Since I last wrote about the impact of leased vs. purchased solar on home sales, more anecdotal evidence has emerged about just how difficult leased systems are making it for homeowners to sell their properties.

For the record, I’m not totally anti-lease. For people who want a slight reduction in their electric bill while doing right by the environment, there’s nothing wrong with a solar lease. But if you think you might be selling your home before your 20-year lease ends, based on recent research, you should think twice.

According to this Washington Post article, potential home-buyers are turned off by the idea of assuming a long-term agreement entered into by someone else. Just imagine buying a house knowing you have to get all your groceries from Joe’s Supermarket for 20 years, or use Green Lawn Company for landscaping, even if you want to switch companies or stop lawn maintenance altogether.

That same article tells of a California family who received multiple offers on their home only to have all potential buyers back out due to the solar lease. Ultimately, the owners ended up paying $22,000 to get out of the lease.

Closer to home, my partner and our Vice President of Installation and Service, Jonathan Williams, experienced this situation from the other side, that of the home-buyer. I’ll let him tell his story:

Solar for Happy House Hunters“My wife and I looked at a beautiful home in Uxbridge, Mass., and were thrilled that it had solar already. But the thrill died quickly when the real estate agent uncovered that it was a ‘PPA’ system. A Power Purchase Agreement is a big no-no as far as I’m concerned. I’ve been working in solar at Clean Energy for seven years. We even used to offer a lease here – which is like a PPA – but we never sold a single one. Once customers understand the difference in financial return between a lease and a purchased system, they always went with the purchase.

“Back to our house-hunting. The agent assured us the PPA system could be removed so we could install our own solar electric system. She was told by the company that installed the system that it would only cost $500. Knowing the industry as I do, I figured this had to be too good to be true. But, we submitted an offer for the home anyway, contingent on the removal of the leased solar system.

“After thinking it over some more, the little voice in my head won out and I decided to call the solar leasing company myself, to confirm the cost of removing the system. Here’s what I found, after much digging and prodding: It was true that removing the system would cost $500, but that type of arrangement was only for people who were having a new roof installed and the system put back in place after.

“In our case — a matter of removing the system for good due to transfer of property — the customer (the one who signed the PPA) must buy out the system at $4/watt plus the $500 removal fee. So it would cost $47,500 to have this system removed completely and the contract negated, an expense the seller of course wanted to pass on to us, but that far outweighed the benefit of purchasing this particular home for us. In other words, the lease was a deal-breaker.

“The scary part is that another potential home-buyer – or seller — might not know what questions to ask the leasing company, or be persistent enough to insist on complete answers.”

Morals of the story:

  • If you’re thinking of entering a lease for solar, consider the implications if there’s any chance you’ll sell your home before the lease ends.
  • If you already have a lease and are selling your home, or if you’re considering buying a home with a leased system, insist that the leasing company give you a detailed, complete explanation of the cost of removing the system or transferring the lease – preferably in writing.

(For an explanation of lease vs. buy, read my earlier article on the subject.)

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