Foote Title Group – Solar Panels
A lot of people are having solar panels installed in their home which is fabulous. It helps the environment you’re saving money and the great thing about it is the companies that are installing them aren’t charging you a dime. You can get solar panels installed, save money on your electric bill and don’t have to spend any money to do it!
There are a couple things you must be aware of though. You need to understand how the “free” panels affect your home ownership. When you’re ready sell or refinance your property there will now be an additional step you need to take care of before you can complete that closing.
Let me explain a little bit about the title side of it of the panels being free and what that means to you because so many are agreeing to get these added to their home. So when we talk about solar panels, of course we all know it’s a super expensive task and for them to do it for free obviously there’s got to be a way for the soar company to ensure they are able to recuperate their cost. So the way they are able to install them for free is they charge you a monthly amount to “lease” those panels and the lease payment and the costs of your now much lower electric cost is still a lot cheaper than your electric bill before the solar panels. Also to secure the expense of their panels they have you sign a lease agreement and record it in the land records secured against your property. This lease agreement is called a “UCC Financing Statement”. This UCC Financing Statement just like Mortgage, ensures that the company loaning or leasing you your panels is reimbursed for their loan and if you don’t make the lease payments it allows the solar company the right to come take the panels off of your home.
When you decide to sell that property the new buyer will either be required to take over that lease agreement by transfer or the panels will be removed. So if you’re selling the property the buyer needs to be made aware in advance that this will be a requirement and that they will have to agree and sign the transfer agreement before closing. This is because in order for a closing company to agree to insure the title for the new buyer and their mortgage company they will require this secured document that protects the solar company to be released and refiled after the new owner takes ownership to the property.
So when that property sold, the new buyer’s lender, who’s loaning the money is not going to want to loan that money unless they get to be secured first against that property. With this UCC Financing Statement for the solar company already recorded against the property the new lender for the buyer can’t be first. This is where the solar company must agree to release and refile their UCC Financing Statement or to sign an agreement agree to go into second position. That way the new lender would be in first position and the financing statement would be in second and all would be well in the world.
This is all not a difficult process just an additional step that needs to take place and you as the buyer and or seller of a home with solar panels must be aware of. Most homeowners that agree to have the solar panels installed don’t realize that the documents they sigh are secured by the home and what the steps are if they’d like to transfer the home. It is in fact a lien against the property and must be addressed before an ownership transfer can happen or before any additional documents or mortgages are recorded against that property. You have to remember a lender loaning money to you wants to make sure that they are in first place because they’re loaning an awful lot of money and they want to make sure that they have the ability to recuperate that money if anything changes in your circumstances or the home. So with that in mind the lender wants to make sure that if they ever have to foreclose because you’re not making the payments or you have some a situation that causes you to be in default on your loan they want to make sure that their first they don’t have to fight with anyone else to get as much money as they can out of that sale to try to repay that loan.