Buying New Orleans Homes with Solar Panels
Recently, the state of California passed legislation that will require solar panels on all newly built homes by 2020. It’s interesting news, since we just had a discussion with one of our local real estate attorneys about problems that are cropping up when buying New Orleans homes with solar panels.
Some background
Prior to 2005, very few New Orleans homes had solar panels installed. Post Katrina, however, there were tax incentives for adding them and plenty of owners took advantage of the program.
The installation came with a lease of the equipment and a maintenance agreement. Generally, the lease payments are for a period of 5-10 years, with a balloon payment due at the end of the lease – which could be up to 20 years after the initial installation.
There are a few owners who bought their panels outright, but they are the exception, not the norm.
Potential issues
When it’s time to replace the roof, solar panels must be removed and then reinstalled. This will increase the cost of roof replacement in the future, if the solar company charges for the removal/reinstallation. If a roof is nearing the end of its useful life, it’s important to know not only how much a new roof will cost, but also how much removal and reinstallation of the panels will be. Remember, our ultra hot summers can wear a roof out sooner than you think.
If the panels are leased, buyers need to know the cost of a lease transfer. This assumes you’re willing to assume the lease, of course. Alternatively, your agent can help you negotiate with the seller to have them either buy out the remainder of the lease or remove the panels.
Some companies refuse to transfer the lease to a new owner at the same terms, instead opting to force them to sign a new agreement that doesn’t take into account how long the panels have already been installed. At the same time, they attempt to raise the monthly rental rates. Boo.
Lease balloon payments are at market value at the time of the balloon – it’s often unclear exactly how much money will be owed at the end of the lease.
Our best advice
If you’ve fallen in love with New Orleans homes with solar panels installed, here’s our advice. It is critical to review the lease terms during your due diligence period (or even before making an offer, if possible). Your REALTOR can help you determine the best course of action if you want to move forward.
MORE ADVICE FOR NEW ORLEANS HOME BUYERS
