Consumer’s Guide to Buying a Home with Solar Panels

Congratulations! You’ve found your dream home and you’re ready to make an offer. But the house has existing solar panels, which means you likely have questions about the system and what your obligations are as the new owner.

The good news is that solar will generally save you money on your electricity bill, and maintenance costs and requirements for the solar array are next to nothing in most areas. However, there are certain things you should consider before buying the home.

The most important question: who owns the equipment?

Before you do anything else, ask the seller or their agent who owns the equipment. There are two general types of solar ownership:

• One is where the homeowner owns the equipment either by purchasing it upfront or by having a loan against the equipment.
• The second is through a “third party ownership” model where the equipment is owned by someone else and the homeowner purchases the power generated either through a Power Purchase Agreement (PPA) or a lease obligation. In this model, the system owner, not you, as the homeowner, is responsible for the upkeep and maintenance of the system.

In an ownership situation, you’ll want the seller to pay off the loan (if applicable) using proceeds from the sale. If the homeowner is “underwater” and they can’t pay off the loan, you can look at an assumption. This can create deal friction and isn’t ideal.

For third-party-owned systems, it’s generally cost-prohibitive to have the seller buy out the remaining obligation of the lease or PPA, so these systems will convey to the new homeowner, pending approval by the system owner.

Given the stark differences between ownership types, the diligence required for each is a bit different. We’ll break down things you should ask and examine based on the ownership type.

Questions to Ask - Owning the System

Although inspection services exist for solar in some parts of the country, there’s a lot you can do with basic questions and a few minutes of research. First and foremost, you should assess whether the system is operational or not.

Ask the seller to show you their monitoring app and their production data. Some systems, which use microinverters or optimizers, will also show you solar panel level production (don’t be worried if one or two panels show underperformance - simply check to see if they’re shaded or obstructed in any way). Compare that with the homeowner’s utility bill and understand a little bit about their usage compared to how you might be using electricity (e.g. EVs, pool pumps, running HVAC, etc).

Next you’ll want to look at the main equipment used. It’s recommended that you focus on the inverters, solar panels, and batteries (if applicable) and the company that installed everything. While some homeowners might have warranty documents, it’s okay if they don’t, as you can easily find these on the original equipment manufacturer’s websites. From there you’ll want to check if the equipment is still under warranty and if anything is required to transfer the warranty to you (note: most manufacturers don’t require any additional steps here, as long as the equipment remains on the original roof where it was first installed).

You’ll also want to check if the equipment manufacturer is still in business and operating in the US. Given the recent ‘FEOC’ restrictions that make it increasingly difficult for Chinese-affiliated companies to operate in the US, they might not be able to honor warranty claims.

And finally, find out who the original installer is and determine if the system is still covered by a workmanship warranty or if there are any third-party service providers.

Once you’ve checked out the system performance and equipment, you’ll want to see if you’re eligible to stay on the rate plan the current owner is on. Some utilities allow “grandfathering” of rate plans after they phase them out, but switching service over to a new user may make that old rate plan ineligible. This is particularly important in CA where old rate plans allowed for net metering and may not have batteries installed. Again, this isn’t a deal breaker, but to get the most value out of the system you might want to consider adding a battery in the future.

Finally, ask your home inspector to check for signs of water ingress under where the array was installed. This is a rare event, but can certainly cause headaches if not addressed. You can also have them check conduit runs and other solar-specific construction considerations to ensure everything is done to code.

Questions to ask - Third Party Ownership

With third-party-owned (TPO) systems, it’s less important to focus on the equipment manufacturers because someone else owns the equipment and is responsible for the upkeep and maintenance.

The big difference is that you’ll want to carefully review the lease or PPA contract to understand what the performance guarantees are and how much the rate you’re obligated to pay the owner will increase every year (the “escalation rate.”).

Given the churn the solar industry has experienced over the years, you’ll want to see if the original TPO is still in business or if a successor company has taken over the obligations of the system. While not necessarily a big deal (it’s kind of like when your mortgage gets sold and reassigned), some servicers are better than others.

Next, compare the estimated system production against the actual to make sure you’re saving money and the system conforms to the contract. Again, you can do this by looking at the monitoring app and comparing it against the TPO billing statements.

Finally, you’ll want to ask yourself if the remaining term of the agreement is something you’re comfortable with in terms of obligations and expenses.

Final Thoughts

Purchasing a home with solar already installed can be a great way to save money on electricity costs. Solar is very low maintenance, and even if you’re not the first owner, it can still provide tremendous benefits. So much so that you may want to consider upgrading your solar array or adding a battery.

In California, new homes are required to have solar installed under “Title 24” but with small systems. Upgrading these is recommended and easy. While solar.com is happy to help you with this, you should also look at the original installer and try to match equipment, especially inverters whenever possible (but it’s okay if you can’t match them).

If you’re considering buying a home with solar you can also consider buying a third-party service contract to have someone available to perform maintenance. Companies like Otovo and Ominidian are ones to look at. But ultimately your need for maintenance is likely low, and if the system has a good track record of performance, you’ll likely be fine.

Want to read more: the Department of Energy offers a Consumer’s Guide to Buying a House with Solar.