Solar Lease / PPA Impact on Home Sale

[CarlsbadCub]

I just cancelled a contract for the purchase of a home in La Costa because of a Solar PPA (Power Purchase Agreement) the current owner had that wasn’t clearly disclosed in the MLS listing. I understood it to be owned by them (it’s a case of he said, she said between the agents) prior to making the offer.

After asking for the Solar agreement for 6 days, I finally received it. They were in year 1 of a 20 year agreement to purchase power at $.19 per KwH (no annual increase), but they’re required to purchase ALL of the power generated by the panels regardless of how much power they consume.

I became very skiddish of assuming the sellers long term agreement for a number of reasons. He seemed to be surprised that it was even an issue and didn’t seem educated on the agreement itself.

He had 3 options, transfer the lease to me, buy it out himself, or prepay the expected production over the life of the contract (panels stay owned by solar company). He wasn’t willing to do anything other then transfer the agreement he signed over to me.

Do you think I made a mistake passing on this property because of this?

[ucodegen]

humm.. new time poster, just signed up to post this.

One of the big problems is the lack of transparency / honesty on this transaction. There are too many missing pieces of information to answer the question.

[moneymaker]

When I looked into it one could save $15-$20 a month with a lease, so I would not say it is a negative. However it is far better to purchase in the long run which is what I did. I didn’t even know rates had gone up so much in the last 3-4 years,like 30%, until someone told me. Buying a house then adding solar,getting Lasic for my eyes and getting married are the best decisions I’ve ever made, though not necessarily in that order.

[CarlsbadCub]

Full buyout was quoted at $88k. Prepay was quoted at $51k. I’m told that the home generates about 18k kWh annually or 1,500 kWh per month. I didn’t get the consumption numbers from them. They did tell me that they don’t usually pay SDG&E anything. The manufacturer of the panels isn’t in their agreement with the solar provider, but they are insured and maintained by the solar company.

The owner put a lot of panels up generating a lot of power that the next family (i.e. Mine) might not consume, and therefore the risk exists of overpaying for the next 19 years as you’re required to buy what is produced, not what is consumed.

[FlyerInHi]

I guess it would depend how much the house is compared to the comps.

I’m really bad at doing the buy/lease comparison, but a detail oriented friend went through it and said lease is a ripoff.

I wonder how legally the solar company can hold you, the new buyer responsible if you don’t sign anything. Do you have to sign anything at close of escrow?

[CarlsbadCub]

The seller has to agree or get me to agree to one of the 3 options they offer when selling the home. They can’t sell the house without doing that or they’re in default of their agreement with the solar company and it wouldn’t show as clear title.

[FlyerInHi]

[quote=CarlsbadCub]The seller has to agree or get me to agree to one of the 3 options they offer when selling the home. They can’t sell the house without doing that or they’re in default of their agreement with the solar company and it wouldn’t show as clear title.[/quote]

Yes, they solar company has some kind of recorded lien. which would mean that if you agree to take over the lease, you would sign something before close of escrow otherwise the title company would not issue not insurance.

[ucodegen]

[quote=CarlsbadCub]Full buyout was quoted at $88k. Prepay was quoted at $51k. I’m told that the home generates about 18k kWh annually or 1,500 kWh per month.[/quote]

Looking at quoted production 1,500kWh per month, roughly 31 days in a month and 4 hours of peak production per day would give about 48 solar panels (4 panels by 12)? That is a fairly large system. How big is the house?

Is there any way to verify the production? They may be inflating the amount. 1,500kWh is a fairly large system.

[ocrenter]

[quote=CarlsbadCub]Full buyout was quoted at $88k. Prepay was quoted at $51k. I’m told that the home generates about 18k kWh annually or 1,500 kWh per month. I didn’t get the consumption numbers from them. They did tell me that they don’t usually pay SDG&E anything. The manufacturer of the panels isn’t in their agreement with the solar provider, but they are insured and maintained by the solar company.

The owner put a lot of panels up generating a lot of power that the next family (i.e. Mine) might not consume, and therefore the risk exists of overpaying for the next 19 years as you’re required to buy what is produced, not what is consumed.[/quote]

My 5000 watt system generated 8600 kWh last year. So you are likely looking at a 11,000 watt system up on the roof.

Average pre tax credit cost per watt is $3.5. Which means before tax rebate the system should have cost $40k or less.

Buyout is more than twice the cost PRIOR to tax incentives.

WOW!!!

[Author]

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