Question: In a recent column about an Arcadia home you said that after the close of escrow a solar panel company had no claim against the buyer of the home for the future lease payments owed to the solar company, even though this buyer has the benefit of the use of the solar panels on his roof. Why didn’t the solar panel leasing company record a lien for their future lease payments like a mortgage?
Answer: At the time that solar panel companies lease or finance solar panels they generally do record a UCC-1 financing statement or similar security document to protect their ownership of the solar panels until all of the payments are made. Problems can occur when the owner of the home later wants to sell the home. The buyer’s mortgage lender will demand to be in first position ahead of all other liens, including any solar panel company lien. Therefore, the solar panel company will record a document releasing their lien, and the buyer’s mortgage lender will then be in first position and the sale of the home closes to the buyer. The buyer usually will have already agreed to sign a new lien after close of escrow so that the solar panel company can record a lien again on the home. If the buyer did not agree to sign a new lien with the solar panel company after close of escrow, however, the buyer should have no liability for the solar panels.
Note: The Arizona Association of Realtors has a Solar Loan Assumption Addendum which should be used by the seller and buyer if there are solar panels installed at the home that are subject either to a lease or financing.
Here is the link to the related column mentioned above.