Question: I am planning on selling my house soon, there are solar panels on the roof.  What do I need to do when I get into escrow?

Answer: It depends…

Solar is a very popular trend right now. Solar panels can be purchased outright, leased from the solar company, or they can be financed to purchase over time.

A solar system may be an attractive option for buyers.  A little preparation will help the process go smoothly during escrow.  A solar system should be disclosed to potential buyers right away (and no, just seeing the panels on the roof is not enough disclosure).  If everyone is aware of the solar (including escrow), any necessary steps can begin right away when escrow is opened.

If you own your solar panels, contact your utility company to determine if there are any special requirements for the buyer to set up their account.

If you lease or are financing the solar equipment, there will definitely be some requirements for transferring the account to your buyer when escrow closes.

Contact your solar provider to see if they require any application/qualification process for the buyer.  Ask what the process is, including any forms that you or the buyer are required to complete.  Find out who the best contact is, and if possible, obtain the application forms.  If you don’t already have a copy, request a copy of your existing solar contract, as potential buyers may want to review it.

In some cases, the negotiations between a buyer and seller result in the requirement that the seller payoff the solar panels in full at closing.  To do this, escrow will need to obtain a demand (payoff statement) from the solar provider.  Escrow will need the solar company name, account number, and phone number.  The solar company may require that the seller authorize the issuing of a payoff statement.

The biggest hurdle we seem to run into, during the escrow of a home with leased or financed solar, is satisfying the buyer’s new home lender and the title company.

Solar systems are installed in the home, usually on the roof.  Solar providers want to make sure that they continue to receive payments, if the home is sold.  For this reason, a UCC Financing Statement is recorded by the solar company, which creates a lien on the title. A new home lender wants to be “First” on the title, and will require that the solar company release (terminate) their lien, to be re-recorded after the close of escrow.  Unfortunately, the process of obtaining a termination of a solar lien can be complicated, so it is important that the process get started right away when your home is sold.

To recap:  If you have a solar system on your home, be prepared to provide information to your realtor, escrow and ultimately the buyer, so there are no surprises, and your escrow can close without delay.


Cynthia Moller