Should I assume a solar lease?

[Johann]

To me, it still doesn't make sense. And like I said again, its just a mental stigma thing. You could cancel your POCO? How many times in your life have you done that? How many people do you know that have? And Im not talking about moving...because you were right back with them at the new house so that doesnt count as cancelling.

The lease to me is just a lower payment compared to a normal electric bill. That's it. 10¢/kWh vs 14¢/kWh, it's pretty simple.

I know what you are saying.

If I cancel my poce, I will not lose my house.
If I do not pay the poco, I will not lose the house either.
If I cancel a solar panel lease without a payout or if I do not pay my solar panel lease than most likely I could lose my house since their is a lien against it.

And yes, years back I knew a person that canceled the poco. That person had the meter removed and the wires from the pole to the house disconnected and lived there for many years after that.

[ernie24]

There is no escalation clause in the lease.

[HX_Guy]

Not sure about escalation in the OP's situation but I do know that most leases today are done with a 2.9% escalation. It's optional though and can be done without just as easily, but the default is 2.9%.

[Ian S]

Some folks have different and additional priorities and outlooks that make the situation more complicated for them. Among other not so nice things about leasing, in an already unknown future, some see leasing as a further impediment and limitation on their options.

BTW, if I missed it or forgot: is there annual escalation on this turkey ? 2.9% is pretty common these days, and was more common a couple of years ago when this lease was created.

No escalation apparently. For me, that would be pretty much a deal killer. Definitely would want a buyout under those circumstances.

[J.P.M.]

To me, it still doesn't make sense. And like I said again, its just a mental stigma thing. You could cancel your POCO? How many times in your life have you done that? How many people do you know that have? And Im not talking about moving...because you were right back with them at the new house so that doesnt count as cancelling.

The lease to me is just a lower payment compared to a normal electric bill. That's it. 10¢/kWh vs 14¢/kWh, it's pretty simple.

Some folks have different and additional priorities and outlooks that make the situation more complicated for them. Among other not so nice things about leasing, in an already unknown future, some see leasing as a further impediment and limitation on their options.

BTW, if I missed it or forgot: is there annual escalation on this turkey ? 2.9% is pretty common these days, and was more common a couple of years ago when this lease was created.

[HX_Guy]

Even though they may have a pre-paid phone that may be cheaper, they have an option to go to another provider at any time.
With the poco I could cancel their services anytime without being financially raped, but most likely it will not happen like you said.
With an lease or contract, you can not just call them up to cancel the contract. Most at the time you will be held responsible for a set amount of dollars when you break the contract. And with leasing solar panels they may indeed have an lien against your house or property.

To me, it still doesn't make sense. And like I said again, its just a mental stigma thing. You could cancel your POCO? How many times in your life have you done that? How many people do you know that have? And Im not talking about moving...because you were right back with them at the new house so that doesnt count as cancelling.

The lease to me is just a lower payment compared to a normal electric bill. That's it. 10¢/kWh vs 14¢/kWh, it's pretty simple.

[foo1bar]

] As soon as I would have heard no houses ending in a #4, I'd move on to a serious buyer in an instant.

Actually a not uncommon thing in this area. I have a friend who got the city to change the address, and was guessing that the change probably added 3+% to the house value.

[SleepingDragon]

Perhaps? How about definitely.

I'm surprised the realtor showed you any houses. As soon as I would have heard no houses ending in a #4, I'd move on to a serious buyer in an instant.

But I was a serious buyer. Didn't like the number 4. Maybe something to do with the meaning and or fengshui?

[SleepingDragon]

Hello everyone. I am enjoying this discussion!! Here is an update. The original purchase agreement said we did not have to assume the lease and so we opened escrow. Now 2+ weeks later the seller sent an amendment requesting that we assume the lease which prompted my post. Yesterday we countered asking for $30K back - price reduction or cash. Today we resumed looking at other houses. No word from the seller yet.

Good job. Make the seller eat that lease or give you something back. Why commit to something you didn't personally hand picked yourself? Uh oh. I better keep quiet. I'm not getting a lot of fans since some people believed that I am "irrational".

[ernie24]

Hello everyone. I am enjoying this discussion!! Here is an update. The original purchase agreement said we did not have to assume the lease and so we opened escrow. Now 2+ weeks later the seller sent an amendment requesting that we assume the lease which prompted my post. Yesterday we countered asking for $30K back - price reduction or cash. Today we resumed looking at other houses. No word from the seller yet.

[Johann]

Well sure...IF the potential homebuyer has plans to do solar anyway, then a purchase would definitely be the way to go. But I'd say that's the exception, and not the rule. Most people would probably just stay with the status quo and pay the POCO their rates.

People are just "funny" when it comes to these leases, and that article further proves that...it's this stigma that you have this contract for 20 years...but what's your contract with the POCO? Indefinite? What are you going to do, cancel your electricity? Not likely.

My parents are like that with their cell phone bill. They have T-Mobile pre-pay because they don't want a contract. They've had the same phone number for years and will continue to do so, but for some reason, they feel better about not being on a contract.

Even though they may have a pre-paid phone that may be cheaper, they have an option to go to another provider at any time.
With the poco I could cancel their services anytime without being financially raped, but most likely it will not happen like you said.
With an lease or contract, you can not just call them up to cancel the contract. Most at the time you will be held responsible for a set amount of dollars when you break the contract. And with leasing solar panels they may indeed have an lien against your house or property.

[HX_Guy]

A lease when you're moving in 1-2 years is much worse than not doing solar at all.
A lease when you're staying put for 5+ years is better. At that point you've gotten some value out of it.
But looking at this lease ($268/month over 20 years) it seems a HELOC loan or even a personal loan would have been a even better option if the solar purchaser didn't have the cash.

An 11kW SunPower system is probably going to cost around $45,000, after tax credit you're looking at $31,000. A $30K HELOC is showing 4.59% rate right now which on a 15 year loan would be $255/month if you also roll the loan fees into it. So yes, that would be a better choice than that lease.

That is of course assuming you have the tax liability to be able to claim that amount and you have the 30% part up front to put toward the system...otherwise I guess you'd get a bigger HELOC to cover 100% of the cost and then when you get the tax credit you put it toward the loan, but that won't change your payment...which would be more around $365 for 100% of the system cost.

Now you're not saving very much anymore compared to your regular utility bill, so most people would probably say screw it and just keep paying the POCO.

[HX_Guy]

Yes. That's why it took me 2+ years of house hunting to finally purchase one. I have stipulations that even the real estate agents couldn't believe... Refuse any house ending with the #4, no house door facing tree directly, no large overhead power lines, schools nearby, etc. etc. And yes, lease and PPA would be added to the instant reject list. Am I irrational? Perhaps. Hmmm.. maybe that's why a few real estate agents quit after showing me the houses back then.

Perhaps? How about definitely.

I'm surprised the realtor showed you any houses. As soon as I would have heard no houses ending in a #4, I'd move on to a serious buyer in an instant.

[Ian S]

I think we should wait until OP return. Guessing aint do any good

I was going by this comment.

Also, the seller may be willing to subsidize our assumption of the lease - so perhaps a $30K payment from the seller would even things out?

[SleepingDragon]

Stating that so absolutely is irrational IMHO. Would you really refuse to buy a house with a prepaid lease? What if you had two similar homes, one of which had decor not to your liking and would cost $100,000 to redo. The second had decor to your liking so no redo but had this O.P.'s same 19 year solar lease with $268/mo payment that would otherwise be going to the POCO? You'd really reject the latter simply because of the lease?

Yes. That's why it took me 2+ years of house hunting to finally purchase one. I have stipulations that even the real estate agents couldn't believe... Refuse any house ending with the #4, no house door facing tree directly, no large overhead power lines, schools nearby, etc. etc. And yes, lease and PPA would be added to the instant reject list. Am I irrational? Perhaps. Hmmm.. maybe that's why a few real estate agents quit after showing me the houses back then.