Buying a home with a solar lease agreement?

[Steven Straughn]

I am in escrow on a property that has a solar lease agreement in place with a company called SunRun. The property was foreclosed, so the agreement appears to be null and void, though we have the option of assuming the contract if we want to. We plan to be in the home for 2-3 while remodeling it.

Here how it works. SunRun owns and maintains the solar equipment, which produces and average of 650 kWh per month, and we would be obligated to purchase ALL of the power [u]produced by the system at $.25/kWh. Our payments to SunRun would have nothing to do with the amount of energy the home consumes. Compared to the tiered rate structure of SDG&E, the breakeven point is at around 850 kWh per month. The company claims that they average historical usage of this home is around 1000 kWh/mo. I don't plan to use that much while living in the home, but maybe a potential buyer would, and would like to have the system in place, especially considering that SDGE's rates will likely increase over the next few years.

The main problem is that this contract is very difficult to get out of under normal circumstances. If we assume the contract and our potential buyer does not want the system, we would have to pay to have the system removed and roof repaired, or buyout the equipment at a cost of around $20k. As it is now, due to the foreclosure, SunRun has no recourse but to remove the equipment if we don't want to be in contract with them.

Also, this company does not have a great reputation. Plenty of horror stories pop up when you search their name online.

I'd appreciate any thoughts or advice on this issue.

[Paul Herold]

I am a real estate broker in California going through the same issue with a client selling his home. He is an investor who bought the property at trustee sale foreclosure auction.  The law states anything attached to the property becomes real estate and transfers to the buyer at auction.  If the solar panels are attached to the roof then they belong to the property. Sun run will fight you but the law is on your side do to the fact they are in 2nd position to the 1st mortgage and by law all and anything after the foreclosing mortgage is wiped out in California.  Some states are different so i would consult with an attorney. Our attorney is dealing with them now. Also it is recommended that you file a small claims case against them to remove the null and void lease agreement from title. For this specific reason of losing panels to foreclosure, Solar companys have started attaching themselves to the tax rolls which are senior to the foreclosing loan.  That makes them still in first position and there interest is not wiped out through foreclosure.