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Are Solar Panel Leases Hindering Arizona Real Estate?

by Dalton Herring on April 10, 2015

Are Solar Panel Leases Hindering Arizona Real Estate?

A rising issue of debate in The Valley of the Sun – and across the state for that matter – is the presence of solar panels on properties when they reach the market. It’s common knowledge that in Arizona, solar panels make sense. They offer a great way to subsidize power bills and “go green,” but Phoenix real estate transactions are being equally hindered by the their presence in the form of restrictive leases. Scott Drucker, of the Arizona Association of Realtors, breaks the conundrum down to 3 main issues:

1. Failure to Address the Lease in Contract
Buyers often assume solar panels are included in the price of purchase, just to discover after close of escrow they are actually leased. If this fact is not written into line 52 of the Purchase Contract, the seller is liable for future payments. To prevent this scenario, the Seller Property Disclosure Statement (SPDS) will be revised this June to include reference to alternative power leases. Solar-specific changes to the Purchase Contract are likely to soon follow.

2. Buyers Are Unable to Assume the Lease
This problem occurs when solar lease companies demand a higher credit score than is necessary to attain a mortgage. It has been somewhat addressed by Senate Bill 1465 (in effect January 2016), requiring the issue be disclosed before homeowners buy or lease panels in the first place. Timing can also be an issue when the property inspection period passes before the buyer hears back regarding approval. In this case, their agent should write into the contract that the sale is contingent on the lease being assumed nearer to the close of escrow.

3. Buyer’s Don’t Want to Assume the Lease
With solar leases lasting as long as 20 years, some buyers simply don’t want to pay the extra expense. This can leave otherwise appealing properties on the market for months, forcing desperate sellers to offer full payment of the remainder of the lease at the close of escrow.


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