Bank owned foreclosure

[Ampster]

Yea, it's called double accelerated depreciation and other tax bennies available to lessors only, thanks to the IRS and lobbyists. The leasing scam would not exist as we know it in the U.S. without the tax breaks.

As Peakbagger notes, solar companies often sell off the leases to third parties, but not always, depending on the situation.

The problem for Tesla or its investors in the PPAs is that with accelerated depreciation schemes, if the investor disposes of the property in less than five years the investor may be subject to recapture of some of that depreciation. I don't know if there is a similar concept for ITC recapture. In any event the original contract (PPA) is in default and the foreclosure may have wiped out the investors. That may already have triggered recapture assuming Tesla no longer has title to the system. Tesla or the investor apparently still has no clue as to what happened.

[ButchDeal]

Note the reason is the rates are "obscene" is the other ratepayers are subsidizing them. The rates have dropped but still very generous. Mass is definitely a state where if you dont pay to put solar on your roof, you are paying for your neighbor to do so.

SRECs have nothing to do with rate payers or other rate payers and certainly not what your neighbors pay for energy. Before you lecture on a subject you should know a little about it.
SRECs are generated 1 per MWH but have nothing to do with the cost of the MWh!

MA SREC prices are high because it is a closed market.

[peakbagger]

Mass committed to large blocks of solar that had somewhat obscene SREC prices. If the system was part of some of the early blocks the SRECs can sometimes be worth over $400 a MWhr. These rate are propped up for many years. That was the why solar companies were flocking to the state. Tesla would have no interest in selling a guaranteed long term flow of payments. Odds are they probably sold them up front to a third party who also is unwilling to let them up.

Note the reason is the rates are "obscene" is the other ratepayers are subsidizing them. The rates have dropped but still very generous. Mass is definitely a state where if you dont pay to put solar on your roof, you are paying for your neighbor to do so.

[ButchDeal]

What are SREC's? All I know is that the system its self is 726 KW/hr system. To be honest (in case you can't tell) I know NOTHING about solar.

PV systems are rated in a size of watts not watt hours. PPA agreements are in kWh (note there is not really a kW/h - no / ). so the agreement was for 726kWh per month.
You have a system of X kW on your roof and an inverter of Y kW size.

An SREC is Solar Renewable Energy Credit and they have value in a few states like MA. You get one SREC for every MWh your system generates so in your case (726 kWh/month) you would get about about 8.7 SRECs a year and at over $300 each that would be about $2,600 a year.

there are several markets for SRECs and they would have to be registered to you as legal new owner etc. as two companies can not claim ownership of the same credits. you can look at https://srectrade.com/

[J.P.M.]

Well they are likely claiming the SRECs but I would say that the new owner of the house and equipment should be getting the SRECs. More negotiating leverage there... (and pretty big one too around $300+ per SREC) NOTE to OP you get one SREC for every MWh your system generates.

Thanx for the confirmation.

J.P.M.

[ButchDeal]

If you haven't done so already, and since Tesla had, and may still own the rights to all the SRECs the system produces, one thing you might want to check into is what SREC's are worth these days in MA and any changes that may be on the horizon for them.

Well they are likely claiming the SRECs but I would say that the new owner of the house and equipment should be getting the SRECs. More negotiating leverage there... (and pretty big one too around $300+ per SREC) NOTE to OP you get one SREC for every MWh your system generates.

[ButchDeal]

The equipment is operating now. I do not have access to the monitoring, just what the electric company sends me. I just looked over the PPA and do not see the model number, I am assuming that is what is on the side of my house? I can check that out when I get home.

Yes if it is solaredge you might be able to register your own installer account and put in the serial number thus taking over the monitoring.
Tesla does some of them with their own monitoring equipment which hijacks the monitoring and sends it to them but you can physically change that too and have solaredge inverter send directly by connecting it to the internet and changing the configuration at the inverter.


As for negotiating Tesla is going to lose the tax credit since they no longer own the equipment. One option for you to possibly consider is to push them that you will sign a 2 year contract with a $1 buy out at the end and $1 a month fee that lets them keep ownership for those 2 years and thus the tax credit for them.
You get the equipment and end the legal shenanigans for $25 total dollars and they get to keep their tax credit.
Otherwise you report them to IRS AND keep the equipment since it is rightfully yours and counter them for your legal fees...

But thats just a suggestion from a tech guy, not a lawyer

[ButchDeal]

I do have the upper hand in negotiating terms for myself, but I am not sure I want to actually get into an agreement with them. As it stands now we have no intention of moving, but if we ever did decided to sell it seems like a major pain in the ass to have leased/PPA equipment attached to your house.

The title came back clean as of February 15 for when we closed, the liens that solar city did have on the property were dissolved. The lawyer we checked with last week did do a search and nothing came back on the property after the fact.

The representative from Tesla did say that there is a buyout option at the end of 5 years and 20 years.

Is the equipment operating now?
Do you have access to the monitoring?
What model inverter is it?

[ButchDeal]

Update: Spoke with Tesla this morning, and played pretty dumb about what I know so far. He sent me the original lease agreement. it is a Power Purchase Agreement, and the system is a 726 kw/hr a month system with about 17 years left on the lease.
There is no option to buy out now because they need to keep the system on our roof for the next 2 years to get the tax credits and receive benefits from the utility company.

He did say when I said that we thought we owned them that they have a lien on the property that protects them from that. So in any case this buys me some time for the title company to do their investigation. I know that the two liens against the house in teslas name were wiped out in the foreclosure. So I will be interested to see what happens

What is the difference between a PPA and a lease?

seems like they had an agreement with a past homeowner not you. IF they want to continue getting the tax credits then they have to continue to own the equipment
This leaves you in a huge bargaining situation, if you were so inclined.

Just because he said they have a lien doesn't mean that they do either. They may have had to refile for it and missed that or just forgot in the confusion of the Solar City/ Tesla change up etc.

A PPA is NOT a lease. With a PPA the provider retains all ownership rights to the equipment and the homeowner agrees to purchase all the power.
With a lease it is similar to car leases, they sometimes have buy outs etc.
PPAs are only legal in a few states as well.

So with it being a PPA, it is more like abandoned property on the land that you purchased.

[ButchDeal]

A PPA is a specific kind of lease. As far as I know there is no difference. It is structured like a lease with payments made the the Lessor, or however they are described in the PPA.

A PPA is NOT a lease. people confuse them but PPAs are not legal in all states. With a PPA you do not have any claim to the equipment, just the power.

[J.P.M.]

A PPA is a specific kind of lease. As far as I know there is no difference. It is structured like a lease with payments made the the Lessor, or however they are described in the PPA.

Actually, there is a difference as the terms are usually defined and used.

With a lease, the monthly payment on the lease is the same for 12 months and usually/often increased by a fixed amount per year. The payments are more predictable.

With a PPA, the usual and common setup is that the homeowner buys all the power produced by the system, usually per month or similar period at a fixed price per kWh produced with that per kWh price possibly adjusting per year or similar period. Thus, depending on the terms of the PPA, there is usually more variability in the amount paid per period with a PPA than with a lease.

There may be other specifics that deal with how a PPA is handled that may be different than a lease in situations such as the OP has.

A question I might have is : Did the OP's attorney know the situation involved a PPA and not a lease ?

A PPA is not a lease. It is a contract to buy power at a somewhat fixed price per kWh that's produced by a PV system owned by the outfit that puts that PV equipment on a homeowner's property.

Bottom line to the OP's last question: With a lease, you are renting equipment. with a PPA, you are buying power.

[Ampster]

............

What is the difference between a PPA and a lease?

A PPA is a specific kind of lease. As far as I know there is no difference. It is structured like a lease with payments made the the Lessor, or however they are described in the PPA.

[PNW_Steve]

I still wonder if it would really be worth thier while to spend the $$ to deinstall the system. How much is that used gear worth to them?

Is Tesla in the business of selling used gear?

[Ampster]

I've owned 5 houses, and NEVER was I as a seller expected to pay for the title insurance policy. Always as a buyer, I was advised by my attorney to have one, especially this last when I paid cash. The lender policy (mandated in the Carolinas for a mortgage loan) would cover up to the mortgage amount, but the lawyer said I'd be bankrupt in the event of a suit; the costs are astronomical.

Now ... "closing costs paid by seller" exists ... but you are the one with the mortgage that needs the protection, and the owner coverage is a few dollars more than the lender policy ... in the Carolinas. States vary!

Yes, states vary. In California the policy varies from north to south in terms of how escrows are handled. In the 50 or so transactions that I have been involved in Southern California the buyer only pays for a lenders title policy if there is a loan. Lenders usually get an ALTA (American Land Title Association) endorsement that covers more than just an owners policy. Of course non of that matters because the OP is in Massachusetts and the legal issue is whether Tesla has any rights to the panels on the OPs roof. I believe they don't but I don't know Massachusetts personal property law.

[gbynum]

Your seller paid for a policy of title insurance and the question for the title company is whether that policy covers claims arising from fixture filings (UCC filing). Did the lawyer read the title policy? Have you read the title policy?

I've owned 5 houses, and NEVER was I as a seller expected to pay for the title insurance policy. Always as a buyer, I was advised by my attorney to have one, especially this last when I paid cash. The lender policy (mandated in the Carolinas for a mortgage loan) would cover up to the mortgage amount, but the lawyer said I'd be bankrupt in the event of a suit; the costs are astronomical.

Now ... "closing costs paid by seller" exists ... but you are the one with the mortgage that needs the protection, and the owner coverage is a few dollars more than the lender policy ... in the Carolinas. States vary!