Buying or Selling a Home With Solar Panels in California
What to Know About Solar Panels Before Buying or Selling a Home in California
By Michelle Saporito | Your Central Valley Realtor
Quick Answer: If you're buying or selling a home with solar panels in California, the first thing you need to know is whether the panels are owned outright, financed, leased, or part of a power purchase agreement (PPA). These arrangements can affect your monthly expenses, mortgage approval, and the process of transferring the property to a new owner.
Solar panels can be a valuable feature, but they also come with questions you should answer before making an offer or listing your home.
If you're considering a home in Manteca, Ripon, Lathrop, River Islands, Tracy, or the surrounding Central Valley, I want you to understand what the solar system means for your finances.
A home might have everything you're looking for. A spacious kitchen, a backyard, room to grow, or a neighborhood that fits your lifestyle.
But before you make a decision, you need to understand what you're paying for.
Let's talk about solar.
1. Are the Solar Panels Owned, Financed, or Leased?
This is one of the first questions I encourage buyers to ask.
Just because a home has solar panels on the roof doesn't mean the homeowner owns them outright.
There are several common arrangements.
Owned Solar Panels
When solar panels are fully paid for and owned by the homeowner, they can generally be included in the home sale, subject to the contract and title details.
There may not be a separate solar loan or lease payment for the buyer to assume.
However, you'll still want to ask about the system's age, condition, warranties, equipment, and energy production.
You should also confirm there are no outstanding liens or other obligations.
Financed Solar Panels
Some homeowners purchase their solar panels using a separate loan.
They own the equipment, but they may still owe money on the financing.
Before the home is sold, everyone needs to understand how that loan will be handled.
Questions to ask include:
How much is still owed?
Does the financing create a lien or security interest?
Will the seller pay off the balance at closing?
Can the financing be assumed, if allowed?
Does the mortgage lender have requirements concerning the loan?
Don't assume the solar loan automatically transfers with the house.
These details should be addressed before closing.
Leased Solar Panels
With a solar lease, the solar company generally owns the equipment.
The homeowner pays to use the system under the lease agreement.
That payment may be fixed or may increase according to the contract.
If the property is sold, the buyer may need to qualify to assume the lease, or the seller may need to arrange another solution under the agreement.
A solar lease doesn't automatically end when the house changes hands.
Power Purchase Agreements (PPAs)
A PPA is similar to a lease in that a third-party company generally owns the solar equipment.
The difference is how you pay.
With a PPA, you typically purchase the electricity the system produces at a contractually established rate.
The agreement may include annual rate increases.
If you're purchasing a home with a PPA, you need to review the contract carefully.
Understand the electricity rate, how payments are calculated, how long the agreement lasts, and what happens when the property sells.
PACE Financing
Another arrangement is Property Assessed Clean Energy financing, commonly called PACE.
With PACE financing, the cost of eligible improvements can be repaid through a property tax assessment.
A PACE obligation can create complications during a sale or refinance.
If a home has a PACE assessment, ask the lender and escrow or title professionals to verify what must happen before closing.
The bottom line: Don't rely on the phrase "home has solar." Find out exactly what kind of solar arrangement applies.
2. Does Having Solar Mean You Won't Have an Electricity Bill?
Not necessarily.
This is something I want buyers to understand before assuming that a home with solar will automatically have lower monthly expenses.
A solar system may reduce how much electricity you purchase from the utility.
But that doesn't mean your utility bill will disappear.
Your actual charges can depend on:
How much electricity the home uses
How much electricity the system produces
Whether the home has battery storage
When electricity is used
The utility's applicable rate plan
How excess solar generation is credited
Utility charges that may still apply
A home with a pool, electric vehicle charging, or higher electricity use may have very different energy expenses from another home with a similar solar system.
That's why I encourage buyers to review actual utility information whenever available.
If the seller has solar, ask for recent electric bills and information about solar payments.
That can help you understand the seller's experience, although your own electricity usage and future bills may be different.
3. What Are NEM 2.0 and California's Solar Billing Plan?
You may hear the terms NEM 2.0, NEM 3.0, or Net Billing Tariff when researching solar in California.
These terms relate to how participating electric utilities credit eligible customers for excess electricity sent back to the grid.
California's Solar Billing Plan, also known as the Net Billing Tariff, generally applies to eligible new interconnection applications with the state's major investor-owned utilities submitted beginning April 15, 2023.
Under the newer plan, electricity exported to the grid is generally credited differently than under the earlier NEM 2.0 program.
The value of those credits can vary by time.
Some existing solar customers may remain on earlier net energy metering arrangements, subject to program rules.
What Does That Mean if You're Buying a Home With Existing Solar?
Don't assume a home's current solar billing arrangement will automatically apply to you after purchasing.
Ask the utility provider to confirm:
Which solar billing plan applies to the property
Whether the existing arrangement can continue after the ownership change
Whether any changes to the system could affect its eligibility
How billing and solar credits will work under your new account
The goal is to understand the actual program associated with that property.
It is also important to confirm which electric utility serves the home because rates and programs can vary.
4. Can Solar Panels Affect Your Mortgage Approval?
Yes, depending on how the system is owned and financed.
Mortgage lenders may need to review solar agreements and related obligations before approving a loan.
For example, a lender may evaluate whether:
The panels are owned outright
A separate solar loan remains
A lease or PPA must be assumed
A lien or security interest affects the property
The agreement creates a recurring payment obligation
The applicable financing program permits the arrangement
Fannie Mae has specific underwriting requirements for properties with solar panels.
These rules distinguish between systems owned by the borrower and systems that are leased, financed separately, or subject to a PPA.
For a first-time buyer, this is a good reason to involve your lender early.
You don't want to discover near closing that an unresolved solar agreement is delaying the transaction.
5. What Happens to Solar Panels When You Sell Your Home?
If you're selling a home with solar, the process depends on the ownership arrangement.
If You Own the Solar Panels Outright
You'll want to gather documentation showing ownership, warranties, installation details, and any available system performance records.
You should also determine whether the system will be included in the sale and disclose the relevant information accurately.
If You Have a Solar Loan
You'll want to obtain the current loan balance and payoff information.
Ask your lender, escrow professional, or title company whether the loan or related security interest must be resolved during closing.
If You Have a Solar Lease or PPA
Contact the solar provider early.
Ask what is required to transfer the agreement to a buyer and whether the buyer must satisfy credit or other approval requirements.
Also ask about any early termination fees, buyout options, or transfer charges.
The sooner these details are understood, the easier it is to plan around them.
If You Have a PACE Assessment
Ask about the outstanding obligation and any payoff requirements.
Some mortgage programs may not permit an outstanding PACE assessment to remain in place at closing.
It's important to address that before the transaction reaches its final stages.
My advice for sellers: Gather your solar documents before listing the home so potential buyers have accurate information to evaluate.
6. Does Solar Increase Your Home's Value?
It may, but there isn't one guaranteed amount.
The potential contribution of solar to a home's market value can depend on the system's ownership, condition, age, local buyer preferences, energy economics, and comparable sales.
A fully owned system may be viewed differently from one subject to a lease or PPA.
An appraiser must evaluate the property under applicable appraisal and lending requirements.
That's why I wouldn't recommend assuming that a particular solar installation automatically adds a specific dollar amount to your home's value.
If you're preparing to sell, it's worth reviewing the property's solar arrangement alongside comparable local sales and other relevant information.
7. What Should You Ask When Buying a Home With Solar?
If you're purchasing a home with solar panels, here are ten questions I'd want you to consider.
1. Are the panels owned, financed, leased, or part of a PPA?
Start with the ownership structure.
2. Is there an outstanding balance?
Request the applicable payoff statement or agreement.
3. What is the monthly solar payment, if any?
Make sure this amount is included in your housing budget.
4. Can the payment increase?
Check for escalation clauses and other scheduled adjustments.
5. How much time remains on the agreement?
A long-term lease or PPA could affect your expenses for years.
6. Who maintains and repairs the system?
Responsibility can differ depending on the agreement.
7. Are warranties transferable?
Find out which warranties apply and whether they continue for a new owner.
8. What condition is the roof in?
Ask about the roof's age and whether solar panel removal would be necessary for future repairs.
9. Which utility billing plan applies?
Verify the applicable plan and transfer rules directly with the utility.
10. Has the lender reviewed the solar paperwork?
The financing details should be understood before moving too far into the transaction.
These questions are about understanding your investment.
You don't need to be a solar expert.
You just need reliable information before making a decision.
8. What Should Sellers Prepare Before Listing a Home With Solar?
If you're thinking about selling your home in the Central Valley, I recommend organizing your solar information early.
Try to have the following available:
Solar installation agreement
Proof of ownership, if fully paid off
Current loan or lease documents, if applicable
Solar provider's contact information
Transfer or buyout requirements
Available warranties
Available maintenance records
Recent utility bills
Solar production information, if available
Information about roof repairs or changes affecting the system
Accurate documentation can help buyers and their lenders evaluate the arrangement.
It can also reduce the likelihood of unexpected questions later in the transaction.
If you aren't sure what kind of agreement you have, contact your solar provider and request the original documents.
9. Should You Avoid Buying a Home With Leased Solar?
Not automatically.
A leased system isn't necessarily a reason to walk away from an otherwise suitable home.
But you do need to evaluate the agreement.
Consider how the solar payment compares with the electricity value you expect to receive.
Review any annual increases.
Find out whether you're responsible for payments even when your electricity usage is lower.
Understand what happens if the system needs maintenance or if you decide to sell the home later.
A solar lease may work for one household and not for another.
The right decision depends on the actual contract and your goals.
10. Solar and New-Construction Homes in the Central Valley
If you're considering a new-construction home in Lathrop, Manteca, Tracy, or another Central Valley community, be sure to ask about solar before signing your purchase agreement.
California's building energy standards generally require solar photovoltaic systems for many newly constructed low-rise residential buildings, subject to exceptions and applicable rules.
But a solar requirement doesn't tell you how the builder structures the cost.
Depending on the property and builder, the system might be included in the purchase price or offered under another arrangement.
Ask:
Is the solar system included in the advertised price?
Will I own the system?
Is there a separate solar purchase or financing agreement?
Is a lease or PPA involved?
What equipment and warranties are included?
Is battery storage included or optional?
What utility billing plan will apply?
I also encourage buyers to compare the full price and monthly ownership costs rather than focusing on one advertised feature.
A new home may have several appealing amenities, but you should understand every financial obligation.
Frequently Asked Questions
Is it better to buy a home with owned or leased solar panels?
There isn't one answer for every buyer. Owned systems generally avoid an ongoing lease obligation, but you should still evaluate system condition, warranties, and maintenance. Leased systems require careful review of payment and transfer terms.
Can a seller pay off solar panels at closing?
Depending on the financing arrangement and agreement, the seller may be able to pay off an outstanding solar loan or arrange a lease or PPA buyout. Confirm the requirements with the provider and closing professionals.
Do solar panels eliminate my electric bill?
Not necessarily. Solar may offset some energy purchases, but utility charges and electricity purchases can remain. Results depend on your usage, production, and applicable rate plan.
Can I negotiate solar terms when buying a home?
You can ask the seller to address an existing solar obligation as part of the purchase negotiations. Whether that can be accomplished depends on the seller, solar agreement, lender, and transaction.
Does solar automatically transfer to the new homeowner?
No. The transfer process depends on ownership, financing, utility rules, and the solar contract. Verify each applicable requirement.
Do I need to inspect solar panels before buying?
It's worth considering a qualified solar system evaluation, particularly when the equipment is older, has reported performance problems, or the documentation is incomplete. Also consider the condition of the roof and related electrical equipment.
Can solar panels cause problems when selling a house?
They can create additional steps when there's an outstanding loan, lease, PPA, or PACE assessment. Understanding the agreement early can help you plan for the transaction.
The Bottom Line
Solar panels aren't automatically a benefit or a problem.
They're something you need to understand.
Whether you're purchasing your first home or getting ready to sell, you should know who owns the system, what it costs, how it affects your utility bills, and what happens when the property changes hands.
I believe buying or selling a home should begin with understanding your goals and asking the right questions.
For some people, that means looking at the monthly expenses.
For others, it means thinking about how long they plan to stay in the home or whether the property fits their next chapter.
My goal is to help you understand the options, not pressure you into a decision.
If you're considering 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 and know which questions to ask.
How can I be of service?
Reach out and let's talk about your goals.
Michelle Saporito
Your Central Valley Realtor
eXp Realty of Northern California, Inc.
DRE #02239654
Phone: 209-328-3417
Website: 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. Explains solar ownership, financing, leases, PPAs, PACE, and buyer considerations.
California Contractors State License Board: Solar Smart. Consumer guidance on solar agreements, liens, leases, and selling a home with solar.
California Public Utilities Commission: Net Energy Metering and Net Billing. Explains California's solar billing arrangements and the newer Net Billing Tariff.
Federal Trade Commission: Solar Power for Your Home. Guidance on solar costs, contracts, electricity savings, and financial terms.
Fannie Mae: Selling Guide. Mortgage underwriting requirements for properties with solar systems.
California Energy Commission: 2022 Energy Code. California's solar-related building energy requirements for applicable new construction.
This article is for general educational purposes. Solar contracts, utility tariffs, financing rules, building requirements, and program eligibility vary. Confirm property-specific details with the solar provider, utility, mortgage lender, title or escrow professional, and other appropriate experts.
