2026-10-22 · 4 min read · Orange County
What Should I Know Before Buying a Home With Solar Panels?
The short answer
First find out who owns the panels. An owned system usually comes with the house. A leased system or a power purchase agreement (PPA) is a contract you may need to take over, and the solar company may have to approve you. Also ask which utility billing plan the system is on, whether there is a PACE assessment on the property tax bill, and for the warranty and permit records. Read the contract before you remove contingencies.
Why Does It Matter Who Owns the Solar Panels?
What should you know before buying a home with solar panels in Orange County? The biggest question is ownership, because it decides whether the panels are simply part of the house or a contract that comes with its own payments and rules.
I'm Jeanette Nelson, a REALTOR® with Jeanette Nelson Real Estate, Keller Williams Realty, serving Orange County, Huntington Beach, Costa Mesa, Fountain Valley, and surrounding areas. The details are worth sorting out before you commit.
This is general information, not legal or tax advice. Talk with an attorney, a CPA or your lender about your situation.
What Is the Difference Between Owned, Leased and PPA Solar?
The California Public Utilities Commission's Solar Consumer Protection Guide describes the main ways people pay for solar:
- Owned (paid in cash or with a loan). The seller owns the system. The CPUC guide says an owned system can be included in the sale like any other major part of the home. If a loan is still on it, ask how it gets paid off at closing.
- Leased. A solar company owns the panels and the seller pays a monthly amount to use them.
- Power purchase agreement (PPA). A solar company owns the panels and the seller pays for the electricity they produce.
With a lease or PPA, the CPUC guide says the seller usually has three choices when selling: the buyer takes over the contract, the seller keeps paying, or the seller buys it out, which could be thousands of dollars.
What if the Panels Are Leased or on a PPA?
If you are asked to take over the contract, get a copy early and read it closely. The CPUC guide suggests asking:
- What are the monthly payment and any yearly increases?
- How many years are left?
- Are there fees to transfer the contract to a new owner?
- What happens if the buyer doesn't qualify to take it over?
The Contractors State License Board (CSLB) notes that some leases require the homeowner to buy out the lease before selling, or require the buyer to agree to take it over. The CSLB also says that if the contract is not assigned to the new owner, balloon payments or removing the system may be required.
Your lender will want to know about the payment. Build time into escrow for the solar company's approval.
How Does Net Metering Work for a New Owner?
Net metering and net billing are utility billing plans that give credit for the power your panels send to the grid. The CPUC sets these rules.
The CPUC's net metering page says customers on the older NEM 2.0 plan can stay on it for 20 years from the date their system was connected. Newer systems use the Net Billing Tariff, which credits exported power differently.
Ask the seller for recent utility bills and which plan the system is on, then ask the utility how the account moves to you after closing.
Is There a PACE Lien on the Home?
Some solar systems were paid for with PACE financing. California's Department of Financial Protection and Innovation (DFPI) explains that PACE is repaid through a special assessment on the property tax bill, and that a lien stays on the home until it is paid off.
Look at the property tax bill and the preliminary title report for any PACE assessment. DFPI notes the added cost can make it harder to sell or refinance, so ask your lender early how a PACE assessment affects your loan. For more on tax bills when you buy, see how are property taxes set when I buy in Orange County.
Do Solar Panels Change My Property Taxes or Tax Credits?
The California State Board of Equalization explains that an active solar system added to a home is excluded from reassessment under a new construction exclusion, and that the exclusion ends when the property changes ownership. Ask the Orange County Assessor how your purchase is assessed.
The federal residential clean energy credit is also gone for new purchases. The IRS says this credit is not allowed for expenditures made after December 31, 2025. Buying a home with existing panels does not give you a new federal credit. Talk with a CPA about your own taxes.
What Should I Ask For Before I Remove Contingencies?
Ask for these during your inspection period:
- The solar contract, loan or warranty documents
- Twelve months of utility bills
- Proof of ownership or the lease or PPA terms
- Permit and inspection records for this specific system from the city
- Roof age and condition, since panels may need to come off for a roof replacement
Let's Start With a Conversation
If you're looking at a home with solar, I'd love to help you gather the right documents first. Call or text me at 714.366.8575 | DRE: 01397168, or contact me. Jeanette Nelson is a REALTOR® with Jeanette Nelson Real Estate, Keller Williams Realty, serving Orange County, Huntington Beach, Costa Mesa, Fountain Valley, and surrounding areas.
Frequently asked questions
Do I have to take over the seller's solar lease?
It depends on the contract. The CPUC guide says the options usually include the buyer taking it over, the seller continuing to pay, or the seller buying it out. That gets negotiated in your purchase.
Can I still get the federal solar tax credit?
Not for new expenditures. The IRS says the residential clean energy credit is not allowed for expenditures made after December 31, 2025.
What is a PACE assessment?
DFPI explains it is financing repaid through your property tax bill, with a lien on the home until it's paid off. Check the tax bill and title report for one.
Should my home inspector look at the solar system?
Yes, ask them to. Also ask the seller for permit records for this specific system.