Is it possible to get out of a solar lease?

Are you one of those homeowners who signed a solar lease because it was the best option at the time, but you are not saving as much as you expected? Are you planning to sell your home with a solar lease? Or you have found the perfect house to move to with an existing leased solar panel system on the roof?

No doubt getting solar is a wise choice for perhaps the biggest investment you will make, your home. Having control over your power cost and stopping a soaring and ever increasing home electrical cost is a wise decision.


Solar provides an abundance of benefits, but there are long term considerations you need to address. If you end up putting your house up for sale you may encounter a few issues during the home sale process. If you are trying to sell a home with leased solar panels, study carefully all terms of your lease contract or seek the help of a trusted solar expert. Since you are 100% responsible for payments during the full term of the lease agreement, it is very important to know that the lease is tied to the title of your home. This means you are likely in an iron-clad agreement for 20 to 30 years.

Getting out of a solar lease:
• You can buy out the remaining part of a solar lease
• Purchase the solar panel system at the market price, if available
• Transfer a solar agreement to a new homeowner

Leasing solar panels with no upfront cost can be very attractive, trying to get out of a solar contract comes with some additional cost.

Depending on the contract agreement, when selling your house you have a few options for fulfilling the lease obligation before the lease is up:

Buyout of a solar lease agreement

Buyout Lease Payments: With this option, you can prepay the balance equal to the payments on the remaining lease and have the solar panels either removed or left on the house. Most solar leasing companies do include a buyout period and price in their agreement. Some do not. Usually, a buyout is allowed after 5 to 7 years of the lease term begins. Check the fine print in your lease contract.

Purchase of the solar system at market-value

Many lease agreements do not clearly set forth an amount of purchase but state that a 3rd party appraiser will determine the fair market value at the time of purchase. You have to consider how many years of the total you have left on your lease term, plus the current market options. The cost of purchase will usually be higher the longer the lease term you have left. Many leases do not offer this option.

Transfer of a solar lease

A solar lease can be transfered to a new homeowner with some conditions and usually a transfer fee. Solar companies will help you fill out the forms and transfer your lease to the new homeowners. Some buyers may not be unwilling to accept this transfer option at which point you can always reduce the selling price of the house by the amount of the transfer and complete the sale. You may likely miss out on some sale proceeds you were expecting.

Relocate a solar panels system from one house to another

Some solar leasing companies provide you the option to relocate a system from one house to another. You will need to make sure the new rooftop will support your rooftop solar system.

Many solar leases provide for relocating a system from one home to another at a cost that may make it prohibitive. You would need approval from your new utility company, city or county and any homeowners association prior to installing the old solar system on a new rooftop.

All in all, if you are planning on selling your house soon, consider a buyout. If you have the possibility of an early buyout of lease payments, you can pay for the remainder of your lease and own the system yourself. Solar power systems that are fully owned by the seller can add value to your house upon sale. Consult your Realtor and/or your local solar expert to get an idea about how much.

Added value to a home sale can offset some or all of the cost of the lease buyout. If the buyout amount is significantly less expensive than monthly payments through the lease period, it may be a financially reasonable option to consider.

You solar lease escalators may erode the savings you expected

You signed up for solar in order to save a bunch on your utility bills but yearly escalators can limit your savings. Solar lease savings are limited by an annual lease payment escalator required in just about every lease contract. A majority of leases contain an escalator clause from 2.99 to 5 percent per year. If your utility company increases its rates by less than your the escalator in your lease payment, your savings can be more for that year. Likely, this would be an unusual circumstance.

Can I cancel my solar lease before the installation?

If your solar install has not yet started and you want to back out of a solar lease, you might be able to cancel it. Each solar company policy dictates The time frame for cancelling a lease without any penalties. It is mandated that you can cancel the contract within 3 days of signing without penalty. Lease contracts sometimes allow up to 30 days with penalties after work has begun. Solar companies usually allow termination of the lease agreement if unexpected and/or unforseen expenses are needed like your roof needs repaired or you need a main electrical panel upgrade.

One way or another, before signing a solar lease you should weigh all options, carefully read the “fine print” and only after that will you be confidently prepared to choose the right path for going solar. Depending on your situation, you may find that a power purchase agreement, solar loan or buying the system with cash might make the most sense for you.

The absolute best way to consider solar may be to contact a local solar expert that will independently review all the equipment and finance options and help you determine what exactly is best for your needs, goals and financial situation. Find a trusted source to represent your interests only.