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At $100,000 over asking the sellers can pay off their own lease.
Bingo. That's where I'd land, too. Or I'd assume (payoff) the lease, but subtract that amount from my offer, which would essentially be the same thing.
I've never wanted any property bad enough to pay $100K+ over asking price. YMMV.
Just as an FYI, there are people routinely paying that much over ask right now for much lower than 1.7 million (IIRC that's what the poster said ), which is just under 6%. In my own neighborhood a house was listed at $510k and sold for $610k, closed a couple weeks ago. That's almost 20% over ask and that rate is super common in this area right now.
I guess I'm dumb on this whole thing but why are you negotiating offers and waiting until this weekend to hear about your counteroffer if your original offer was accepted the 17th?
At this point, assuming any deal goes through to closing, I wouldn't be surprised to find they left some surprises for you to discover later on.
Yes they accepted our offer for the house on August 17th. Then on the 30th we heard about the debt that comes with the lease. And this comes after I call the solar company's number and find out they are out of business, read Yelp reviews on them, and then asked my agent a bunch of questions. This dragged out all week.
The company was ASD and the reviews are baaaaad.
So even though they accepted our offer on the house, now we have to negotiate this solar deal. I've read that legally it HAS to be a totally separate deal than the house. It needs its own closing if the seller is going to pay off the lease and we chip in money. All of this should have been done before the offer was accepted on the house.
I'm the one who had to research and speak to the debt collector. If we chose to assume the lease, they don't "transfer" anything to you. The new buyer has to apply for this lease and be approved just like the original buyer did. Basically you have to do exactly what you AREN'T supposed to do when getting a mortgage. Apply for new debt!
As for a lien, we were told there is a PUC on the property which is supposedly different than a lien. But still has to be cleared for the sale just the same.
So the last we heard was the seller said they would pay and close the account but we had to chip in $8000 of that.
I'm educating my agent how that 8k would have to be a gift at the closing table. It cannot be rolled into the sale of the house.
Our final offer was to offer them back the 5k credit they were giving us after inspection. Outside of updating the house, there is a broken a/c, hot water tank way past due and a lot of windows that need to be replaced. A good 20k of repairs and they were offering us 5k. So the most we'll "chip in" for this lease is giving them back the 5k of repair credits. That's it.
We said they can pay off the lease and take the panels with them if they want. Of course the roof would need to be repaired if need be. But this all falls outside of the house closing. It would have to be a separate contract.
That's why agents tell their sellers to take of this before listing their house. It's all a big headache.
Oh and the best part is this..............The panels on this house generated just under $1900 in electricity "credits" with the electric company in the past 12 months.
The payments of the lease 161 per month x 12 months total $1932.
So it literally cost more money to have the lease than the solar saves in electric. We wouldn't start coming out ahead until the end of the lease which is 12 years from now if we took over the lease.
Or we pay the 8,000 to help the seller close out the lease. Then we'd start coming out ahead in 4 years. ($2,000 a year in solar credits earned but paying 8,000 up front means 4 years of breaking even and earning solar credits at year 5 )
Again, I'm having to educate my agent on this so she can point this out to the other agent on why neither taking over the lease or paying the 8k is an attractive offer for us. I may as well take 8k and fling it out the window.
If they don't eat this lease after this weekend, we are walking. At this point I don't love the house anymore.
Thank you all for reading this. I really hope it can help someone out there looking to buy or sell with a solar lease
Last edited by TheLonelyGoatherd; 09-04-2021 at 01:11 PM..
I agree that the seller did do a very basic initial disclosure that there was a solar lease, but it was definitely not sufficient to meet the requirements of the CAR sale and purchase agreement (which I'm assuming is what you used?).
Clause 8B(5) requires the seller to disclose to the buyer whether any item or system (including solar) is leased/has a lien or encumbrance/is not owned by seller and to provide all written material such as lease and warranty needed to make a decision. That clause specifically says that the "Buyer's ability to assume any such lease, or willingness to accept the Property subject to any such lien or encumbrance, is a contingency in favor of Buyer and Seller as specified in paragraph 14B and C." That contingency stands until you specifically waive it in writing with a sign-off (hoping you didn't inadvertently do that at the time of signing the contract).
Clause 14A gives the seller 7 days from the date of acceptance to deliver to you all that material (so you should have received it by August 24/5). 14B(1) gives you a default of 17 days (or whatever you agreed to) to do necessary investigations and remove any contingencies. Under 14B(3), "if any report, disclosure or information for which Seller is responsible is not Delivered within the time specified in paragraph 14A, then Buyer has 5 (or ) Days After Delivery of any such items, or the time specified in paragraph 14B(1), whichever is later, to Deliver to Seller a removal of the applicable contingency or cancellation of this Agreement." 17 days plus 5 days after the date of acceptance takes you to September 9, so if you didn't change any of those dates when you signed the contract, you have until Thursday to cancel the agreement without penalty. Even after that date, Clause 14 b(5) says the buyer can still choose to either waive the contingency or cancel the contract (if the seller hasn't already cancelled).
Based on all that, assuming you haven't already initially waived the contingency about leases and liens, I wouldn't pay for a single thing related to the lease and just let them sweat it out, come to their senses, and pay it off themselves. You have the contractual right to terminate and walk without losing your deposit and they are going to face this issue with every single buyer who comes after you. One would hope that they can see that a 100k-over-asking bird in the hand is worth two in the bush, and that they do what they need to do to make the purchase proceed.
Yikes, your agent definitely failed on this. Totally agree with Cloudwalker.
Actually I had more written until I went back to look at Cloudwalker's post, and I was going to state the same exact thing, including where the clauses are in the contract. So I won't bore you with the same comments.
I would not pay a penny more for this house than what is already in the contract. They need to take care of this themselves, and provide to you a home that is free of ALL encumbrances.
Last edited by FLSkater; 09-04-2021 at 04:49 PM..
Reason: tightened up spacing
True story - at the bottom of the market last time, I had a home that had been on the market about 9 months with, if I recall, an asking price of around 450k when our average sale was around 160k. I finally got an offer, and it was a good offer. That same afternoon, I got a 2nd offer that was almost identical. We called for best offer and the both backed out, not wanting to compete over a home. Couldn't get either of them back even at their original offer. They said they moved on, and I assume part of it is they didn't trust us anymore as they probably thought we were lying. I never sold that house, and both buyers missed out on what could have been a great home for them. Don't know what became of either buyer. I'm actually still facebook friends with the seller. He was a nice guy, felt terrible for him and me!
Oh my gosh that's awful. And I can see that happening. When a house is sitting so long, as a buyer, you are going there already thinking you will offer less than asking. That's kind of a given. Any house can sell if it's priced right. So when a house sits, you immediately think "overpriced" whether that's the case or not. So hearing about another offer cropping up does get your wheels turning. Especially every hour that passed and we didn't get an answer. I wouldn't walk away immediately like your buyers did. That's strange that neither wanted to at least see if their offer was accepted. But I guess they figured there was something shady going on even though there wasn't. I can honestly say, had our offer expired (which it was about to within that hour) they would have gotten a new offer that was below asking. Your buyers should have at least tried that!
I agree that the seller did do a very basic initial disclosure that there was a solar lease, but it was definitely not sufficient to meet the requirements of the CAR sale and purchase agreement (which I'm assuming is what you used?).
Clause 8B(5) requires the seller to disclose to the buyer whether any item or system (including solar) is leased/has a lien or encumbrance/is not owned by seller and to provide all written material such as lease and warranty needed to make a decision. That clause specifically says that the "Buyer's ability to assume any such lease, or willingness to accept the Property subject to any such lien or encumbrance, is a contingency in favor of Buyer and Seller as specified in paragraph 14B and C." That contingency stands until you specifically waive it in writing with a sign-off (hoping you didn't inadvertently do that at the time of signing the contract).
Clause 14A gives the seller 7 days from the date of acceptance to deliver to you all that material (so you should have received it by August 24/5). 14B(1) gives you a default of 17 days (or whatever you agreed to) to do necessary investigations and remove any contingencies. Under 14B(3), "if any report, disclosure or information for which Seller is responsible is not Delivered within the time specified in paragraph 14A, then Buyer has 5 (or ) Days After Delivery of any such items, or the time specified in paragraph 14B(1), whichever is later, to Deliver to Seller a removal of the applicable contingency or cancellation of this Agreement." 17 days plus 5 days after the date of acceptance takes you to September 9, so if you didn't change any of those dates when you signed the contract, you have until Thursday to cancel the agreement without penalty. Even after that date, Clause 14 b(5) says the buyer can still choose to either waive the contingency or cancel the contract (if the seller hasn't already cancelled).
Based on all that, assuming you haven't already initially waived the contingency about leases and liens, I wouldn't pay for a single thing related to the lease and just let them sweat it out, come to their senses, and pay it off themselves. You have the contractual right to terminate and walk without losing your deposit and they are going to face this issue with every single buyer who comes after you. One would hope that they can see that a 100k-over-asking bird in the hand is worth two in the bush, and that they do what they need to do to make the purchase proceed.
And your agent...completely failing on this one.
I went back and looked and the box is checked in B that says "All buyer contingencies removed except" and then in the blank it says "solar lease approval"
When we were running down that contract, I can honestly say we just did what our agent recommended. Otherwise I would have needed an attorney with me looking it over before we signed. We are in the clear but had my agent said to waive all of the contingencies, we likely would have done it. And we aren't stupid people! We just don't do this for a living. It's so easy to get duped into something as a buyer, especially if you are looking to your agent for guidance. In this case, our agent doesn't know about solar leases so she didn't know to warn us.
She's still trying to tell us how we'll benefit from solar. I told her that's not the point. Yes you can benefit from solar, but not in this lease we can't. I told her it's the difference between asking someone to buy a car that's work 10k in Kelly Blue book and asking the buyer to pay 10k. Versus, trying to sell them a car worth 10k with a 12 year payoff that will far exceed the cost of a new car of the same make and model. It's not the car that's the issue. It's how the payments around it are structured that make it a good deal or not.
She is just like, "Okay I can see you don't want this" like we are the ones being just so difficult. Those pesky, difficult buyers.
I just wonder with that blank form that they wanted us to sign that just says "Assumption of Lease" at the top that the realtor typed up, would have ever have held water? There is nothing on the form that says how long the lease is for, what is owed, etc. The debt collector requires a new buyer to apply for a loan with them. The fact that this guy even tried to type up his own form makes me think that he was going to try to use it against us. Not that it would hold up with the debt collector. But rather, hold up in our minds. Like too late, we signed that lease assumption. Now we have to apply with the debt collector to take over payments. Know what I mean?
Honestly, if you can get a system for $8k free and clear that will be paying for itself in 4 years that's not a bad deal. It's a great one in isolation. Obviously everything else matters, but at this point I'd personally try to hone in on that and get them to pay a bit more. Maybe you get to a 3 year payback and just get it done. 6-8k isn't really that much in the overall deal.
Scroll to the middle of the page. You'll see the list of how to maintain the panels. We were told we should have someone come out twice a year. I was surprised too.
Shocker that a realtor doesn't see the blame from the agent's side. Isn't this what agents always claim when people ask what exactly do you get paid for? "Oh we look out for our clients"
Why in the world would I think that there was some kind of a lease on solar? I know nothing about solar. I'm from the east coat. Solar just isn't a thing there. And even here, I've been looking at homes a lot lately and I'd say 90% of the home in our area don't have solar panels. And after two years of house hunting this is the first house that we've seen have panels.
There was no mention of them in the listing description. You only see the panels in ONE photo in the listing. Zero mention of the lease until AFTER our offer was accepted. It wasn't until the inspection that we asked what the deal was and the agent said there's a lease but honestly made it sound like the lease was from the electric company. He made NO mention of this company who lease the panels and that they were out of business and that the lease was with a debt collector.
I asked our agent why she didn't warn us and she says that she's never dealt with a sale like this. She's only sold very few homes with solar panels and they all just came with the house. She's never had a buyer of hers be asked to pay separately for panels or take over a lease. So if my agent who does this for a living didn't know to ask, how in the heck should my husband and I have known? NOW we know. And now you better believe if this falls through it will be the first thing I ask if I see a listing with panels. I'll be asking before I even set up a showing.
the disclosure we received after inspection and it says verbatim "leased solar panels installed 8 years ago"
This is on a disclosure page that is chock FULL of other things we had to look at. So no that line didn't set off red flags for me. The flags went off when I asked for the name of the company and went to call only to find out they were out of business. Then as I was waiting for the correct number I started reading about the shams and the debt tied to these leases. And then I thought, "Surely this agent wouldn't be trying to close this house without disclosing the debt right? I mean he likes having his license right?"
Even when my agent gave me the phone number of the solar company she said I had to "set up an account with them" So to me that sounded like what you do when setting up electric in a house. You don't pay the previous owner's bill, right? You set up a new account.
There was no mention that I actually would have had to apply for the lease and get accepted. Apparently it's in the contract that they don't guarantee they will accept a transfer! All of this I found out later on. You don't see any of this as shady from the seller's side?
You don't think it's shady to mention that they want us to pay an extra 20-30k two weeks AFTER our offer is accepted? They accepted our offer on August 17th. We find out we are supposed to pay this debt on August 30th. You see nothing wrong with that?
The whole thing is an artichoke with layers. Finding out there is a balance but seller's agent says "he's not sure how much" First he said he thought 30k, then he said he thinks 23k. We still don't have an exact number. So come on, man. Don't try to hoist this on me the buyer like I'm just the stupid one and the buyers and seller's agents are in the clear.
And then you wonder why so many people hate realtors and don't trust them? Yes it's all my fault for not seeing solar panels and asking a million questions immediately.
You are absolutely right about realtors. It is shocking really - how unprofessional they are.
Don’t forget about additional expenses - if you accept the deal - it may be the time to replace the inverter soon.
How high and how steep is the roof?
I would ask the solar company that agreed to maintain it to inspect and give you a report on conditions and the efficiency of the system and it’s installation - how much they charge for panels cleaning and inverter replacement- you might need much more money to maintain the outdated system.
I would ask the seller or the debt collector company to pay for this estimate- before you spend a dollar.
You have to have all the info before you even close.
You might be able to re-negotiate the remaining balance with them upfront? Actually- the seller has to do it- the system condition report may help you decide
Scroll to the middle of the page. You'll see the list of how to maintain the panels. We were told we should have someone come out twice a year. I was surprised too.
Shocker that a realtor doesn't see the blame from the agent's side. Isn't this what agents always claim when people ask what exactly do you get paid for? "Oh we look out for our clients"
Why in the world would I think that there was some kind of a lease on solar? I know nothing about solar. I'm from the east coat. Solar just isn't a thing there. And even here, I've been looking at homes a lot lately and I'd say 90% of the home in our area don't have solar panels. And after two years of house hunting this is the first house that we've seen have panels.
There was no mention of them in the listing description. You only see the panels in ONE photo in the listing. Zero mention of the lease until AFTER our offer was accepted. It wasn't until the inspection that we asked what the deal was and the agent said there's a lease but honestly made it sound like the lease was from the electric company. He made NO mention of this company who lease the panels and that they were out of business and that the lease was with a debt collector.
I asked our agent why she didn't warn us and she says that she's never dealt with a sale like this. She's only sold very few homes with solar panels and they all just came with the house. She's never had a buyer of hers be asked to pay separately for panels or take over a lease. So if my agent who does this for a living didn't know to ask, how in the heck should my husband and I have known? NOW we know. And now you better believe if this falls through it will be the first thing I ask if I see a listing with panels. I'll be asking before I even set up a showing.
the disclosure we received after inspection and it says verbatim "leased solar panels installed 8 years ago"
This is on a disclosure page that is chock FULL of other things we had to look at. So no that line didn't set off red flags for me. The flags went off when I asked for the name of the company and went to call only to find out they were out of business. Then as I was waiting for the correct number I started reading about the shams and the debt tied to these leases. And then I thought, "Surely this agent wouldn't be trying to close this house without disclosing the debt right? I mean he likes having his license right?"
Even when my agent gave me the phone number of the solar company she said I had to "set up an account with them" So to me that sounded like what you do when setting up electric in a house. You don't pay the previous owner's bill, right? You set up a new account.
There was no mention that I actually would have had to apply for the lease and get accepted. Apparently it's in the contract that they don't guarantee they will accept a transfer! All of this I found out later on. You don't see any of this as shady from the seller's side?
You don't think it's shady to mention that they want us to pay an extra 20-30k two weeks AFTER our offer is accepted? They accepted our offer on August 17th. We find out we are supposed to pay this debt on August 30th. You see nothing wrong with that?
The whole thing is an artichoke with layers. Finding out there is a balance but seller's agent says "he's not sure how much" First he said he thought 30k, then he said he thinks 23k. We still don't have an exact number. So come on, man. Don't try to hoist this on me the buyer like I'm just the stupid one and the buyers and seller's agents are in the clear.
And then you wonder why so many people hate realtors and don't trust them? Yes it's all my fault for not seeing solar panels and asking a million questions immediately.
You are absolutely right about realtors. It is shocking really - how unprofessional they are.
Don’t forget about additional expenses - if you accept the deal - it may the time to replace the inverter soon.
How high and how steep is the roof?
I would ask the solar company that agreed to maintain it to inspect and give you a report on conditions and the efficiency of the system and it’s installation - how much they charge for panels cleaning and inverter replacement- you might need much more money to maintain the outdated system.
I would ask the seller or the debt collector company to pay for this estimate- before you spend a dollar.
You have to have all the info before you even close.
You might be able to re-negotiate the remaining balance with them upfront? Actually- the seller has to do it?
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I was surprised too.
