Should I assume a solar lease?

[HX_Guy]

Hey Ian: Early buy out looks like a no brainer for you ?

Yeah that seems crazy cheap...what's the catch?

[Ian S]

Yeah that seems crazy cheap...what's the catch?

Well, it's a signed lease and I paid the upfront amount so they'd have to live up to it. The only catch I could envision is that it might run afoul of IRS rules on leases. That would be their problem in principle, but I worry that it could passed along to me somehow. I'm just hoping that others with the same kind of SP lease go through that buyout process before I do and share their experience. I have a few more years to ponder it I suppose.

[ernie24]

Hello everyone! ! Here's the end to the story. Two weeks before we were supposed to close escrow the seller tried to change our agreement and extract $ from us to make up for the negotiated price reduction due to the solar lease. Needless to say, we canceled the transaction. Time to look for another home. My advice to anyone considering the purchade of a home with an existing solar lease: factor the lease in to the initial offer. Do not open escrow until the lease is completely resolved. Finally, if the seller wants to change the deal later on - run!! There's more homes out there.

[J.P.M.]

Hello everyone! ! Here's the end to the story. Two weeks before we were supposed to close escrow the seller tried to change our agreement and extract $ from us to make up for the negotiated price reduction due to the solar lease. Needless to say, we canceled the transaction. Time to look for another home. My advice to anyone considering the purchade of a home with an existing solar lease: factor the lease in to the initial offer. Do not open escrow until the lease is completely resolved. Finally, if the seller wants to change the deal later on - run!! There's more homes out there.

Ernie: FWIW, I think you did the right thing by far. Thank you for the consideration of the update.

I know a lot of decent real estate in north county inland San Diego. Quiet, sunnier than downtown and a bit warmer in summer, but not like the I.E.

Good luck. There's always another house.

Regards,

[Ian S]

Hello everyone! ! Here's the end to the story. Two weeks before we were supposed to close escrow the seller tried to change our agreement and extract $ from us to make up for the negotiated price reduction due to the solar lease. Needless to say, we canceled the transaction. Time to look for another home. My advice to anyone considering the purchade of a home with an existing solar lease: factor the lease in to the initial offer. Do not open escrow until the lease is completely resolved. Finally, if the seller wants to change the deal later on - run!! There's more homes out there.

I assume you'd get your earnest money back. The seller's real estate agent must be furious unless they have a better backup deal and just wanted to get out of yours.

[ernie24]

Hopefully we will get our deposit back less our costs. We never removed any contingencies.

[nomadh]

How about this, what if you paid 20 or 30 k more and the owner pays off the lease.
The system is paid you have it financed at mortgage rate % with tax deductible interest and no power bill.
not a bad deal for a dream house

[russ]

Actually you had a signed contract - you cold have enforced it. The seller signed on the dotted line and you let them off.

[Ian S]

Actually you had a signed contract - you cold have enforced it. The seller signed on the dotted line and you let them off.

Since we don't know the details of the contract, there may have been language that allows the seller to weasel out of it. In any event, while the buyer might be able to pursue legal remedies, that route may be fraught with hassles and heartache. Sometimes, it's just better to move on and focus on getting another house although I'd hope the seller winds up penalized if they don't have solid grounds for their actions.

[beme]

Hi we are in the same boat right now with a battle about assuming the lease. Here is the contract of the seller, Its a small house 1430 sq ft has a huge pool sitting on a .26 acre so outside lighting and all. Panel brand REC solar number of solar 28 panels total size DC 5.88 kw 240V inverter SMA sunny beam wireless monitor. Lease remaining is 14 yrs at $223/month Estimated price per kwh 0.31. Asked the seller to pay 30% to lower our payments down. He refused. I even offered to pay 10k answer is no. Well, he has not paid the solar for 2 years so he is behind 10k which he said he will pay the balance due before closing. Escrow already open and in 2 days all contingency will be signed off. Lease of solar was not on our purchase agreement. Just want to know if this lease is worth taking over or I should move on. Problem our house is on escrow too. Need your advice asap. Thanks

[foo1bar]

Lease remaining is 14 yrs at $223/month Estimated price per kwh 0.31. ... Need your advice asap. Thanks

Inform your RE agent that you expect a clean title when you close, and that you're not willing to assume the lease with the given terms. You can even tell him/her that you would be willing to buy out the lease for an extra $X out of your pocket, but it appears that isn't possible.
(IMO $14k would be high for a buyout - you could get a new 5.8kW installed for about that. But if the property's purchase price already reflects a discount because of the solar lease, perhaps $14k is what you want to offer... Depends on what you think is fair price for the property and what the property is worth to you.)

Then it's up to your RE agent to get it to work. And hopefully you have a buyer's agent, so if it won't work, he'll help you get out of it, since you probably won't have clean title if you aren't assuming the lease.

Just remember that it is not your responsibility to help the seller out with the bad deal that he made when he purchased the system.

[J.P.M.]

Hi we are in the same boat right now with a battle about assuming the lease. Here is the contract of the seller, Its a small house 1430 sq ft has a huge pool sitting on a .26 acre so outside lighting and all. Panel brand REC solar number of solar 28 panels total size DC 5.88 kw 240V inverter SMA sunny beam wireless monitor. Lease remaining is 14 yrs at $223/month Estimated price per kwh 0.31. Asked the seller to pay 30% to lower our payments down. He refused. I even offered to pay 10k answer is no. Well, he has not paid the solar for 2 years so he is behind 10k which he said he will pay the balance due before closing. Escrow already open and in 2 days all contingency will be signed off. Lease of solar was not on our purchase agreement. Just want to know if this lease is worth taking over or I should move on. Problem our house is on escrow too. Need your advice asap. Thanks

You're probably not paying $0.31/kWh for everything you buy from the power co. (POCO). Rates are changing but 1st 2 tiers are less than that. Whoever told you $0.31/kWh is dancing with your leg to make the $223/month look cheap. I don't have your util. rates in front of me, but I'd guess that whatever that array puts out over a typical year will be pretty close to $223/mo. or less from the POCO. Even if $.031 IS a valid # - WHICH IT AIN'T - the array will put out about, say , about 9,100 kWh/yr. 9,100 X 0.31 = $2,821, 2821/12 = $235/mo. or less if honest average util. rates are plugged in. HMMM? Savings of $12/mo. ? Where's the real gain there besides living with a 6 yr. old system for 14 years, and/or trying to peddle the same turkey as a home seller if you move sooner. IMO, ONLY, Looks to me like these folks are trying to take advantage of your solar and utility rate ignorance. More importantly, I'm w/ Foo1bar on this one. NOMB, but too many smelly fish here. If it was me, I'd cancel. But, you're not me & vice versa.

[solar pete]

You're probably not paying $0.31/kWh for everything you buy from the power co. (POCO). Rates are changing but 1st 2 tiers are less than that. Whoever told you $0.31/kWh is dancing with your leg to make the $223/month look cheap. I don't have your util. rates in front of me, but I'd guess that whatever that array puts out over a typical year will be pretty close to $223/mo. or less from the POCO. Even if $.031 IS a valid # - WHICH IT AIN'T - the array will put out about, say , about 9,100 kWh/yr. 9,100 X 0.31 = $2,821, 2821/12 = $235/mo. or less if honest average util. rates are plugged in. HMMM? Savings of $12/mo. ? Where's the real gain there besides living with a 6 yr. old system for 14 years, and/or trying to peddle the same turkey as a home seller if you move sooner. IMO, ONLY, Looks to me like these folks are trying to take advantage of your solar and utility rate ignorance. More importantly, I'm w/ Foo1bar on this one. NOMB, but too many smelly fish here. If it was me, I'd cancel. But, you're not me & vice versa.

+1 from me on this one

[roxanwright]

My only problem with leases is that you're likely to lose $$$$ in the event you need to sell your home. Other than that I think it is a great idea.

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