Purchase or Pre-paid lease of 4-year old Solar System

[Volusiano]

Thanks! I'm guessing and hoping that the lessor would be willing to work on the pricing in this case, might make more sense for them to do that then to have to pay to yank the panels off a rooftop.

They turned down OP's $4K offer. OP's first 2 months' bills are lower than lease payment.

[silversaver]

A 4 yrs old 8.5kW solar worth at least $10k+

[quicksilver8907]

Bank owned home. Previous owner died two years ago.

[HippoFriendly]

Solarps, most of what you said do make a lot of sense. The only iffy part I see is number 4 where you stated ("Neither the original lease or a fixture lien prevents the current occupant from using the fixture"). While this is true, you can also say that "Neither the original lease or fixture lien ALLOWS the current occupant to use the fixture". It's an assumption that if the language doesn't forbid the use of it, then you're free to use it based on common sense. But common sense can also says that if it's not yours, then don't touch it. So it falls into the area of ambiguity subjected to interpretation.

But I agree that if you decide to interpret that you can use it, then you should go ahead and use it and don't need to write a letter demanding them to do something because you would rather they do nothing so you keep on using it.

In fact, this approach will probably help drive them to react more quickly toward a resolution instead of stonewalling you forever, since they now notice that you're starting to benefit from it and they will want to reach a final resolution with you before you reap too much benefit from it. But if they still stonewall, then it's still to your benefit anyway. So this approach is a win-win for you and actually is one good way to force their hands toward a resolution more quickly if that's what you want.

In terms of whether the labor cost to remove the system is just as much as installing a new system or not, it's probably not as much but pretty darn close, I would think. The only thing they will save is not the labor for the design and permit. But in terms of installation, they'll probably have to revert all installation steps just the same, except maybe not having to do as much coordination as they would on the installation.

So I would also agree with solarps that you should just demand the removal of the system to force their hands into abandoning the system to your favor. If they had sat on it for 2 years already, it's obvious they don't want to have to remove it. Sure, they want to wait and hope to score something with the new owner. But if the new owner forces their hand, it's probably better for them to write it off as a loss in the end than to try to throw more good money after bad to remove the system.

I am a contractor who does installations as part of custom home construction. I use a combination of liens to protect my interests including fixture liens. A fixture lien is only an evidence of ownership document filed with the state and only encumbers title and is not a means of enforcing how something is used. It transcends future changes in ownership of the underlying property for a period of years as long as it is filed correctly and at the right time.

While I don't engage in the leasing of the installations I do, a lease agreement is only between the two signatories and is not a means of encumbering the underlying asset and does not control any third parties. The remedy for defaulting on a lease is spelled out in the lease itself and there is no default legal remedy. By no default legal remedy I mean a lease is a contract and the the law itself doesn't say what happens when you default on a contract other than that the terms of the contract determine the rights and remedy. For most leases that are defaulted on the remedy is repossession and collecting damages from the defaulting party.

If the person constructing the new home fails to complete financing and the project falls into default the fixture lien doesn't provide me with a right of repossession, it is just a notice to all potential buyers of the property that my equipment (fixture) is legally encumbered and their purchase of the property doesn't include ownership of the fixture, ie they can't sell it. I can't repossess the fixture because of the fixture lien, for that I need a separate legal document that gives me the right of repossession.

Best wishes quicksilver, consulting with an attorney is always good advice when dealing with an unclear legal question. I look forward to hearing what you learn.

[russ]

I am a contractor who does installations as part of custom home construction.
Best wishes quicksilver, consulting with an attorney is always good advice when dealing with an unclear legal question. I look forward to hearing what you learn.

Welcome to Solar Panel Talk! Thanks for an informative post that contains accurate and useful information.
Russ

[quicksilver8907]

Hey everyone, so SolarCity has officially turned on our system for the "trial period" I requested. I told them i wanted a few months without solar and a few months with it free of charge and we could compare electric bills. Today is the first full day it has been on and it has generated 41 kwh. Is that a pretty good number for central california and an 8.460 kw system?

[HX_Guy]

Are all panels facing south and no shade?

[J.P.M.]

Hey everyone, so SolarCity has officially turned on our system for the "trial period" I requested. I told them i wanted a few months without solar and a few months with it free of charge and we could compare electric bills. Today is the first full day it has been on and it has generated 41 kwh. Is that a pretty good number for central california and an 8.460 kw system?

Thanx for the update.

Depending on array orientation and cloud cover, it may/may not be a good #. Hard to tell w/out specific weather data and other particulars.

[quicksilver8907]

About 20 or so panels facing 240 degree, closer to west than south and the other 12 are facing pretty close to south with limited shade.

[silversaver]

I'm getthing 46kWh out of my 7.1kW today

Today isn't a perfect day to see your system's real output.

[Ian S]

If the sky was clear all day, that production number doesn't sound that great. My south facing 6.9 kW array here in Phoenix produced that much today with a few clouds.

[bp1]

ITC Recapture

I was just browsing and ended up reading this thread start to finish. Really interesting...

One thing to consider - the IRS requires tax equity investors (the banks who provide the funds to finance these leases in exchange for the federal tax credit and depreciation) to own the assets for 5 full years. A sale before 5 years would trigger "recapture" of part of the investment tax credit. By selling you a system in year 4, SC or their tax equity investors would have to pay back 1/5 of the tax credit and lose any remaining depreciation. I'd bet this is worth at least $3-5k for an older system.

They won't face this loss if they wait another year and pass the recapture period, and they won't face this loss if they get you to sign a lease agreement (prepaid or otherwise). Makes sense why they'd rather give you free power than sell the system right now, right?

More on the tax credit recapture provisions here: https://financere.nrel.gov/finance/c...-capital-solar

[EEMLoanGuy]

They won't face this loss if they wait another year and pass the recapture period, and they won't face this loss if they get you to sign a lease agreement (prepaid or otherwise). Makes sense why they'd rather give you free power than sell the system right now, right?

Yes, it does make sense. I've been reading this thread with interest. This is one of those situations where the homeowner is really the one holding all the cards, but they'd be foolish to not obtain legal counsel.

Personally, I'd make a low-ball cash purchase offer to SC knowing they would not accept it and explore the idea of adverse possession with my attorney. I'm no attorney and can't cite legal precedent on this particular issue, but I'd be willing to bet dollars to dimes that I'd be within my rights to use the system, just not sell it and then at some point as determined by the relevant statue of limitations sue for title.

However, someone talked about potentially setting a precedent by negotiating a turn-on date with SC...maybe. This is all very interesting and while I don't wish anyone to experience home foreclosure I'm interested in seeing more of these cases and seeing what legal precedents result from them.

Please keep everyone updated on developments.

[OvertheSun]

Adverse possession laws have very specific requirements. Generally, it requires continuous use for a statutory period of time (5-10 years is typical) in an open and notorious manner (i.e., you can't try to hide the fact the you were using the property), and under color of right, (meaning you are behaving as though you have the right to the property) and which is adverse to the true owner. Some courts look at whether you paid taxes on the property as an indication of open and notorious use. If the owner doesn't take action to stop the adverse possession, then you can go to court after the statutory period to have title awarded to you. Permission from the actual owner to use the property or a lease defeats an adverse possession claim. Typically applies only to real property, e.g., California does not recognize adverse possession of personal property, like solar panels.

Solarps may have been on the right track in suggesting you just go ahead and use the system, with or without permission, even after the trial period. But I think for a different reason. They have the right to recover their property, but haven't done so in 2 years. You have no contract with them and have told them you don't want a lease. So the panels just sit their. They could try to enjoin you from using their property, but a court would probably just tell them to take the panels down so that you couldn't use them (i.e., they have the ability to prevent you from using the system, but haven't and/or, they haven't taken any action to mitigate damages, if any could be
considered to have been incurred). So, overall, they aren't losing anything by having them on your roof and would likely incur expense taking them down, plus risk damaging your roof, for which they would be liable. I don't see a way that they could claim damages if you use them. The equipment will depreciate and degrade regardless of your use. Will they not be five year old panels a year from now whether you use them or not? Will they have a significant reduction in value if you use them versus do nothing? No damages, no injunction, no contract to enforce against you = no claim on which relief could be granted to Solar City.

I also think the tax consequence angle is very intriguing. Call their bluff and tell them your offer to buy still stands after they have realized the tax benefits in another year - except the price would then be $2,000 - or they can take them down now.

[quicksilver8907]

So my first full month with solar is up. My SCE bill was a whopping $-19. My panels have been generating right around 40kwh per day average. Doesn't sound that great to me. Does anyone know how I could calculate what my electric bill for this month would have been without solar. SCE states consumption and generation numbers on my bill but the numbers don't seem to make sense. It says my net generation was -763 and my consumption was 616. But according to the solar city monitoring I generated around 1300 or so.