Solar panels have become increasingly popular in New Jersey, both for their environmental benefits and the promise of lower utility bills. But when it’s time to sell a home equipped with solar panels, the process becomes more complicated than a traditional real estate transaction. A solar system is a unique asset, one that may be owned outright, leased, or financed, and the way it is structured will directly impact the sale. Understanding how solar agreements work and how they must be addressed at closing is essential for avoiding delays, misunderstandings, or even a failed transaction.
How Solar Ownership Affects the Sale
The very first question in any home sale involving solar panels is: Who actually owns the system? Many homeowners assume that because the panels are on their roof, they own them. In reality, a significant percentage of solar installations in New Jersey are leased or financed. When the panels are owned, they transfer with the property like any other fixture. But leased or financed panels come with ongoing contractual obligations that must be addressed long before closing.
A potential buyer may be excited about a home with solar power, until they learn they’ll be assuming a 20-year contract with escalating payments. Some buyers view these agreements as a benefit, while others see them as a burden. Mortgage lenders may also have concerns if the payments are significant or if the buyer’s debt-to-income ratio is tight. Because of this, sellers should be upfront and transparent about the solar system, providing all agreements, warranties, payment schedules, and contact information for the solar company as early as possible.
The Role of Solar Companies in the Transaction
Solar companies are heavily involved when a home is sold. If the panels are leased, the new buyer must formally assume the lease, which typically requires a credit check and approval process. These companies do not move quickly, and delays in obtaining transfer documents are one of the most common reasons closings are postponed. Sellers often underestimate the time required to get paperwork in order.
Financed systems can also complicate matters. Some financing agreements require payoff at closing; others may allow the buyer to assume the remaining payments. An attorney can help review the terms to determine the best approach for both parties.
Appraisal and Marketability Considerations
Solar panels can be an appealing feature that boosts a home’s desirability. But leased panels generally do not increase the appraised value of a home, and some appraisers treat them as an encumbrance rather than an asset. Buyers may also be hesitant if they don’t understand the cost structure or long-term obligations.
To ensure a smoother transaction, sellers should work with real estate professionals who understand solar agreements and can explain them effectively to potential buyers. When buyers clearly understand how the system works and how it impacts their monthly expenses, the transaction proceeds with far fewer surprises.
Planning for a Smooth Closing
Well before the property goes under contract, sellers should gather copies of the solar agreement, recent electric bills, maintenance records, and any buyout options. Buyers should review these documents carefully with their attorney. Both sides benefit from addressing the solar issue at the beginning of attorney review rather than at the tail end of the process, when timelines are tight and lender commitments are already issued.
Solar panels can be a valuable asset, but only if their transfer is handled correctly. Whether you are buying or selling a New Jersey home with solar panels, experienced legal guidance can prevent delays and ensure that the transaction proceeds smoothly. At The Law Offices of Agnes Rybar LLC, we help clients understand and navigate complex solar agreements so they can move forward confidently. Contact us today to schedule a consultation and ensure your solar-related home sale is handled properly from start to finish.
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