Deferring costs of Solar Panels

Member since 2019 · 31 posts · 2 votes

Does anybody know if it is legal to make tenants pay the monthly solar panel lease fee and what the solar company is charging for the electricity generated?

The lease that the property manager set up, that the tenants signed, only says that the tenants are responsible for the utilities. Nothing is in writing about the solar panels or any associated costs with the solar panels.

The tenants are now questioning being asked to pay the Solar City monthly fees.

Blessings ~ Laura

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Russell BrazilBusiness Member

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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes

If its not in the lease, its not their responsibility.

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Laura Yoerger
OP
Member since 2019 · 31 posts · 2 votes
7y
We are in Washington County, Oregon.
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Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
7y
If its not in the lease, its not their responsibility.
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Laura Yoerger
OP
Member since 2019 · 31 posts · 2 votes
7y
So the Solar City charges would not fall under the “Utility” clause?
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Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
7y
No. You are leasing equipment. That is not a utility charge.
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Laura Yoerger
OP
Member since 2019 · 31 posts · 2 votes
7y
BTW - thank-you for the prompt reply, Mr. Brazil!
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Laura Yoerger
OP
Member since 2019 · 31 posts · 2 votes
7y
What about what Solar City charges for the electricity generated?
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Jacob D Adamczak
Charleston, SC · Member since 2018 · 182 posts · 73 votes
7y
If I understand correctly, you are leasing the system and you get billed monthly for the cost of the panels, and the panels eliminate an electricity bill. The cost of the lease should be lower than what you would have originally paid for electricity each month. Therefore, SolarCity kind of becomes the new utility and since the fee should be lower, I see no reason why you wouldn't be able to pass that on or why they would question a lower cost of electricity
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Nathan GesnerBusiness Member
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Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
7y
I agree with @Russell Brazil. It sounds like your lease makes the tenant responsible for utility use, not the leasing of equipment. That's like charging them rent to use the house and then telling them they have to pay your mortgage, too.
Your lease should always be very clear about Tenant responsibilities so there's no confusion. If you want them to pay the equipment lease, that should be clearly stated or included as part of their rent.
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Earl Hatmaker
Specialist · Dayton, OH · Member since 2018 · 59 posts · 41 votes
7y
Does your tenant receive a check if there is excess power produced? I doubt it). This sounds like something you the LL did to try and make an extra buck on a property. Did the plan not work?
What is the cost to "lease" the panels? What do you do when you decide to stop leasing? What is the damage that has been done to you house?
If they are not paying an electric bill and the cost of the "lease" is lower than a bill would be I would just build this into your rent price in the future. But as it has already been said, you need to be specific on your lease from the start.
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Laura Yoerger
OP
Member since 2019 · 31 posts · 2 votes
7y
Originally posted by @Jacob D Adamczak:

If I understand correctly, you are leasing the system and you get billed monthly for the cost of the panels, and the panels eliminate an electricity bill. The cost of the lease should be lower than what you would have originally paid for electricity each month. Therefore, SolarCity kind of becomes the new utility and since the fee should be lower, I see no reason why you wouldn't be able to pass that on or why they would question a lower cost of electricity
The panels do not eliminate the electric bill, just lower it during the sunny season here in the Portland, Oregon area.
And the credit I would have recieved for excess power generated was not transferable to the tenant, so PGE gave it to a needy family.
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Laura Yoerger
OP
Member since 2019 · 31 posts · 2 votes
7y
Originally posted by @Nathan Gesner:

I agree with @Russell Brazil. It sounds like your lease makes the tenant responsible for utility use, not the leasing of equipment. That's like charging them rent to use the house and then telling them they have to pay your mortgage, too.
Your lease should always be very clear about Tenant responsibilities so there's no confusion. If you want them to pay the equipment lease, that should be clearly stated or included as part of their rent.
Thank-you for your input Nathan!
I am still wondering if I can make them the monthly fee that Solar City charged me for the energy that the solar panels generate?
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Laura Yoerger
OP
Member since 2019 · 31 posts · 2 votes
7y
Originally posted by @Earl Hatmaker:

Does your tenant receive a check if there is excess power produced? I doubt it). This sounds like something you the LL did to try and make an extra buck on a property. Did the plan not work?
What is the cost to "lease" the panels? What do you do when you decide to stop leasing? What is the damage that has been done to you house?
If they are not paying an electric bill and the cost of the "lease" is lower than a bill would be I would just build this into your rent price in the future. But as it has already been said, you need to be specific on your lease from the start.
Thank-you for your input Earl!
No the tenants do not recieve a check and apparently neither does the landlord, as Solar City does not allow the transfer of this credit. PGE just used the credit for a low income family.
But can the tenants be made to pay what Solar City charges for the energy that the solar panels generate?
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Jacob D Adamczak
Charleston, SC · Member since 2018 · 182 posts · 73 votes
7y
I would say yes, if they are responsible for utilities, including electricity, it doesn't matter where that comes from, they would be responsible as per your lease. If they were paying additional costs besides the electricity costs, then that would be outside of the scope of the current lease.
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Laura Yoerger
OP
Member since 2019 · 31 posts · 2 votes
7y
Originally posted by @Jacob D Adamczak:

I would say yes, if they are responsible for utilities, including electricity, it doesn't matter where that comes from, they would be responsible as per your lease. If they were paying additional costs besides the electricity costs, then that would be outside of the scope of the current lease.
So they can be made to pay for the energy generated even though it is not actually energy they are using and they do not recieve the compensation for any credit that excess energy created causes? Solar City said that this credit was not transferable so PGE gave the credit for the energy produced to a low income family.
So in essence they are paying for all of the energy generated but if they do not use it all through PGE they lose that money since Solar City does not allow the transfer of this credit to them since they are not the original leasees.
That is what the tenants are balking at. They say that the solar panels are a home improvement and that since they do not even get any credit they should not be made to pay these fees.
They are saying that their lease just says that they are to pay the utility bills (which is true, there is nothing in the lease specifying the solar panel lease bill). And that “utility bills” mean they pay for what they use (i.e. trash services, water, gas, and electricity they actually consume). They say that it is not fair to try to make them also pay for the energy that the homeowner’s solar panels generate, especially when they do not even receive any credit for energy they pay for but do not use.
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Jacob D Adamczak
Charleston, SC · Member since 2018 · 182 posts · 73 votes
7y
oh I see. Yes I don't think you can charge them for the excess energy generated it would have to cap off at the amount of their usage unless their lease had it written that they were to pay for excess production for the panels or they had requested the panels.
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Account Closed
Lender · Pensacola, FL · Member since 2017 · 658 posts · 626 votes
7y
How much is the monthly solar equipment fee? The next time the rental agreement comes up for renewal, the rent might be increased by an amount that covers the solar equipment fee.
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Laura Yoerger
OP
Member since 2019 · 31 posts · 2 votes
7y
Originally posted by @Jacob D Adamczak:

oh I see. Yes I don't think you can charge them for the excess energy generated it would have to cap off at the amount of their usage unless their lease had it written that they were to pay for excess production for the panels or they had requested the panels.
The lease only says that they are responsible for the utility bills.
The property manager being used had never encountered a solar powered home and just had the tenants sign a standard lease. The solar panels, lease fee, charge for energy created, etc...were not specifically addressed in the lease.
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Laura Yoerger
OP
Member since 2019 · 31 posts · 2 votes
7y
Originally posted by @Account Closed:

How much is the monthly solar equipment fee? The next time the rental agreement comes up for renewal, the rent might be increased by an amount that covers the solar equipment fee.
There is a flat monthly rate of $75 plus a per kWh of energy created fee. So the total monthly bill varies. The last 2 bills were $130 & $123.
The tenants say that their electric bill is already higher than that each month and since theu also will never receive the credit for excess energy created, they believe it is illegal to be asked to pay the solar company fees also.
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Account Closed
Lender · Pensacola, FL · Member since 2017 · 658 posts · 626 votes
7y
@Laura Yoerger
This sounds like a question for your lawyer to answer.
Someone willfully entered into a contract with Solar City to allow the installation of those panels and the assignment of the power-saving benefits to a needy family (unless there is a government requirement to install solar on every new home, as is now the case in California starting in 2020). There has to be a paper trail for a lawyer to follow to determine which party (property owner or tenant) is responsible for the solar panel lease fee. There is also the business question about being able to charge more rent for a green home (if the decision is made to market that aspect of the property).
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Bill B.
Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
7y
Their electric bill is over $130/mo and you want them to pay another $130/mo?
My electric bill with 3 pool pumps and an electric car was $58 last month. The highest it ever got in the middle of summer was $250. And this is Vegas. (2800sf SFR)
Sounds like solar city is screwing somebody or the house is full of holes.
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Mathew Wray
Real Estate Agent · Portland, OR · Member since 2013 · 412 posts · 219 votes
7y
$130/month times two units times 12 months is $3,120 a year. That’s not chump change and I understand why you’d like to defray the costs associated with it. But, it sounds like it wasn’t clear in the lease up front.
Could you go to a lawyer, have them research, and potentially go to court to solve the problem...I’d say yes, but at what cost and headache to you? With our tenant friendly state, do you want to risk losing in court and being out fees on top of the income? Is that Wirth your time?
What about your tenants? If a landlord would’ve taken me to court I would’ve left post-haste so now you factor in an early or contested (you know any charge you make them while moving out is going to be challenged as retribution) vacancy and how much does that cost you?
Although it stings, I’d shelve the request and wait until the leases are up, then clearly define who’s responsible for the payments. In the meantime, just chalk it up to a learning experience.
Mathew
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Laura Yoerger
OP
Member since 2019 · 31 posts · 2 votes
7y
Originally posted by @Bill B.:

Their electric bill is over $130/mo and you want them to pay another $130/mo?
My electric bill with 3 pool pumps and an electric car was $58 last month. The highest it ever got in the middle of summer was $250. And this is Vegas. (2800sf SFR)
Sounds like solar city is screwing somebody or the house is full of holes.
Thank-you for your input Bill.
The house is about the same size as yours at 2900 sq.ft. The tenants are a family of 6 and the mom homeschools the 4 children. It sounds like they are home most of the time.
It is winter here in Oregon and the tenants have complained that the house is hard to keep warm.
They say they run the thermostat at 72°-74° degrees during the day and try to remember to turn it down to 68° at night or when gone.
They have also complained that they are not able to actually program the thermostat for energy effeciency because it has to have an app connected to wifi and an account with Solar City, which they don’t have.
Their January bill was actually $128.67. It was their water bill that they said was over $130 (They were warned that the city of Cornelius, where the house is, charged a base fee of $100 before they even compute water usuage).
Their kWH consumption seemed high but after googling average winter consumption in Oregon, theirs is only a little over the average and of course their family is also larger and at home more than the average family.
So not sure if something is amiss or not.
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Mathew Wray
Real Estate Agent · Portland, OR · Member since 2013 · 412 posts · 219 votes
7y
Also, check with your cpa and see if you can write off the solar leases as a loss against your rental income! There might be at least some benefit you can find there.
1 Reply
Laura Yoerger
OP
Member since 2019 · 31 posts · 2 votes
7y
Originally posted by @Mathew Wray:
$130/month times two units times 12 months is $3,120 a year. That’s not chump change and I understand why you’d like to defray the costs associated with it. But, it sounds like it wasn’t clear in the lease up front.
Could you go to a lawyer, have them research, and potentially go to court to solve the problem...I’d say yes, but at what cost and headache to you? With our tenant friendly state, do you want to risk losing in court and being out fees on top of the income? Is that Wirth your time?
What about your tenants? If a landlord would’ve taken me to court I would’ve left post-haste so now you factor in an early or contested (you know any charge you make them while moving out is going to be challenged as retribution) vacancy and how much does that cost you?
Although it stings, I’d shelve the request and wait until the leases are up, then clearly define who’s responsible for the payments. In the meantime, just chalk it up to a learning experience.
Mathew
Thank-you for your input Matthew. You make very good points.
To clarify, there is just this one single family home in question.
The home was for sale but not selling. A property management company suggested that the home be rented out instead of sold.
So this is definitely a learning experience.
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Steve Milford
Lender · Vancouver, WA · Member since 2015 · 482 posts · 316 votes
7y
@Laura Yoerger
If the solar panels are leased, it creates a lien on title as a financed item.
Talk to a lawyer, but I don't think you can pass it on. If it was me, I would just accept it as lessoned learned and look at firing this PM. I looked to hire a PM so I could be hands off last year. All quotes I received was for rent lower than I wanted and in fine print, they were just messenger anyways. I chose to go with cozy.co, charge the rent I wanted and use a maintenance co for repairs as they come up. For any lessons learned like you have, then I will just increase rent next time around.
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