Whenever you see solar panels (e.g., during the listing presentation, while looking at advertising/MLS photos, during a showing), always be on high alert and quickly have serious documented communications with your seller or buyer.

Sellers – Real estate licensees inquire if the solar panels are owned, leased, or financed. Request the seller gather all documents relating to the solar panels (e.g., lease, financing, payoff, maintenance records, utility bills, warranties, operating manuals). Alert sellers that the SCR310 contract conveys "fixtures" and solar panel systems are most always fixtures (e.g., bolted to the property, pipes, cables, batteries, control devices, monitoring/metering devices, used to supply electricity or heat for the property, connected to the utility systems). Recommend the sellers provide SCR230 (e.g., seller disclosure) that asks about solar panels and leases and green energy and systems and legal issues in a variety of questions. Yes answers on the seller disclosure require a seller written explanation.

Buyers – Real estate licensees recommend the buyers promptly hire their closing attorneys and notify the closing attorneys about the solar panel issues as soon as possible so the attorneys can quickly begin working on the solar panel issues and have time to pursue any required legal remedies. Inquire about acquiring the seller documents on the solar panels as soon as possible so the attorneys can review (e.g., lease, financing, payoff, maintenance records, utility bills, warranties, operating manuals). Recommend that buyers hire solar panel experts for inspections and consider using SCR310 due diligence procedure to maximize the negotiation/termination options.

The hotline has received reports of legal difficulties finding the payoff lien satisfaction information for closing payoff/satisfaction of financed solar panels (e.g., never filed at the courthouse, the lien has been sold/transferred to other distant corporations). So, the sooner the closing attorneys know about the solar panels and start working on the legal issues with solar panels, the better these payoff issues can be handled prior to closing.

The closing attorneys can likely prorate and handle money and lease issues for leased solar panels with enough documentation and time and awareness.

These same issues can arise in commercial transactions and lease transactions.

Alternatively, the seller could properly remove all the solar energy systems from the property prior to any showings or offers or listings. This is uncommon, but an option for the seller who owns their solar system and wants to transport their solar system to their next property. Perhaps, the seller properly pays off the lien prior to any showings or offers or listings to minimize some of the issues mentioned in this article.

Posted by: Byron King on 10/21/21 (This information is only accurate as of 10/21/21. You must contact SCR for updates and changes to this information after 10/21/21 as laws and regulations may change over time. SCR 803-772-5206 or email info at screaltors.org or email byron at screaltors.org)

This information is not legal advice. This information is intended only to provide general information and may not be relied upon as specific legal guidance. Legal counsel should always be consulted before acting in reliance on this information.