Buying or Selling a Home With Solar Panels in California
What You Need to Know About Solar Panels Before Buying or Selling a Home in California
By Michelle Saporito | Your Central Valley Realtor
Updated October 26, 2026
Quick Answer: Before buying or selling a home with solar panels, find out whether the solar system is owned outright, financed, leased, or part of a power purchase agreement (PPA). The arrangement can affect your monthly housing expenses, mortgage financing, property sale, and future responsibilities. A home with solar isn't automatically a better or worse deal. What matters is understanding the actual costs and contract terms.
If you're looking at homes in Manteca, Ripon, Lathrop, River Islands, Tracy, or surrounding Central Valley communities, you've probably noticed that solar panels are becoming a familiar feature.
But here's something I want buyers and sellers to understand.
Having solar panels on a home doesn't necessarily mean the homeowner owns them.
And solar doesn't automatically mean you won't have an electricity bill.
Whether you're preparing to purchase your first home or sell your current one, it's important to ask the right questions before making a financial commitment.
Let's break it down.
1. Are the Solar Panels Owned, Financed, or Leased?
This is one of the first questions I encourage buyers to ask.
There are several common ways a solar system can be purchased or financed.
Owned Solar Panels
If the seller owns the solar panels outright and has paid off any related financing, the equipment may transfer with the home, depending on the purchase agreement and title documentation.
You generally wouldn't be taking over a separate solar lease payment.
However, you should still verify the system's ownership, age, condition, warranties, maintenance responsibilities, and any outstanding liens.
A fully paid-off system doesn't mean there will never be maintenance or replacement costs.
Financed Solar Panels
Sometimes a homeowner purchases solar panels through a separate loan.
The homeowner may own the equipment but still owe money to the lender.
When the property is sold, the loan and any associated security interest need to be addressed.
Depending on the financing agreement and mortgage lender's requirements, the seller may need to pay off the loan, or another permitted arrangement may be available.
Don't assume the solar loan automatically transfers to the new homeowner.
Ask for the loan agreement, current balance, payoff requirements, and any lien information.
Leased Solar Panels
With a solar lease, the solar provider generally owns the equipment.
The homeowner pays to use the system according to the lease agreement.
The contract may include:
Monthly payments
Annual payment increases
Maintenance responsibilities
Contract duration
Transfer or buyout provisions
When the home sells, the lease must be addressed according to its terms. The new buyer may need to apply to assume the agreement, or the seller may need to arrange a buyout or another approved solution.
Power Purchase Agreements (PPAs)
A PPA is different from a traditional solar lease.
With a PPA, the solar provider generally owns the equipment, and the homeowner agrees to purchase the electricity the system generates.
The contract usually establishes the price per kilowatt-hour and may include annual price increases.
If you're buying a home with a PPA, ask how much the seller has been paying, how payments are calculated, and whether the contract can be transferred.
PACE Financing
Some solar installations are financed through Property Assessed Clean Energy, or PACE, arrangements.
PACE financing is generally repaid through a property tax assessment rather than an ordinary monthly solar loan.
Because this financing can create a property lien, it may affect your mortgage eligibility and closing requirements.
My advice: Before discussing whether solar is a benefit, first determine exactly how the system is owned and paid for.
2. Will Solar Panels Eliminate Your Electric Bill?
Not necessarily.
California's Public Utilities Commission warns consumers against assuming solar will eliminate their electricity bills.
Your actual electricity expenses depend on several factors, including:
How much electricity your household uses
How much energy the solar system produces
Whether the home has battery storage
When electricity is used
Your utility provider's billing plan
Charges for electricity purchased from the grid
Any separate solar loan, lease, or PPA payment
For example, a household that charges electric vehicles or runs air conditioning frequently may use more electricity than another household living in the same home.
That's why I encourage buyers to ask for recent utility bills and solar production information when available.
Look at the complete picture.
A home might have a lower electricity bill but also carry a separate solar payment.
You want to understand the combined costs rather than focusing on only one bill.
The seller's past bills can provide useful context, but they cannot guarantee what your future bills will be.
3. What Are NEM 2.0 and California's Solar Billing Plan?
You may hear homeowners or solar companies mention NEM 2.0 or NEM 3.0.
These terms relate to how eligible solar customers are billed and credited for electricity sent back to the utility grid.
California's newer Solar Billing Plan, also called the Net Billing Tariff or NBT, generally applies to eligible new solar interconnection applications under the applicable investor-owned utility rules.
Under this plan, compensation for exported electricity differs from the earlier NEM 2.0 structure.
The value of those credits can vary depending on when electricity is exported.
Certain existing systems may remain under older net metering arrangements, subject to utility rules and applicable eligibility periods.
What Should You Ask When Buying a Home With Existing Solar?
Ask the utility company to verify:
Which solar billing program applies to the property.
Whether that program will continue after the home changes ownership.
Whether changes to the equipment could affect the billing arrangement.
Whether the home has battery storage.
How annual billing adjustments or true-up charges work.
Don't assume every solar-equipped home in the Central Valley has the same electricity rates or billing arrangement.
Confirm the property-specific information directly with the utility.
4. Can Solar Affect Your Mortgage Approval?
Yes, depending on the solar arrangement.
Lenders may need additional documentation when a property has leased, separately financed, or third-party-owned solar panels.
Fannie Mae, for example, has specific property eligibility rules for homes with solar systems.
Your lender may need to review:
Who owns the solar equipment
Whether there's a solar loan or lease payment
Whether the system is collateral for separate debt
Any recorded liens or security interests
The terms of a lease or PPA
Whether the arrangement satisfies the loan program's requirements
An unresolved solar financing obligation can create complications during a home purchase.
For buyers, the best time to ask your lender about solar is before you're close to completing the transaction.
For sellers, having the documents available early can make the process easier to navigate.
5. What Happens to Solar Panels When You Sell Your Home?
The answer depends on the ownership structure and contract.
If You Own the Solar Panels Outright
Gather documentation showing the system is paid off, along with installation records, warranties, and available maintenance information.
Confirm how the equipment will be addressed in the purchase agreement.
If You Have a Solar Loan
Contact the lender and request a payoff statement.
Ask how the financing and any related lien or security interest must be handled when the property sells.
If You Have a Solar Lease or PPA
Contact the solar company before listing.
Find out whether the buyer can assume the contract, what approval is required, and whether any transfer or buyout fees apply.
Don't promise a buyer that the contract can be transferred until the provider confirms the requirements.
If You Have PACE Financing
Request the assessment details and payoff information.
Your escrow or title professional and the buyer's lender should review how the obligation affects closing.
Some mortgage programs require outstanding PACE financing to be paid off before or at closing.
For sellers, preparing the solar paperwork early is one of the simplest ways to avoid unnecessary confusion later.
6. Do Solar Panels Increase a Home's Value?
They may, but there's no guaranteed amount.
The contribution of a solar system to a home's value can depend on its condition, age, ownership structure, equipment, energy costs, local market evidence, and appraisal requirements.
An owned solar system can be evaluated differently from leased or third-party-owned equipment.
I wouldn't want a homeowner to assume that spending a certain amount on solar automatically increases the home's resale value by the same amount.
If you're planning to sell, it's important to evaluate the system along with the rest of the property and relevant comparable sales.
The goal is to price your home based on market evidence, not an assumption about the value of solar.
7. What Should Buyers Know About Solar on New-Construction Homes?
This is especially important if you're considering new construction in Lathrop, River Islands, Manteca, Tracy, or surrounding communities.
California's 2025 Building Energy Efficiency Standards took effect January 1, 2026, for applicable new building permit applications.
The standards generally require solar photovoltaic systems for qualifying newly constructed single-family homes, with specified exceptions.
But that requirement doesn't tell you whether a particular builder includes solar in the advertised home price or how the installation is financed.
Before signing a purchase agreement, ask:
Is solar included in the advertised price?
Will I own the system?
Is there an additional cost for the equipment?
Is the system financed separately?
Is a lease or PPA involved?
Is battery storage included or optional?
What warranties apply?
Which utility billing plan will apply?
If the builder offers solar-related incentives, review the actual contract terms and compare the total costs.
What About Solar Tax Credits in 2026?
The federal Residential Clean Energy Credit under Section 25D was terminated for new qualifying expenditures after December 31, 2025.
That means buyers should not assume the previously available 30% federal residential solar credit applies to a new installation in 2026.
Other incentive programs may have different eligibility requirements or availability.
Before relying on any advertised tax benefit or rebate, verify it with the appropriate agency and a qualified tax professional.
8. What About the Roof, Equipment, and Warranties?
Solar is more than the panels you see on the roof.
You also need to consider the system's equipment and condition.
For example:
Roof condition: How old is the roof? Has it been inspected? Would the panels need to be removed if repairs are required?
Inverter: What type of inverter does the system use, and is it functioning properly?
Battery storage: Is a battery included, and what warranties and maintenance requirements apply?
System performance: Is the system producing electricity as expected?
Warranty transfer: Will the equipment and installation warranties transfer to the new homeowner?
Depending on the property's condition and available documents, you may want a qualified solar professional to evaluate the system.
A general home inspection may not provide a comprehensive solar performance evaluation.
9. Ten Questions I Would Ask Before Buying a Home With Solar
If you're considering a home with solar panels, here's a checklist worth keeping.
Are the panels fully owned, financed, leased, or under a PPA?
Is there an outstanding loan balance or recorded lien?
Are there monthly solar payments?
Can those payments increase over time?
How many years remain on the agreement?
What happens to the agreement when the home sells?
Who handles repairs and maintenance?
Are the warranties transferable?
What do the recent utility bills and production reports show?
Has my mortgage lender reviewed the solar documentation?
These questions can help you understand what you're agreeing to before making a decision.
You don't have to become a solar expert.
But you should understand the obligations that come with the home.
10. What Should Sellers Do Before Listing a Home With Solar?
If you're thinking about selling, gather the paperwork before your home goes on the market.
Documents that may be helpful include:
Original installation agreement
Solar financing agreement, if applicable
Current loan balance or payoff statement
Lease or PPA contract
Transfer or buyout requirements
Available proof of ownership
Equipment and installation warranties
Maintenance or repair records
Recent electricity bills
Solar production reports
Any applicable PACE financing documents
Having this information organized can make it easier to answer buyers' questions and address lender requirements.
It also helps you avoid advertising the solar system as owned when it is actually leased or financed.
Clear, accurate information matters.
Frequently Asked Questions
Is it better to buy a home with owned or leased solar?
It depends on the terms. Owned solar generally avoids a separate lease obligation, but maintenance and equipment condition still matter. A lease requires reviewing its payments, duration, transfer requirements, and potential increases.
Can a seller pay off solar at closing?
Depending on the financing and contract, a seller may be able to pay off a solar loan or arrange a lease or PPA buyout. The specific payoff and closing requirements must be confirmed.
Will I have an electric bill if the house has solar?
Usually, yes. Solar may reduce electricity costs but doesn't automatically eliminate utility charges. A separate solar payment may also apply.
Can a solar lease prevent a home sale?
It can complicate a transaction if transfer approval, financing requirements, or buyout terms cannot be resolved. Whether the transaction can proceed depends on the agreement and the circumstances.
Can I negotiate solar terms when buying a home?
You can ask the seller to address an outstanding solar obligation as part of the negotiations. Whether the requested terms are possible depends on the seller, contract, solar provider, and lender.
Do solar panels automatically transfer to the buyer?
No. Ownership and transfer requirements must be verified. A fully owned system and a third-party lease can have very different requirements.
Does a new home have to come with solar in California?
Many qualifying newly constructed single-family homes are subject to California's solar requirements, but there are exceptions. Confirm which building standards apply to the property's permits and how the builder handles the solar installation.
Is the 30% federal solar tax credit still available in 2026?
The federal Residential Clean Energy Credit ended for new qualifying expenditures after December 31, 2025. Ask a qualified tax professional about your specific circumstances and check whether any other current incentives apply.
The Bottom Line
Solar panels can be an important feature of a home.
But before buying or selling, I want you to understand what the system actually means financially.
Who owns it?
What does it cost?
What happens when the property changes hands?
And will the arrangement fit your goals?
These are questions worth answering before you commit.
When I'm helping someone explore a home, I want to understand how they plan to live, what's important to them, and what expenses they need to consider.
My approach is to share information, ask questions, and help you make an informed decision.
If you're buying or selling a home with solar in Manteca, Ripon, Lathrop, River Islands, Tracy, or the surrounding Central Valley, I'm here to help you understand the process.
How can I be of service?
Reach out and let's talk about your real estate goals.
Michelle Saporito
Your Central Valley Realtor
eXp Realty of Northern California, Inc.
DRE #02239654
209-328-3417
https://buycentralvalley.com
Helping families put down roots in the communities they love, one home, one story, one community at a time.
Sources and Further Reading
California Public Utilities Commission: California Solar Consumer Protection Guide — Solar financing, leases, PPAs, consumer rights, savings claims, and questions to ask.
California Public Utilities Commission: Net Energy Metering and Net Billing — Solar billing programs and electricity export credits.
Fannie Mae Selling Guide: Special Property Eligibility Considerations — Mortgage requirements for properties with solar panels and PACE financing.
California Energy Commission: 2025 Single-Family Solar PV — Solar requirements and exceptions under the 2025 Energy Code.
California Energy Commission: 2025 Building Energy Efficiency Standards — Effective dates and building code requirements.
Internal Revenue Service: Residential Clean Energy Credit — Federal tax credit eligibility and termination information.
This article provides general educational information. Solar agreements, financing requirements, utility billing rules, incentives, and property conditions vary. Verify all property-specific details with the solar provider, utility company, mortgage lender, escrow or title professional, and other qualified advisers before making a decision.
