.
In a word, UCC-1 protects the rights of a solar company over the equipment it has leased out to a homeowner. That being said, property owners are told not to worry about refinancing their homes in the future, but this isn’t the case with most solar installers.
An Annoying Barrier
A fixture filing may secure solar panels to the advantage of the installer but it may complicate the process of transferring the property to a subsequent owner.
Such was the case of a California homeowner who leased a solar energy system only to find out that a lien has been placed on the property itself. On top of that, the bank required a fee of $48 to remove the lien. Information was lacking as to the nature of the lien so the owner had no choice but to write off the encumbrance to move forward with refinancing.
This problem would have been avoided if the solar installer itself gave adequate information about the fixture filing as a lien. No matter how hard some solar companies try to convince homeowners that a fixture filing is different from a lien, title companies and banks will still regard the lease as an encumbrance against the property. It’s for this reason that purchasing a solar system offers the best possible benefits for homeowners, such as tax incentives and faster transactions on the part of the home seller.
Then again, solar leases are still the best option for homeowners who want to avoid paying maintenance costs. At any rate, home sellers and buyers will have to be aware of the technicalities that surround the leasing of solar systems to homeowners.
If you’re planning to install a solar system through a lease, you might want to consult with an attorney and review the leasing agreement before signing. This would help save you precious time and money in expediting a transaction with a home buyer later on.
And if you’re looking to purchase a solar home in the DFW area, you will need to work with a realtor who can keep in constant contact with title companies for a smoother transaction.
Look no further than Arbrook Realty for your real estate needs!