The agreements for solar panels that may jeopardize selling your home

The Solar Energy Proposition

Solar power is often promoted as a straightforward solution: with electricity prices on the rise, installing solar panels can significantly reduce your energy expenses and lock in a consistent, eco-friendly rate. Additionally, having solar panels can boost your home's resale value by 5% to 10%.

However, there’s a catch—many homeowners don’t actually own their solar panels. Instead, they opt for long-term leases, sometimes lasting up to 25 years, which come with substantial monthly fees, annual price hikes, and expensive buyout clauses. Rather than being an asset, these leases can become a financial burden.

Homeowners frequently believe that if they sell their property before the lease ends, the new buyer will simply take over the payments. In reality, buyers may find it difficult to qualify for the extra financial obligation or may not want to inherit a contract they didn’t agree to, complicating the sale process.

As buyers gain more leverage in various markets, real estate professionals report that solar leases are increasingly becoming a sticking point in negotiations. Sellers often end up paying off the remaining lease balance—sometimes tens of thousands of dollars—to avoid losing potential buyers.

“If you’re selling your home and haven’t paid off the solar system, the buyer must qualify for both the mortgage and the lease,” explained John Bulik, a real estate agent near Denver. “This can deter some buyers, and many simply don’t want the added hassle.”

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Solar’s Expanding Presence

Over the last twenty years, residential solar installations have surged, fueled by growing environmental awareness, rising utility costs, government incentives, and technological improvements that have made panels more affordable and efficient. Today, about 8% of U.S. homes are equipped with solar panels, with adoption rates even higher in sun-rich states like Hawaii, California, and Arizona. As a result, solar panels are now a common sight in real estate listings.

Despite falling prices, solar systems still represent a significant investment. In 2025, Tesla estimated the average system cost between $21,900 and $26,400.

Leasing solar panels eliminates the initial expense and relieves homeowners of maintenance responsibilities. However, this convenience comes at a cost: lease agreements often include annual payment increases, which can erode savings over time and complicate home sales.

Nevertheless, leasing has become more popular. By mid-2024, approximately 36% of residential solar installations were leased or structured as power purchase agreements, up from 22% three years prior, according to Ohm Analytics.

Tax Incentive Shifts

This year, leasing is expected to become even more prevalent following the expiration of a 30% tax credit for purchasing clean energy systems at the end of 2025. Meanwhile, a separate commercial tax credit for companies offering leases and PPAs remains available, prompting many solar firms to rethink their business strategies.

“The industry is being pushed to develop more lease and PPA options,” said Vikram Aggarwal, founder and former CEO of EnergySage, a solar comparison platform.

However, Aggarwal believes that most consumers would avoid leases if they fully understood the long-term implications.

When Kip Barnard, a real estate agent in San Jose, works with sellers who have solar panels, he first determines whether the system is owned or leased. If it’s leased, he carefully explains how these contracts can complicate the sales process. In competitive markets like Silicon Valley, buyers often end up assuming the leases, but Barnard describes the process of marketing, transferring leases, and negotiating as “challenging.”

“Many sellers are attracted by the promise of added home equity, but may not realize that leases are actually liabilities,” Barnard noted. “I’ve never met a buyer who was excited to take on someone else’s lease.”

When Buyers Walk Away

Josie Williams and her husband, searching for a home in Gun Barrel City, Texas, found a property that checked all their boxes: spacious layout, convenient location, and a large yard for their children. However, the seller still owed over $60,000 on the solar panels and wanted the new owners to assume the payments.

Unfamiliar with solar contracts, Williams consulted her agent and discovered that, while the home had no electric bill, she and her husband would be responsible for $291 monthly payments on the panels for the next 20 years. Concerned about the financial impact, they tried to negotiate a lower price or have the seller pay off the system, but when negotiations failed, they decided to walk away.

“If you have outstanding loans on something like that, it shouldn’t be the buyer’s responsibility,” Williams said.

So, what’s the best approach for homeowners? Despite rising electricity costs, experts and agents suggest that solar panels can still add value and save money—if the system is owned outright. A 2025 analysis by SolarReviews found that homes with solar panels sold for nearly 7% more than those without.

In Colorado, Xcel Energy has been raising rates significantly, with another 10% increase planned this year. Across the country, energy bills are outpacing inflation, making owned solar systems an increasingly attractive long-term investment, according to Bulik, who installed solar panels on his own home eight years ago.

“Even without tax incentives, purchasing solar panels is starting to look appealing again,” Bulik remarked.

Claire Boston is a Senior Reporter for Yahoo Finance, specializing in housing, mortgages, and home insurance.

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