Breaking a solar lease

[anneh]

I have a potential situation with my solar system and would welcome any insights members of the forum can provide.

We installed solar with Sunrun (put in by local installer) 3.5 years ago. We have an 18 year lease. So far, so good--I have not been thrilled with the true up bill from Edison every year, but I have been able to stabilize our electricity payments over the years which has been very helpful. I think we are saving a bit of money--nothing earth shattering but savings nonetheless.

We are now going to move and the previous owner of the home is very serious about buying the house. However, he thinks we were ripped off on our lease deal and isn't interested in assuming the lease or purchasing the system outright.

I have not yet talked to Sunrun, and hope that they will negotiate the terms of the lease or purchase price to make it palatable to our buyer, but in the event that they aren't willing to negotiate what exactly might happen if we break our lease and ask them to uninstall the system? Has anyone successfully negotiated with Sunrun on this type of issue?

I am just pondering the worse case scenario--our new home has solar already so moving the system is not an option. We do have the benefit of time, as we won't be leaving the home until July.

Thanks in advance.

[Sunking]

Good Luck. That is a problem with a lease. You have to find a buyer will to take over the lease. Otherwise you will have to eat it.

[anneh]

When you say "eat it", what exactly am I "eating"--and if I refuse to eat, what are the consequences?

[wanabefree]

When you say "eat it", what exactly am I "eating"--and if I refuse to eat, what are the consequences?

I think its just like any other debt or loan. You would be in breach of contract and subject to being sued and a judgement could be issued for collection. They could then garnish wages attach your bank accounts etc. Just like any other bad debt you might be able to reach a settlement before or after it goes that way but it is a legal contract and you did promise to pay.

[slopoke]

I cut and pasted a portion of a Sunrun lease contract that was in a different thread. It states what options they have in their contract, yours might have the same wording. You will have to look through your contract.

"You are responsible for payments during the full term of this Lease Agreement. If you sell your house, you have two
options: 1) Transfer the Lease Agreement to the new homeowner, 2) Purchase the system. Whichever option you
choose, Sunrun will guide you through the process".

[Sunking]

When you say "eat it", what exactly am I "eating"--and if I refuse to eat, what are the consequences?

By eat I mean taking your losses. If you cannot find a buyer, you keep the house and make payments even if you do not live there. At that point your only option is to lease your house.

Or you buy the system at whatever your lease company demands. Either way the lease company has the leverage and you have none to negotiate. Put another way you made your bed, now sleep in it. There are two ways to find out how much it will cost you.

1. Call your county title agent and find out how much the lien is on your property. That is what it will cost you at closing.
2. Call the leasing company and ask

Or look at the contract you signed as there will be clauses for early termination.

Essentially what you did is limit the buyers market. Instead of 100% of buyers being interested, you now have a very limited market of like minded buyers. Not many are going to be willing to carry your lease and may demand you to remove the system as condition of sale as one interest buyer has already demanded. That expense is on you. You very well could be the one writing the check at closing instead of receiving one. That is called Negative Equity or being Under Water. One of those PC ways of saying you are screwed and you screwed yourself without offending you.

[inetdog]

I think its just like any other debt or loan. You would be in breach of contract and subject to being sued and a judgement could be issued for collection. They could then garnish wages attach your bank accounts etc. Just like any other bad debt you might be able to reach a settlement before or after it goes that way but it is a legal contract and you did promise to pay.

The worst of the consequences, in my opinion, is that until you choose one of the options allowed in the contract or finish up whatever legal process the company puts you through you will find it difficult if not impossible to sell the house.
Any buyer would either insist that you show them written proof that the lease has been satisfied or else discount the price of the house by the buyout cost of the lease. If you are unlucky they might even insist that you buy out the lease and then remove all of the solar equipment and restore the roof if necessary before close of escrow.
Since the property is attached to the building, it becomes an inextricable part of the sales transaction, one way or the other.

Disclaimer: I am not an attorney, nor have I ever played one on TV. YMMV.

[J.P.M.]

When you say "eat it", what exactly am I "eating"--and if I refuse to eat, what are the consequences?

I'd read the lease for guidance on that and perhaps seek the opinion of legal counsel.

[peakbagger]

The lease says you can buy it out. The old owner doesn't want the lease but you didn't say he didn't want the solar. Thus find out the buy out from the leasing company and negotiate with the former owner on how much he is wiling to pay for the solar outright. If you strip it off the roof and try to sell it figure 10cents on a dollar so its to your incentive to buy it out and get the new owner to keep it.

[russ]

Many of the early leases were really bad deals - sounds like this may be one of those.

[silversaver]

Did you ever think about this when you sign the lease agreement? Unlike SolarCity, Sunrun does offer purchase option durig the lease. Just call Sunrun, they should be able to give you a residual amount and that amount shouldn't be too high.

Most of these lease agreements were bulletproof, you can't get anything out of it.

[pleppik]

"You are responsible for payments during the full term of this Lease Agreement. If you sell your house, you have two
options: 1) Transfer the Lease Agreement to the new homeowner, 2) Purchase the system. Whichever option you
choose, Sunrun will guide you through the process".

To me, this says that this is purely a matter of dollars. For enough dollars you can get out of the lease--whether the buyer or the seller pays those dollars is a matter of negotiation between the involved parties.

So if you can't find a buyer willing to assume the lease, your options are:

1) Reduce the selling price by the amount it would cost to buy out the lease (less the actual value of the solar system once it's owned by the buyer)

2) Buy out the lease, and increase the selling price of the home by whatever the actual value of the solar system is, or

3) Default on the lease, get sued, go through collections, get your credit messed up, and eventually pay the amount it would have cost to buy out the lease plus penalties, legal fees, collection fees, and increased interest on any money you borrow for the next 5-7 years.

Given those options, I'm not sure why you would consider door #3.

[AZHIGH]

Don't default on your obligation. Just buy out the SunRun lease and add it to the sales price of your house. Easy. Who wouldn't want free electric? Solar adds a lot of value to your home. Buy it, no lease for the new owner and roll the cost into the purchase price. SIMPLE. What is the issue?

[russ]

Don't default on your obligation. Just buy out the SunRun lease and add it to the sales price of your house. Easy. Who wouldn't want free electric? Solar adds a lot of value to your home. Buy it, no lease for the new owner and roll the cost into the purchase price. SIMPLE. What is the issue?

Read the OP - the prospective buyer does not want the system.

Not everyone wants to assume a lease.

[silversaver]

Obviously the guy doesn't want to pay anything..... I'm sure he will take it for free.

Yes, lots people choose lease route. Because they don't like to pay any money, but like the idea of saving money each month. You need to have money, to build solar and to save money.....