With rooftop solar on the rise and soon to be coming faster than ever, I have been receiving regular phone calls from fellow REALTORS asking how to handle solar in their transaction. It is my hope the following tips will help shine sunshine on best practices within your real estate transactions.

Before we begin, let’s identify the components of a solar system. Commonly, a solar photovoltaic system will contain the following: 

  • PV modules, which capture sunlight and convert it to direct electric current.
  • An inverter, which converts the direct current to alternating current for household use.
  • A bi-directional meter that measures the power flow going into and out of your home. The meter reads energy delivered, received and net. Traditional meters read delivered only. 
  • Batteries (optional) store and provide back-up energy. A back-up connection to the power grid or a generator supplements energy needs. 

Your solar system provides energy like a personal power plant on your rooftop. As it generates energy, your home will use it during the time of production. However, net metering happens when a home system generates more electricity than it can use or store.  As the energy is being delivered back into the grid, the meter goes backwards and the homeowner receives a credit. When you pull energy from the grid, you will then use your credits first, then purchase from the utility company. Energy moves back and forth daily as the sun rises and as it sets. 

Now that you know the basic functions of the system itself, how do you help your clients when listing or buying a home? Be sure to ask good questions, so you are able to position the home in the market effectively and have proper disclosures. Be sure to find out what the financing approach was when attaining the system. Did they pay cash, finance, lease or enter into
a power purchase agreement (PPA)?

Each of the financing approaches will determine your next moves. Be sure to ask for documentation. If it’s a lease or PPA, be sure to understand the terms of the agreement. You should know the size of the system, the annual energy production and the monthly payment for the energy production, equipment, fees, etc.  It’s also important to know what the transfer terms are for the Leases/PPA. If the system was purchased, be sure to attain receipts and if still making payments, verify the balance. I like asking for the drawing of the system, so it can be uploaded or used in marketing. 

If the system was financed, then expect a mechanics lien on the title. The lien will be cleared upon payment through escrow. If it was leased or has a power purchase agreement, expect a UCC-1 filing which represents the system’s ownership. The UCC-1 filing will be removed by the company during the transfer and refiled upon closing (similar to a water softener.)

Know the terms. Disclose. Disclose. Disclose. Without properly disclosing while listing, the transaction can get messy very fast. Most importantly, use proper disclosure forms such as the SRPD ‘Supplemental Property Information’ form. This protects all parties by knowing what you’re dealing with in advance. 

When marketing your listing
with solar, be sure to leverage the many MLS data fields so your listing can be
found in searches. Also, these data fields help support evaluation by a qualified GREEN appraiser. Use photos and energy bills, and have the information handy upon request. 

These are just a few highlights, but for deeper knowledge of Home Performance and Renewable Energy, register for upcoming GREEN Designation Courses. Go to GLVAR Education for more information, at http://www.lasvegasrealtor.com/Education/ .