What you need to know when buying a house with solar panels?
Residential home solar system is more popular than ever, especially in Arizona as we had sunshine almost 365 days a year. If you are in the market for a new construction home, you might come across options with solar panels installed. It is important to understand the unique aspects of buying a solar-equipped home so you can enjoy the benefits of solar energy in your new home.
Who owned the solar system
The first and most important thing buyers should find out is who owned the solar system. Just because a solar system is on a homeowner’s roof does not necessarily mean the homeowner owned it. To understand how system ownership is determined. It all depends on how the system was purchased.
Solar system purchased with cash
Seller who purchase a solar system outright with cash own the system. That’s the simplest scenario in a real estate transaction. A solar system purchased outright is considered “real property”. In real estate terms, it is a fixture of the home, and can therefore be appraised as part of the home’s value. In this scenario, solar system will increase seller’s house value.
Buying a house with fully-owned solar system
This is an ideal situation if you are looking to buy a property with solar. Solar system that are purchased up front are owned entirely by the seller, means that they don’t come with any strings attached. In this situation, be prepare to pay more as the house value does increased that come with solar.
Solar system purchased with loan
If the seller purchased the solar system with loan and has been paid in full, the seller owned the solar system. However, if the seller still making monthly payment toward the loan, the ownership will depend on the contract. Depending on the contract, the lender may require the seller to pay off the balance or buyer may assume the loan.
Buying a house with solar panels financed through loan
If the seller to pay off the existing loan, it will be same as buying a house with fully-owned solar system. If the solar lender allow buyer to assume the loan and buyer is willing to willing to take over the loan, buyer will need to qualify concurrently for both a mortgage and a loan for the system, which may affect their debt-to-income ratio.
Solar system is leased
This is the most common scenario in today’s market. Homeowner who leased the system pays for the right to use the system for a specified period of time, but does not actually own the system. The system is owned by the solar provider, who typically places a UCC-1 Filing against the system. Sellers with a leased solar system must either transfer their systems to their new residence or “buyout” their contract.
Buying a house with leased solar system
If the system is leased, it is highly suggested that buyer ask to take a look at the leasing contract before agreeing to take on the lease and continue buying the house. The best way to review the lease is either with a attorney, or the cheaper option, with a solar professional who knows what to look for.
If you don’t like what you see, ask the seller whether will compensate you for the liability, or payoff the lease before they sell the house. You can also request the system be removed by the seller as part of the deal, assuming the seller is in a position to do so. Remember, if you intend to take over the lease, you must qualify for the lease and your mortgage.
Who manufactured the panels?
You want to research the reputation of the manufacturer company. Even the panel is not produced by a US corporation, you want them to be a U.S. corporation so you’re covered by the Magnuson–Moss Warranty Act, which protects US consumers from misleading warranty terms.
Who install the panels?
Which company installed the solar system? Most solar companies provide ten-year workmanship warranties. You’ll want to learn about the company and the warranty details so you know who to contact if there are any issues with the array.
What’s the warranty?
Ask about the warranty terms. You likely have two separate warranties: one for the panels and another for the inverter, which converts the energy produced by your panels into alternating current that actually powers your house.
Ask for electric bill statement
The best scenario is get the utility bills before the panels being installed and after installed. That way, you can compare the electricity cost and potential saving.
Does the utility company offer net metering?
Depending on utility company, some solar panel owners are eligible for net metering, a policy that allows you to sell excess electricity produced by your solar panel system back to the grid to service others. This can help you determine how much you can save on your monthly electricity bill.
Get the system inspected and valuated
You should get the system inspected before you buy the house to determine its functionality. For your own interest, you should also look into hiring an independent company, so that you will get unbias report. You should make sure the chosen company is doing an in-depth inspection of all parts of the system. Make sure they provide a comprehensive valuation of the system, such as sytem performance, panel brand and age, inverter type and etc.
Going solar is an investment for your home, and purchasing a new property with solar already installed is a great way to save on utilities cost on day one and in the long run. It is always crucial to review any contracts before deciding to purchase a solar-equipped home.
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