Buying a Bay Area Home With Solar Panels? Here Are 8 Things You Should Know Before You Buy

Meta Description: Buying a Bay Area home with solar panels? Learn about ownership, leases, financing, electric bills, batteries and hidden expenses before purchasing.

Table of Contents

1. Solar Panels Can Be a Great Feature — But Ask Questions
2. Are the Solar Panels Actually Owned?
3. What Happens if the System Is Leased?
4. Is There an Outstanding Solar Loan?
5. Will Your Electric Bill Really Be Lower?
6. What About California’s Solar Billing Rules?
7. How Old Are the Panels?
8. Does the System Include Battery Backup?
9. What Happens When the Roof Needs Replacing?
10. The Bottom Line

Solar Panels Can Be a Great Feature — But Ask Questions

You’re touring a beautiful Bay Area home.

The kitchen is updated, the backyard is lovely, and the seller proudly announces:

“And the house has solar!”

Wonderful!

But my next question would be:

“Is the solar system owned, financed or leased?”

Because those are three very different situations.

Solar panels can be a wonderful feature, potentially reducing electricity costs and providing renewable energy.

But buying a home with solar isn’t always as simple as inheriting a few panels on the roof.

There may be contracts, financing arrangements, equipment warranties, utility billing considerations and maintenance responsibilities.

Before you get too excited about those panels, here are eight important things to investigate.

1. Are the Solar Panels Actually Owned?

When a listing says a property has solar panels, that doesn’t necessarily mean the seller owns them outright.

Solar systems generally fall into several categories.

Owned outright: The homeowner purchased the system, and there is no remaining financing obligation.

Financed: The homeowner purchased the system using a loan or other financing arrangement.

Leased: A solar company or third party owns the equipment, and the homeowner makes payments under a lease agreement.

Power Purchase Agreement (PPA): A third party generally owns and operates the system, while the homeowner agrees to purchase the electricity it generates under a contract.

These arrangements can have very different implications when the property is sold.

Never assume solar panels are owned simply because they’re attached to the roof.

2. What Happens if the Solar System Is Leased?

Imagine purchasing a home and discovering that the solar panels come with a monthly payment.

Depending on the lease, there may be established payments, annual increases, maintenance provisions and requirements for transferring the contract.

Some solar leases can be financially attractive. Others may be less appealing depending on the terms.

Ask whether you’ll need to assume the lease, what the monthly payments are, whether payments increase, and how much time remains.

Also ask whether the system can be purchased outright and what happens if you decide to sell before the contract expires.

These questions deserve answers before committing to the transaction.

3. Is There an Outstanding Solar Loan?

Let’s say the seller tells you the solar system is owned.

That’s a good start.

But is it completely paid off?

A homeowner may own the equipment while still owing money on the installation.

Financing may involve a personal loan, a secured loan or another arrangement.

The parties need to determine whether the loan must be paid off, whether it can be transferred and whether there are liens or title issues.

This is where your lender, escrow officer and title company may need to become involved.

You want to know exactly what financial obligations, if any, are coming with the property.

4. Will Your Electric Bill Really Be Lower?

Buyers sometimes see solar panels and immediately imagine an almost nonexistent electric bill.

But solar panels don’t automatically eliminate electricity expenses.

Savings depend on the size and efficiency of the system, household electricity consumption, the utility rate plan, and whether the property has battery storage.

A household with electric vehicles and heavy air-conditioning use may have very different needs from a household of two people.

Ask to see approximately 12 months of actual utility bills and, if available, solar production reports.

Remember, the seller’s electricity usage may be completely different from yours.

5. What About California’s Solar Billing Rules?

California has different billing arrangements for solar customers.

Older qualifying systems may operate under previous Net Energy Metering programs, commonly called NEM 1.0 or NEM 2.0.

Newer systems generally fall under the Net Billing Tariff, sometimes called the Solar Billing Plan.

These programs calculate electricity charges and credits differently.

The financial benefit of a particular solar system can depend on which program applies.

When purchasing a property, buyers should verify the existing billing arrangement and whether it can continue after ownership transfers.

For additional information, visit the California Public Utilities Commission at https://www.cpuc.ca.gov or PG&E at https://www.pge.com.

6. How Old Are the Solar Panels?

Solar panels are designed to operate for many years, but they aren’t maintenance-free or guaranteed to perform indefinitely.

Ask when the system was installed, who manufactured the equipment, and whether warranties remain in place.

Find out whether warranties are transferable.

If possible, review the system’s production history.

A solar system that isn’t operating properly may provide substantially less financial benefit than expected.

7. Does the System Include Battery Backup?

Some solar systems have battery storage. Others do not.

A battery may allow homeowners to store electricity for later use and potentially reduce dependence on electricity purchased during expensive periods.

Depending on the equipment and configuration, battery backup can also provide electricity to designated circuits during certain outages.

However, solar panels alone generally do not mean your home will have electricity during an outage.

Ask what equipment is backed up, how old the battery is, and what warranties apply.

8. What Happens When the Roof Needs Replacing?

Here’s one buyers don’t always consider.

Solar panels sit on the roof.

And roofs eventually need repairs or replacement.

If the roof needs replacing, the solar equipment may have to be removed and reinstalled.

That can create additional costs.

Some contracts also restrict who can perform that work.

Find out the roof’s age, whether it was replaced before the solar installation, and whether removal and reinstallation would affect warranties.

A newer solar system on an aging roof deserves particular attention.

The Bottom Line

I’m certainly not suggesting that solar panels are a bad thing.

Quite the opposite.

For many Bay Area homeowners, solar can be a valuable feature.

But just like any other major home improvement, solar needs to be evaluated as part of the overall property.

You wouldn’t purchase a home without asking questions about the roof, foundation or major systems.

Solar shouldn’t be any different.

Sometimes the most important part of a real estate transaction isn’t what you can see. It’s what you discover when you start asking questions.

And that’s one of the reasons having experienced professionals involved in your transaction is so important.

Selma Michael, REALTOR®
DRE #01339617
510-517-2346
selmamichael.com
Serving the Greater Bay Area