Debate Magazine

If You Install Solar Panels, the Company May Put a Lien on Your Home

By Eowyn @DrEowyn

Are you considering having solar panels installed in your home?

If you do, think twice, especially if the solar company’s condition is that you enter into a long-term lease contract.

A man in California who had his solar panels installed by a company called SolarCity discovered, to his shock, that the company actually placed a lien on his house.

Jeff Leeds' solar-paneled roof

Tori Richards for, April 15, 2015, that Jeff Leeds now regrets having solar panels installed on the roof of his home in the Northern California city of El Granada.

Leeds didn’t actually buy the panels, but acquired them by making a 20-year lease with SolarCity — an agreement that he now says is like “partnering with the devil.”

Not only has he endured skyrocketing electric bills, installation of an inferior system, SolarCity’s refusal to clean the panels or to provide a payment for his system’s poor performance, Leeds recently received a notice from his bank telling him that SolarCity had placed a lien on his home, and that his equity line of credit application for a second home could not proceed until the lien was removed.

Leeds said the bank “told me it was a lien. I had to pay the bank a $48 fee for removal. They held me up from closing my loan to buy a vacation home so I had to borrow from another account. It cost me time in calls to both Wells Fargo and to SolarCity.”

SolarCity say it’s not a lien, but a “fixture filing” that stakes the company’s claim to the panels, which it owns if consumers have taken part in its popular 20-year lease program. Owning the solar panels that it installs on clients’ homes allows SolarCity to claim lucrative state and federal subsidies available only to system owners. SolarCity has received approximately $500 million in tax subsidies and grants over the years.

In fact, SolarCity’s lease contract specifically states “SolarCity will … file no lien against the home” and that “The Fixture Filing is intended only to give notice of its rights relating to the System and is not a lien or encumbrance against the Property. SolarCity shall explain the Fixture Filing to any subsequent purchasers of the Property and any related lenders as requested. SolarCity shall also accommodate reasonable requests from lenders or title companies to facilitate a purchase, financing or refinancing of the Property.”

SolarCity’s website, in a consumer Q&A format, also states:

“Is there a lien on the solar home? No … the UCC-1 protects our interest in the solar energy system and prohibits the lender from taking ownership of it.”

Indeed, when Leeds confronted SolarCity about its lien on his house, “they referred me to a paragraph sunk deep inside their contract. That UCC-1 is what they kept telling me on the SolarCity side, but Wells Fargo Bank considered it a lien and charged me $48 for the fact that it was there…. And nobody explains that to you when you buy it. They give you a huge contract to read and nothing is explained.”

A March 10 email from a Wells Fargo Bank employee to Leeds confirmed that the UCC-1 is a lien: “To the bank, it’s a lien on the title..”

Sal Balsamo, a real estate attorney and owner of Barrister’s Title Services in North Carolina who has been involved with closing some 40,000 home loans as both an attorney and title underwriter, explains that by attaching a fixture filing to the property, SolarCity is second in line to collect proceeds behind the original mortgage lender in the event of a default. Any future lender — whether providing a refinance or equity loan — would not want to be third in line and will demand that SolarCity remove the lien.

Balsamo says that for SolarCity to call its lien on Leeds’ house a “fixture filing” is “parsing words to a ridiculous degree.  I don’t think there’s any question that it’s a lien. Someone can say it’s nothing more than a security interest, but that’s nonsense. At best they are mincing words and at worst they are being intellectually dishonest. A fixture filing is a lien.

Balsamo warns that signing lengthy contracts like those involving solar companies is risky because consumers often don’t realize what’s contained in the contract. “It’s up to the vendor to explain it to them. Either it wasn’t explained so customers understood, or, more likely, the vendor did not tell them” about the filing. Balsamo suggested that solar customers have an attorney read any contract before signing.

During a Feb. 12 Capitol Hill hearing of the Senate Committee on Energy and Natural Resources, Sen. Jeff Flake (R-Ariz.) grilled Department of Energy Secretary Ernest Moniz about solar company liens and singled out SolarCity’s rival Stealth Solar as the offender.

Flake said, “After entering into these long-term agreements, a lot are in for a surprise when they realize they have to pay off a lien put on their house. What role, if any, can or does DOE plan to play in ensuring these companies who access federal tax incentives in particular  … aren’t misrepresenting what they are doing to their customers?”

Moniz was apparently caught off guard by the question and stammered that he didn’t know anything about liens but would look into it.

Ernest Moniz

A California banker, who requested anonymity because she is not authorized to speak on this topic, says she encounters enraged homeowners with Leeds’ same scenario five to 10 times a day: “This is my nightmare for 2015. Homeowners have no idea what they’ve gotten themselves into. Fixture filings are definitely liens…. Green energy is so popular with lawmakers that it allows these companies to say, ‘This is ours, our property.’ “That lease will follow you until you die.”

Arizona acts to protect home-owners

Solar customers who live in Arizona will soon have state protections with the nation’s most comprehensive transparency laws. One of those regulations, SB-1465, prohibits any type of secretive lien process. Despite vigorous opposition by SolarCity and another solar contractor, Sunrun, Gov. Doug Ducey signed the bill into law last week. It had unanimous legislative approval.

Among the items solar contracts must contain:

  • 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.

Rep. Paul Gosar (R-Ariz) explains:

“We have to have better transparency and better truth in lending. This is becoming a bigger and bigger problem across the country as (solar) systems are getting transferred. Solar is getting to be our future and we don’t need people who are pulling shenanigans on the homeowner by not allowing them to know the full story of what they are signing. We are now living in an environment where it’s OK to lie and you just back up one lie with another lie – from the spokespersons at the White House all the way down to SolarCity.

Jeff Leeds believes SolarCity “just friggin’ lied to me in the sales process.” If he had been alerted to the fixture filing by the sales person, he would have thought twice about signing the contract. He has even filed a complaint with the state of California regarding SolarCity’s business practices.

“I would love to tell them how they bamboozled me, a Ph.D.,” Leeds said. “Imagine what they can do with the average schmuck out there.”

Here are the other articles in’s series on SolarCity:

  1. Congressional leaders charge ‘potentially deceptive sales tactics’ by SolarCity, others
  2. SolarCity’s $750M tax gift shrouded in secrecy
  3. SolarCity and others backed Chinese solar-panel makers flooding U.S. market
  4. SolarCity skyrocketing stock dependent on government tax giveaways
  5. Customers tell horror stories of solar company that gets $422M in tax dollars

A Cato Institute report on renewable energy like solar, written by Robert L. Bradley Jr., president of the Institute for Energy Research in Houston, Texas, warns:

A multi-billion-dollar government crusade to promote renewable energy for electricity generation, now in its third decade, has resulted in major economic costs and unintended environmental consequences. Even improved new generation renewable capacity is, on average, twice as expensive as new capacity from the most economical fossil-fuel alternative and triple the cost of surplus electricity. Solar power for bulk generation is substantially more uneconomic than . . . biomass, hydroelectric power, and geothermal projects . . . . Wind power is the closest to the double-triple rule.

The uncompetitiveness of renewable generation explains the emphasis pro-renewable energy lobbyists on both the state and federal levels put on quota requirements, as well as continued or expanded subsidies. Yet every major renewable energy source has drawn criticism from leading environmental groups: hydro for river habitat destruction, wind for avian mortality, solar for desert overdevelopment, biomass for air emissions, and geothermal for depletion and toxic discharges.

Current state and federal efforts to restructure the electricity industry are being politicized to foist a new round of involuntary commitments on ratepayers and taxpayers for politically favored renewables, particularly wind and solar. Yet new government subsidies for favored renewable technologies are likely to create few environmental benefits; increase electricity-generation overcapacity in most regions of the United States; raise electricity rates; and create new “environmental pressures,” given the extra land and materials (compared with those needed for traditional technologies) it would take to significantly increase the capacity of wind and solar generation.


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