How to get out of a solar lease agreement.
Buyer’s remorse can be a genuine thing with a solar lease agreement. You got into your solar PV system pretty quick and cheap, but now you understand why. You are going to be paying in the long run. In most cases, solar companies tie the solar lease to the home’s title, making it a nearly impenetrable agreement for 15 to 20 years. Even if you inherited a solar lease from a home purchase, can you get out of it? We are going to unpack your options in this article.
Can I Get Out of a Solar Lease?
In most cases, the only way out is to spend more money. Yeah, probably not what you wanted to hear. Sadly, companies write solar leases to be a long-term agreement between you and them and don’t expect you to end your contract early. The three typical ways are to:
- Buy out the remaining part of the solar lease agreement.
- Purchase the solar PV system in its entirety, at market price
- Transfer your solar lease agreement
None of these ways are painless or straightforward. The buyout method requires you to prepay the balance of what you owe on the solar lease. You can then have the solar panels removed or use the system on your own. Most solar companies that lease do include a buyout price and period in your contract, so at least they won’t be making the number up on the fly. You know what you are getting into before you undertake the financial burden of a buyout. However, buyouts usually aren’t an option until year five or seven of your lease. If you just got into the agreement, check your contract, but you may be in the lease for a while.
Your contract may allow for market value purchasing. This way is a little slipperier than the buyout. Usually, the solar company brings in an appraiser to assess your system’s value. The assessment considers your system’s age and current, comparable options available on the market. Still, you may end up paying more than if you just finish your contract or financed in the beginning. Your system is an appreciating asset.
You may be thinking that transferring your solar lease will save the day. You were going to sell your home anyway, now may be the time. Good thought, and solar does improve the value of your home. Win-win, right? Well, according to the National Renewable Energy Laboratory (NREL), homes with solar panels sell 20% faster and for higher values than comparable non-solar homes, but a new buyer may not want to take over your lease agreement. They would rather own the system, and you may have a valuable asset become a liability. Now, you might have to revert to the buyout option.
Solar lease agreements make getting out a lot harder than getting in.
Can I Just Cancel My Solar Lease?
After installation, you may notice that your lease payment is more than your original utility bill. That could be due to improper sizing or the solar lease “escalator clause” that gives the company the ability to raise your payment 3-5% annually. Well, we would like to tell you that you can just cancel your solar lease. Unfortunately, the only time you can is before installation, normally. There may be some unique stipulations in your contract, cancellation penalties, etc., but you can typically cancel your solar lease if:
- System installation hasn’t occurred yet.
- It is less than one month after signing your contract.
- Some “unexpected and unforeseen additional expenses” become apparent, like your roof needs replacement or repair. Look under the “unexpected and unforeseen additional expenses” clause in your contract.
Most people only figure they want out of their solar lease after all three of these scenarios have passed. Therefore, you are looking at paying more money to escape your contract.
How to Get Out of a Solar Lease?
Simply don’t get into one. Avoidance is the best protection from solar lease agreements’ pitfalls and hidden costs. Take the time to read the “fine print” of the lease contract to understand everything you are signing up for, and after you do that, research other options like financing. Go into the wonderful opportunity of solar energy fully knowledgeable and satisfied. Finding a great company that will give you every option available with its pros and cons to make an informed decision is the best way to start. Option One Solar will do that for you!
Before you sign, get a second opinion.
We advise all shoppers to educate themselves on the different solar options that are available before making a decision. Many sales tactics out there are deceptive and misleading, whether it’s a purchase, lease or other option, choosing the wrong company could quickly become a headache.
If you have already received a quote from another company, one of our solar sales experts would happily review it over the phone with you and let you know if it’s a good or bad investment. We will analyze the proposed equipment and contract and ensure you are being quoted a solution that meets your needs. Give us a call at 760-646-8444.