Can I Sell My Home With Solar When Purchased on a PPA?

Understand How Solar Panels Affect Your Home’s Selling Process

Picture of page author Alex Kelleher.

by Alex Kelleher
5 min read - Published on 05/10/2022

Life happens. Whether you’re relocating for work, or maybe you just want a change of scenery, you may come to the decision that you need to sell your home. Selling a home can be a daunting process, and it might feel even more overwhelming if you’ve invested in a solar panel system for your home.

You’re probably wondering how this energy-saving upgrade will affect the home selling process. While it takes a little extra planning and preparation to sell a home with solar panels, it’s totally doable and we’ll help make sure this process goes smoothly!

Perhaps you haven’t yet decided if solar panels are a good fit for you as a homeowner. If you’re researching the selling process in order to make the decision, don’t let the extra steps in the process dissuade you! With the increase in homes with solar panels, many realtors are very familiar with this process and can help you step-by-step. Energy-efficient homes with solar panels installed receive higher valuations and can sell for 4.1% more on average than homes without solar.

There are multiple financing options when it comes to purchasing a solar panel system. Your solar consultant likely explained that you can purchase the system with cash, you can get a solar loan, or you can utilize a PPA or other type of lease. In this article, we’ll discuss the unique steps to take when selling your home with solar purchased on a PPA.

Before we jump into the process of selling a home with solar financed with a PPA, let’s discuss a few terms and acronyms. As a homeowner, knowing these terms will be helpful so that you can ask your realtor any questions that you might have when it comes to selling your home!

What is a PPA?

A Power Purchase Agreement (PPA) is a contract in which the homeowner can lease the solar panel system from a third-party developer or solar company. This means that the homeowner doesn’t own the solar panels, and is not responsible for maintenance or repairs of the solar panel system. PPAs can be a very effective option, especially because the upfront costs for installation and purchasing the panels are covered by the third-party developer.

With a PPA, homeowners can enjoy a fixed, predictable rate of electricity for the length of the contract, which is often 10-25 years.

What is a UCC-1?

A Unified Commercial Code (UCC) is a financial statement. A UCC-1 is a record filed by lenders to report that they have a lien on assets. In the case of a PPA, the third-party developer or solar company will file a UCC-1 to let potential home buyers know that a lease exists on the solar panels on your home. Because your solar panels are a tangible asset, the third-party developer will also likely file the UCC-1 with the county that your home is in. These records are available to the public, which allows buyers and their realtors to access information that they need to know about your home’s solar panels.

Selling Your Home with Solar Purchased on a PPA

You undoubtedly considered all of the financing options when you first purchased your panel system, and if you chose to utilize a PPA, there are just a few things to keep in mind when you’re preparing to sell your home.

The solar company likely filed a UCC-1 if you have a power purchase agreement, and if you have a PPA with Lumio, you can contact us to get that information. Your first step to selling your home with solar panels purchased on a PPA should be to ask your agent or title company to verify that a UCC-1 was filed. UCC-1s are important because anyone that is interested in buying your home will want to know that a third party has installed a solar panel system to the home and that the third party is responsible for maintaining it.

You should also know that if you signed a loan agreement or a cash agreement for your solar panels, you won’t need a UCC filing–we’ll discuss this more later.

The next step after you’ve ensured that a UCC-1 was filed, is to prepare all the necessary information that buyers will need if they decide they would like to purchase your home. We’ll cover the possibility of transferring the loan terms, and the option of purchasing the remaining portion of your agreement to add it to the price of the home. These extra steps will help simplify the selling process for your home with solar panels.

Picture of solar panels installed on the rear roof of a house.

Why a PPA is different from a loan agreement or cash agreement

Purchasing your home’s solar panel system with a cash agreement can greatly simplify the selling process. But since paying upfront in full isn’t an option for all homeowners, perhaps you opted to invest in solar panels utilizing a solar loan. Both of these options differ from a PPA because the panels are fully, or at least partially, owned by the homeowner. With a PPA, the panel system is owned by the third-party developer or solar company, not the homeowner. This does make things a little more complicated when it comes to selling the home, but a PPA doesn’t make the home unsellable!

Options for selling a home with solar when purchased on a PPA:

If your solar panels were purchased on a PPA, you have a couple of options when it comes to selling your home. You’ll need to work with the solar company to understand the terms of your PPA when it comes to selling the home, but generally your options consist of transferring the PPA to the new owners or purchasing the remaining portion of your agreement. We’ll discuss each option more below.

Transferring a PPA to Homebuyers

Because PPAs are long-term agreements, many third-party developers will include terms that allow the agreement to be transferred to the new homeowners in the case of selling the home. Not all buyers will understand the benefits of having a solar panel system on their home, so you should work with your realtor to help communicate those benefits. Your realtor can also help the potential buyers understand the terms of your PPA agreement. Most PPAs have specific transfer requirements which may require the buyer to qualify based on credit or mortgage approval.

Purchase the Remaining Portion of the Agreement

You also have the option of purchasing the remaining portion of your PPA agreement so that you can fully own the panels. Depending on the terms of your PPA, you may even be able to get a prepayment discount for buying out the contract early. When you purchase your PPA agreement you become the full owners of the solar panel system, which means that you can add it to the price of your home. Work with your realtor and your solar company to see if this could be the right option for you.

Answers to questions that potential buyers ask

Undoubtedly, the potential buyers of your home will have many questions about your home and the solar panel system. Be prepared to discuss the many benefits of having a solar-powered home. Here are a few examples of questions that they may ask:

  • How big is the system?
  • How much energy does it produce?
  • How do you monitor the system?
  • How do you know how much you are saving?

Having answers to all of their questions will make the negotiation process go smoothly. In cases where the potential homebuyers refuse to transfer the PPA, it’s because they didn’t get a clear enough explanation of the terms of the agreement. They also may not be aware of the savings and benefits of the system, so explaining those will help your home selling process be quicker and easier.

Selling with a PPA

Many homeowners find themselves needing to sell their home with solar panels, you’re not alone! If you’ve purchased your solar panel system with a PPA, you’ll need to take some extra steps in the selling process. But with some preparation and research, this process can be easy and totally doable! Your realtor and solar company can help you through these steps and all of the necessary paperwork.

You have multiple options when it comes to transferring your PPA to the new homeowners or purchasing the remaining portion of your agreement. Be sure to gather the necessary information to bring to your realtor when you decide to sell so this process can be straightforward and successful!

If you’ve purchased solar on a PPA with Lumio, please contact us at least two weeks prior to closing so that we can make sure everything runs smoothly when you close. If you have any questions, reach out to one of our solar consultants on what paperwork is needed to go through with the sale of your home.