Step by Step Process to Solar Lease Transfers
In previous sections, we have discussed the key players, key documents, and talked about the overall process. The following details step by step the process to transfer your solar lease, starting from the time you decide to list your solar home for sale to the closing on the sale of your solar home.
Step 1. Contact solar leasing company. Seller contacts the solar leasing company to notify them that they intend to sell their home and transfer the solar lease to a potential buyer. Seller should notify the solar leasing company that their listing agent has permission to talk to them regarding the transfer as well. As stated before, either the seller or the listing agent should request copies of all pages of the solar lease, including payment schedules, a copy of the transfer application (if applicable), and any marketing materials that they can use during the marketing of the home.
Step 2. Gather required documents. Listing agent should complete gathering documents including utility bills, production data, copies of the solar lease, data sheets, etc. to begin preparing the solar marketing materials. Listing agent should familiarize themselves with the solar lease transfer requirements and have the solar lease transfer form ready for a potential buyer.
Step 3. Sign solar lease contingency. Upon receiving a purchase contract to buy the home, buyer and seller need to include the solar lease contingency in the purchase contract. Both the buyer’s agent and the listing agent should discuss with each other the steps involved in the solar lease transfer process to make sure that all parties have a clear understanding about the steps that are needed to take place before closing.
Step 4. Notify solar leasing company. Listing agent should contact the solar leasing company to notify them that the home is under contract, provide buyer details, anticipated closing date, and escrow company contact information. Listing agent should also request the removal of the UCC-1 filing (which can take up to 14 days in some cases).
Step 5. Buyer makes contact. Buyer contacts solar leasing company and makes application for the solar lease transfer. While most solar leasing companies do not require an application fee, buyers should be aware that they may have to provide personal, financial and credit information to the solar leasing company. Buyer should notify their mortgage lender that there is a solar lease associated with the home they are purchasing and verify that the lease payment will not have any effect on their mortgage application. Buyer should review the terms and conditions of the lease to their complete satisfaction during their due diligence period.
Step 6. Follow Up. Both listing agent and the buyer’s agent should follow up with the solar leasing company to track the status of the buyer’s application and the removal of the UCC-1 filing.
Step 7. Buyer Approval. Upon approval of the buyer to assume the solar lease upon the closing of the home, the solar leasing company should send the formal transfer paperwork either to the escrow agent or directly via electronic signature email for both the buyer and seller to sign. If signed electronically, be sure that the escrow agent is sent a copy of the signed transfer agreement.
Step 8. Buyer contacts electric company. Buyer notifies the electric company that they are assuming the solar lease on the property when they are switching the utilities in their name. It is important that the buyer indicates whether or not they wish to continue to use the grandfathered rate plan/net metering program (if applicable) that the seller has or wishes to switch to a current rate plan (usually a higher costing plan).
Step 9. Complete the transfer/sale of the home. The escrow agent will complete the sale of the home at the prescribed date in the contract. Furthermore, the escrow agent will submit the signed transfer agreement back to the solar leasing company and include any required additional documentation, such as a deed showing ownership transfer for example.
Step 10. Verify transfer. Listing agent should verify after closing that the solar lease transferred to the buyer, the seller is released from the solar lease obligation, and no further action is required.
Looking at the step by step process, there is a lot of solar lease-related paperwork that will be used before, during and after the sale of the home. This includes:
- Solar lease and lease addenda. This includes all of the paperwork that you signed when you initially decided to install solar on your home.
- Solar leasing company transfer forms. Many leasing companies have a transfer or credit authorization form that they will want the buyer to fill out.
- Solar leasing company marketing materials. Many solar leasing companies will provide stock, generic marketing materials that discuss the benefits of solar, how the solar lease transfer process works, and in some rare cases, specific performance/production information about the solar system.
- Electric bills. You should provide your listing agent with a minimum of 12 months worth of electric bills though 24 months is ideal.
- Solar production data. Most solar companies provide an online portal account where homeowners can track their monthly solar production. Your listing agent should be asking for a minimum of 12 months production data from your solar system. In the event that it is not available, your listing agent should how to calculate that data.
- Solar marketing materials. These marketing materials are usually generated by your listing agent to showcase the benefits and savings created by your solar system. Using the aforementioned documents, your listing agent should be able to narrow down to specific cost savings, anticipated future savings, environmental impact benefits, and other metrics that they can share with potential buyers.
- Solar Lease Addendum. As stated before, there is not any legal provisions in the standard Arizona real estate contract that obligates the buyer to assume and take over your solar lease. Failure to include it in the purchase contract could cost you thousands of dollars in fees, attorney costs, and aspirin.
- Transfer application. In the event that the solar leasing company does not provide a form to use prior to having an accepted purchase contract on your home, they may provide a transfer application to the buyer, the seller, and/or both parties to fill out.
- Solar lease transfer agreement. Once the buyer has been approved to transfer the solar lease into their name after closing, the solar leasing company will provide the formal and binding solar lease transfer agreement that releases you from your rights and obligations under the solar lease and transfers them to the new home buyer. Most agreements do have provisions in them that only make these agreements effective upon the successful closing of the sale of the home.
Selling a Home with a Solar Lease: