Many of solar leasing customers have found themselves in what is essentially a “deal with the devil,” when they realize that the often multi-million dollar companies have placed a lien on their homes. What is often referred to as a “fixture filing,” a lender lien or a UCC-1 claims to simply uphold the creditor’s ownership of the panels. But what a lien really does is solidify the legal right of a creditor to sell collateral property if a debtor fails to meet the obligations of the loan contract.
Unfortunately, most customers are not told that when they enter into a solar lease a security lien is placed on the homeowner’s entire property; not just the panels. Which is technically their right, since many solar companies shell out the $15-$25,000 to cover the cost of the panels, installation, with usually no money down.
It is not the agreement that has ruffled feathers, but the deceptive and fraudulent tactics used by these solar companies to omit hidden terms in their contracts. In response to the high volume of consumer complaints, 12 Republicans and four Democrats have asked two federal regulatory agencies to investigate concerns that “these leases are not offered in good faith or with accurate disclosures.”
Often times customers have actually had to go down to the bank and pay out of their own pocket in order to have access to their own bank accounts. Once a valid lien is placed on a bank account it is frozen, meaning that the customer loses access to their own money and are treated like they are the ones who did something wrong. Typically the lien is removed when the loan is paid in full, but this can create potential complications when selling or refinancing a home. Many lenders like Freddie Mac or Sallie Mae require that the entire lien be paid off before issuing a new loan.
In an attempt to increase transparency Arizona Gov. Doug Ducey has signed a comprehensive law with regulations that prohibit any type of secretive lien process. But Arizona republicans have been accused of simply using the bill to kill solar by making the business process more difficult. The bill contains dozens of transparency regulations that should make signing such a monumental contract less of a guessing game. Here are some of the main points that will come into play January 1st:
• At least 10-point type and contain no blank spaces
• Total price must be stated over the life of the contract, including interest
• Potential tax ramifications
• Disclose restrictions or impacts the buyer may have to transfer or modify the property
• Depreciation schedule
• A right to cancel up to three business days after purchase
Unfortunately in most states it is still the customer who is burdened with digging through hundreds of pages worth of legal documents to make sure they’re not being taken advantage of. This should serve as a lesson to all people looking to invest in solar: If it sounds too good to be true, it is! And buy, don’t lease!