Contract Break downs
What you need to know and how to find it.
This page provides a simple breakdown of the different types of solar contracts—loan, lease, power purchase agreement (PPA), and cash purchase—so you can quickly determine what type of contract your client has and how it affects their home sale. Understanding key contract details, such as transfer requirements, buyout options, and rate increases, is crucial for a smooth transaction. We provide example contracts, important terms to look for, and step-by-step guidance on completing solar-related addendums to ensure compliance and a hassle-free transfer process. If you need further assistance, we also offer consultations over the phone to help guide you through any complexities.
BE ADVISED
We are here to provide a breakdown of the contracts. It is highly recommended that you thoroughly read the entire contract. Please note that this is not legal advice; rather, it is an explanation of specific terms within the contracts to help you more easily locate and understand key information.
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Loan (Financed Purchase)
The homeowner takes out a loan to purchase the solar system.
They own the panels and receive incentives like tax credits.
Monthly payments go toward paying off the loan.
If selling the home, the loan balance must be paid off or transferred to the buyer (if allowed by the lender).
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Lease
The homeowner does not own the solar system.
A solar company owns the panels, and the homeowner pays a fixed monthly fee to use the energy.
No maintenance costs, but no tax incentives either.
When selling, the lease must be transferred to the buyer or bought out.
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Solar Power Agreement (SPA) / Power Purchase Agreement (PPA)
Similar to a lease, but instead of a fixed fee, the homeowner pays for the electricity generated at a set rate.
The solar company owns the system and maintains it.
The rate may increase over time, depending on the contract.
Must be transferred or bought out when selling.
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Cash Purchase
The homeowner pays upfront and owns the system outright.
They receive all incentives, including tax credits and energy savings.
No monthly payments—just savings.
Easiest transfer when selling, as the system is fully owned and stays with the home.