Solar Leasing On A Investment Potential Property Explained

6 Replies

So many people have questions on how the process is covered on both the purchase side and the sale side of solar leasing. Luckily for this topic less and less people are doing this process. Ownership is the way to go going forward and will continue to be the case. Having experience with over 1000s of installs across the country the following includes a link and some commentary for those of you RE investors. An avid RE investor myself I thought I would write this to aid you fine folks on the specifics. Enjoy.

When you lease solar panels they put a UCC lien on the equipment, true, to hedge against you defaulting. HOWEVER in the case of a sale it becomes enforced as a lien to ensure the finance company holding the paper on your equipment doesn't get discarded with the new owners. This is the common issue in all 50 states and solar leasing companies do NOT want to transparently address it. Here's a link for you on how residential solar actually works in the event of a sale. https://financere.nrel.gov/finance/content/residen...

In this, notice the line - Financiers can take security interests as per the UCC, which is a set of legal rules for creating and enforcing rights in property subject to sales, leases, loans, and other types of transactions

In other words it's harmless as long as you either live there, don't refi, sell, and payments if any needed are being made. Once any of the detailed signal a flag it's no longer a happy harmless "Just a UCC filing" and as it states can enforce "security interests" as per the UCC rules.

Solar title-clouds/UCCs/liens/whatever are The Devil.

Want a $40k solar panel? Great! Write a $40k check.

Like you correctly say...

it's harmless as long as you either live there, don't refi, sell, and payments if any needed are being made.

In other words, it's harmless if you don't ever actually do anything with the property.  

Are solar panels a cost effective route or more of an appeal to environmentally friendly people?

Rob,

   Great question. Solar panels can be a great investment for the investor providing several factors are in place. You have any kind of incentives where you are investing. If you can find a reasonably priced installer with a great product and warranty. Also, if the house has electric heat and if you install solar you can do an all inclusive price which allows you to receive higher rents although your costs are not any higher. Going forward though, it may be beneficial in the way of attracting younger professionals that are millennials as they are beginning to search for greener residences to call their home with apartments 

@Rob Beardsley They are a cost effective route regardless of attitude to the environment especially in tier 1 markets like CA. I got involved in solar because it released my "inner tree hugger" :)  I realised pretty quickly that while people were environmental, they would not be switching to solar unless the numbers stacked up. Fortunately they do and then some.

Solar reached "grid parity" across the USA generally about three years ago with fossil fuel power. In many States including CA it is a cheaper option by some margin. My goal with properties is to make them intelligent and sustainable to attract the specific market you mentioned.

@Andrew Smith I love this idea! I too would like to implement various environmentally friendly strategies in operating multifamily but of course like you said, the numbers have to make sense. What other initiatives do you run such as water conservation.

Originally posted by @Rob Beardsley :

@Andrew Smith I love this idea! I too would like to implement various environmentally friendly strategies in operating multifamily but of course like you said, the numbers have to make sense. What other initiatives do you run such as water conservation.

 Our focus right now is on driving the mass adoption of solar, but our platform is geared to marketing efficiency of all related products. The next products include batteries. LEDs and so on. Our thoughts are that producing and managing energy efficiently and sustainably unlocks other vital progress to sustainability like desalination and hydroponic food growth. That's on a "large scale" rather than an individual building.

For me I want to increase efficiency with products such as high efficiency water heaters, solar powered A/Cs and so on. In terms of numbers though these have a little ways to go before they stack up even factoring in the reduced solar footprint. The most effective way for now is to replace utility power with as much solar as the space will allow.

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