With California’s push toward clean energy, it’s no surprise that more homes are being sold with solar panels. But here’s the twist most sellers (and some agents) don’t see coming:
Solar panels can complicate escrow — unless you’re prepared.
Selling a solar-powered home isn’t just about curb appeal or energy efficiency. From leases and liens to disclosures and payoffs, solar panels come with real paperwork and real potential for delays.
Here’s what every California agent needs to know to keep their solar transactions smooth, compliant, and on schedule.
First, Is the Solar System Owned or Leased?
Before you open escrow, the first and most important question is:
Who owns the solar system?
There are three common scenarios in California:
1. Owned Outright
If the seller purchased the system in full (no loan, no lease), the process is relatively easy.
-The system conveys with the home
-Disclosures are still required
-Warranty documents and manuals should be provided to the buyer
Escrow action: Confirm ownership and request documentation.
2. Leased (or Power Purchase Agreement – PPA)
If the seller doesn’t own the panels, they’ve likely entered into a lease or PPA with a third-party solar provider.
This means:
-The seller is under contract to pay monthly fees
-The buyer must agree to assume the lease (with lender approval)
-The solar company must provide assignment paperwork and payoff info
Escrow cannot close until the lease is transferred or resolved.
3. Financed (Loan Not Paid Off)
Some systems are purchased with financing. If there’s an outstanding loan, it might be:
-Secured (recorded as a UCC-1 lien)
-Unsecured (no lien, just a personal loan)
Either way, escrow needs to verify:
-Current loan status
-Whether the buyer is assuming the loan or the seller is paying it off
-Whether a UCC lien needs to be released
What Escrow Needs to Process a Home Sale with Solar
Here’s the checklist agents should provide (or help their sellers gather) as early as possible:
-Solar purchase agreement or lease contract
-Loan or financing documents (if applicable)
-Contact information for the solar provider
-Final payoff or assumption instructions
-Copy of UCC-1 filing (if recorded)
-Service and warranty documentation
-Utility bills or solar production history (often requested by buyers)
At New Venture Escrow, we review these items up front not at the 11th hour to keep closings clean.
Buyer’s Lender Must Approve the Solar Terms
This part often gets missed: If the buyer is assuming a solar lease or PPA, their lender must approve it before the loan can fund.
Lenders want to confirm that:
The added monthly cost won’t affect debt-to-income ratio
There’s no lien on the title that interferes with the mortgage
Translation: If the solar provider is slow to release paperwork, it can delay funding and potentially blow your COE date.
Pro tip: In your purchase contract, add language that allows for a short extension if lender approval on solar lease delays closing.
Solar Disclosures Are Required by Law
In California, solar ownership and lease details must be fully disclosed.
Under the California Solar Consumer Protection Guide and Civil Code 2079.10.5, sellers must:
-Disclose whether the system is leased, owned, or financed
-Provide copies of agreements and transfer requirements
-Notify buyers of any transfer or termination fees
-Failure to disclose could lead to:
-Legal liability
-Contract cancellation
-Delays in escrow (or worse)
Reminder to agents: Review the Transfer Disclosure Statement (TDS) and make sure solar is addressed clearly and accurately.
Why Solar Transactions Get Delayed and How to Prevent It
Most solar-related delays come from incomplete paperwork or slow third-party providers.
Common roadblocks include:
-Seller doesn’t know who to contact about the lease
-Solar company takes weeks to issue payoff or transfer forms
-Buyer’s lender needs additional time to review the solar agreement
-No one knew there was a UCC lien until the title report came back
To avoid this:
-Identify solar status during the listing appointment
-Contact the solar provider before opening escrow
-Involve your escrow officer early
-Include realistic timelines in the contract
Final Thoughts: Be Proactive, Not Reactive
Solar panels are a selling point, but only if the deal doesn’t fall apart during escrow.
As an agent, your role is to:
-Ask the right questions early
-Collect the right documents before delays happen
-Work with an escrow partner who knows how to navigate solar deals in California
At New Venture Escrow, we know the ins and outs of solar-related sales and we communicate clearly with all parties so the closing doesn’t get stuck in a holding pattern.
