CAUTION - Solar Loans May Prohibit Added Appraisal Value

Real Estate Agent with JLA Realty TREC # 0524744

Because of all of the unknows, I have not been a fan of solar on single family homes.. Be careful and do your due diligence before you install solar panels on your roof!    

Original content by Jan Green - Scottsdale, AZ SA5376460000

There's been a lot of confusion amongst the public and realtors especially about solar loans versus owned solar systems.  Homeowners are being told by solar companies that these loans help them to buy solar panels and own them.  This is a partial truth and may not apply to every system or homeowner scenario.  


Solar companies may not know the ins and outs of how to provide value in a real estate transaction for solar panels.  They know the benefits of solar systems, but may not have ever worked to sell a home with a solar system installed on a roof.  So it stands to reason they may not have all of the answers for valuing a system or whether it's owned or not.


When a homeowner receives the tax credits, rebates and incentives while using a solar loan the panels may possibly be owned; HOWEVER, the solar company MAY be filing a UCC filing with the State so that the home can be collateral for the loan of the solar array.   When the UCC filing is posted, that system now becomes personal property as it is not a fixture of the home and is not owned by the homeowner even though the financing tool is a loan.  No value can be given by the appraiser due to the UCC filing.


Then why aren't leased solar panels treated the same way since there is a UCC filing for leased panels?  No value is given for any solar panel with a UCC filing, per the March, 2015 Fannie Mae guidelines.   When the lessee does not receive any tax credits, rebates or incentives AND has the UCC filing, there can never be any value given when a home is sold with a leased system .  There is no up front cost, but the homeowner is making lease payments to the solar company.  Technically, the solar company owns the panels.  


Then how is the loan program allowed a caveat that they can own the panels?  When a homeowner with a loan, that includes a UCC filing, pays off the panels (hopefully no pre-payment penalty) and either pays cash or uses a different revolving credit line (HELOC) to pay off the solar loan, then the homeowner can request the UCC filing be removed.  WHEN THE UCC FILING IS REMOVED FROM STATE RECORDS  and the system was financed with a LOAN- WALA - THE HOMEOWNER NOW OWNS THE SOLAR PANELS!


Since it takes time to remove a UCC filing, it is wise to process a payoff well before listing a home for sale.  If a homeowner lists a home for sale and the UCC filing is in place, an appraiser CAN NOT ADD VALUE to the system as technically it's a leased system according to their guidelines and the panels are treated as personal property.


Owned solar panels are always a better way to go as a homeowner can now work with a qualified realtor and appraiser to calculate the value of the owned solar panels, which is added to a home's value.    The value is determined by using, and all of the data from the system, date of install, number of panels, and azimuth of the system.   The information can be conveyed to an appraiser using the Residential Green & Energy Efficient Addendum, provided on the Appraisal Institute site.  This site also contains a list of Green Qualified Appraisers by State.  Once on this site, click STATE to reorganize them in alpha order.



This GREEN Designee has been selling homes since 2002, and has acquired 3 green designations since 2008.  Working in the field of sustainability with vendors, builders, and trades along the way has provided MUCH knowledge to assist homeowners within the realm of green construction, including solar panels!



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Comments (4)

Bill Salvatore - East Valley
Arizona Elite Properties - Chandler, AZ
Realtor - 602-999-0952 / em:

Great information.  Thanks for sharing and have a wonderful day! bill

Aug 29, 2022 01:34 PM
Leanne Smith
Dirt Road Real Estate - Golden Valley, AZ
Relocation to NW AZ with elbow room & more freedom

Thanks for sharing Jan Green - Scottsdale, AZ 's posting. Yes solar can be somewhat daunting when financing a home.

Aug 29, 2022 02:12 PM
Jan Green - Scottsdale, AZ
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Thank you for the re-blog.  I have the actual Fannie Mae doc that shows what's required for financing and appraisal.  

Aug 29, 2022 02:20 PM
Danny Frank
JLA Realty - Houston, TX
The Pearland Real Estate Expert

I would love to see that doc.

Aug 30, 2022 07:38 AM