Solar Panels in Divorce: Asset or Hidden Liability?

As residential solar becomes more common, it is also becoming one of the most complicated issues we encounter in real estate transactions. While solar is often viewed as an environmentally friendly upgrade, the ownership, financing, and contractual obligations behind many systems can create significant challenges during a sale.

The industry itself has evolved rapidly, but oversight has not kept pace. Aggressive sales practices, complex financing arrangements, and a wave of company bankruptcies have left many homeowners with unanswered questions, unsupported systems, and unexpected financial obligations. For attorneys handling divorce matters, these issues can directly affect disclosures, negotiations, settlement terms, and—most importantly—the actual equity available to the parties.

Below are some of the most common questions we receive.

Q. What is the difference between owned and leased solar systems?

A. An owned system is generally transferred with the property as part of the sale. Leased systems and Power Purchase Agreements (PPAs), however, require additional documentation, lender or provider approval, and buyer qualification. These extra steps can delay escrow and complicate an otherwise straightforward transaction.

Q. Can a buyer simply assume an existing solar loan or lease?

A. Not always. Some solar loans must be paid in full before closing, while others may permit an assumption by the buyer. Recent lender failures have created additional hurdles, with some sellers discovering they must satisfy loan balances—often ranging from $30,000 to $80,000 or more—before a transaction can close. Leases and PPAs are often easier to transfer, particularly when administered by large, established providers such as Sunrun or Tesla.

Q. Do solar panels automatically increase a home's value?

A. Not necessarily. Many homeowners expect solar to add value, but the answer depends on the type of system and the local market. Appraisers may recognize additional value for owned systems in areas where solar adoption is common. Financed or leased systems, however, frequently provide little or no added value and, in some cases, may discourage prospective buyers. Solar does not automatically translate into greater equity.

Q. What issues are creating the biggest transaction challenges today?

A.

• Company bankruptcies: A significant number of solar installers have closed their doors, leaving homeowners without warranty coverage or ongoing service. Unsupported systems often become negotiation points during escrow.

• Roof conditions: Some systems were installed on aging roofs. Removing and reinstalling panels to complete roof repairs can cost several hundred dollars per panel, and buyers are increasingly requesting specialized solar inspections before closing.

• Disclosure concerns: Sellers are not always clear on whether their system is owned, financed, leased, or subject to a PPA. Inaccurate disclosures can create legal exposure and lead to post-closing disputes.

  
  

Q. What should homeowners expect from the solar market going forward?

A. With the federal 30% residential solar tax credit scheduled to expire for qualifying systems after December 31, 2025, many contractors rushed to complete installations before the deadline. As incentives diminish and market demand adjusts, additional consolidation within the industry is possible, potentially resulting in more company closures and continued uncertainty for homeowners with existing systems.

Q. How can solar affect equity in a divorce?

A. Equity—not simply property value—is what matters in most divorce cases. A solar system that appears to be an asset on paper may actually reduce net proceeds if it requires expensive repairs, loan payoff at closing, or buyer concessions during negotiations. Understanding these obligations early helps ensure that both parties have a realistic picture of the property's financial value.

Solar can absolutely be a benefit—but only when its ownership, financing, and condition are fully understood. Identifying potential issues before a property goes on the market helps reduce surprises, minimize delays, and support more informed settlement decisions.

As always, I'm available to help you and your clients evaluate these issues, identify potential risks, and navigate the transaction with greater confidence.