Solar Panels on Foreclosure

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Solar Panels on Foreclosure

Joe Onorato
South Jersey · Member since 2019 · 14 posts · 6 votes

Question for everyone in the forums. What is your experience with solar panels and how the bank handles them? I'm assuming these would be a lien on a property like any other lien? The only reason I ask, is they don't seem to be being handled that way, but it could just be the rep I'm dealing with at the solar company.

Currently under contract on a property from Auction.com and there are solar panels. The company is Vivint. I was wondering your experiences if any when dealing with solar. We are at the finish line and obtaining the UCC release, and I'm not sure if the rep for Vivint is just not used to investors or what, but he's making it seem like we are assuming responsibility for the payments of the solar? He mentioned purchasing the panels or prepayment of the power.

If you need more information I'm happy to share but just curious as I'm expecting a ton of foreclosures over the next 3-5 years having solar, so this is my first experience with these. Thanks all in advance!

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Steve K.
Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
7y

It’s very uncommon for a solar company to come across a situation like this (I’ve worked in solar for over 15 years and haven’t encountered a client’s property being foreclosed on), mostly because the credit threshold to lease solar panels is fairly high, above about 650 for most companies. Perhaps it will become more common as solar proliferates and the barrier to entry is lowered with newer financing products. Anyway my point is I’m not surprised that there is confusion with the bank and the folks at Vivint, as it’s likely the first time they’ve encountered this scenario. I would negotiate hard with Vivint and get a really good price on the system. They would much rather take some money for the system and get it off their books than lose money by coming out to remove it and repair the roof. They also probably won’t be able to resell the equipment as only new equipment qualifies for the tax credit and there isn’t much of a market for used solar equipment so you’re in a good position to negotiate. I’d start at something like half what they say the early buyout price is and go from there. 

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  • Steve K.
    Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
    7y

    Good work Joe, glad that worked out for you!

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  • Joe Onorato
    OP
    South Jersey · Member since 2019 · 14 posts · 6 votes
    7y
    Originally posted by @Steve K.:

    Good work Joe, glad that worked out for you!

    Thanks Steve! And thanks for your insight. Will definitely be noted in the future for upcoming deals, it's saved in my notes.

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  • Ali Shah
    Real Estate Investor · Las Vegas, NV · Member since 2008 · 127 posts · 10 votes
    6y
    Originally posted by @Joe Onorato:

    Good afternoon all, sorry for disappearing for a few days. Just wanted to fill everyone in on the process as all of you have been very helpful. We go to settlement tomorrow and I'm pleased to announce that after much fight we've purchased the unit outright from the solar company. It took me bringing in a roofing expert to document how the roof should be repaired, telling the solar company there's no way they feel like coming out to remove this system and repair to livable standards etc. We purchased the system at a substantial discount and also got the transferrable warranty. 

    The only unfortunate situation is that the SRECS do not transfer over. Definitely a nice learning experience for future transactions. Thanks again for everyone's help! I'm happy to answer any questions on how we went through the process and negotiation. 

    Joe, may I ask how much discount did you end up getting it for and what the negotiation process was with the solar company??  thank you 

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  • Tonja Pena
    Member since 2021 · 1 post · 0 votes
    4y
    Quote from @Tom Gimer:

    Financing statements are used because these items are personal property, not realty. UCCs are not liens although they are specific exceptions on title insurance policies because the secured party generally has the right to access, maintain and remove the equipment, among other things.

    You can assume the prior owner’s agreement if the terms make sense. If they don’t, the owner’s agreement with Vivint (now Tesla?) is NOT binding on a foreclosure purchaser because it does not run with the land.

    I’m sure we’ll see different variations of the owner/solar relationship but if you find a UCC, this is why.

     Hey @Tom Gimer

    I'm local to you in PG County and Baltimore and have a similar situation.  I'd like to remove the panels.  Have you closed any properties where the buyer just removed the panels themselves and gave them away or sold them?  Tesla is taking too long to respond to my request to remove them?  Also, if we don't technically have a lease with them (lease was with old foreclosed on owner), do they have to repair the roof if they do come and remove the panels and pucks?  

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  • Maria Musquiz
    Member since 2022 · 1 post · 0 votes
    4y
    Quote from @Joe Onorato:
    Originally posted by @Steve K.:

    Good work Joe, glad that worked out for you!

    Thanks Steve! And thanks for your insight. Will definitely be noted in the future for upcoming deals, it's saved in my notes.

    Hello, just now I’m dealing with a flip house with this issue in NM. Can you give us an idea what’s the %% percentage on the negotiation price… Should we negotiate at 50% of the asking buyout price?  

    Thanks for your advice, even now 2 years later this thread is very informative. I am just starting and this is my 2nd house , first one thru Auction.com.  So All the info I can get is so deeply appreciated. 
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