You can almost always buy the solar panels you’re leasing, but only during the windows your contract allows and at a price the leasing company controls. Buying out a leased solar panel system typically becomes an option after the system has been in place for five years, with buyout opportunities on each anniversary after that and a final chance when the lease term ends. What you’ll pay depends on whether your agreement uses a fixed price schedule or a fair market value appraisal, and the gap between those two methods can run into the thousands.
When Your Contract Lets You Buy
Solar leases and power purchase agreements usually run 20 to 25 years, and the buyout terms are written in from the day you sign. Your agreement will say when you can purchase, how the price is figured, and what steps to follow. If it isn’t in the contract, you generally can’t demand it.
Most agreements block any purchase for the first five or six years. After that lockout, contracts commonly open a buyout window each year on the system’s anniversary date, plus a final option at lease end. Miss the window and you’re usually waiting another 12 months. Read your specific contract rather than assuming you can buy whenever you want.
The five-year restriction traces back to federal tax rules. When the solar company installs panels under a lease, it claims the federal investment tax credit on the equipment. Selling the system before five full years pass triggers an IRS recapture of part of that credit, with the penalty shrinking each year until it disappears at year five.1Office of the Law Revision Counsel. 26 U.S. Code 50 – Other Special Rules Your buyout timeline is built around that calendar, and the IRS rules won’t bend for yours.
How the Buyout Price Is Calculated
Buyout prices follow one of two methods, and your contract already picks which one applies.
Predetermined Purchase Schedule
Some contracts include a table listing a specific dollar amount for each year of the lease. The number is set at signing, so there are no surprises. Prices typically start near the original system cost and decline over time as the equipment depreciates. On a $20,000 installation, a year-seven buyout might sit somewhere around $12,000 to $14,000 and drop from there. The advantage is predictability: you can plan because the figure is locked in.
Fair Market Value Appraisal
The more common approach, especially in power purchase agreements, ties the buyout price to the system’s fair market value at the time of purchase. An independent appraiser weighs remaining useful life, current performance and degradation, the present value of projected future energy production, local electricity rates, and comparable system sales. The income approach, which discounts future energy savings back to present value, tends to carry the most weight.
FMV protects the leasing company by making sure they get what the system is actually worth rather than a depreciated book value. For you, the downside is uncertainty. Strong output in a state with high electricity rates appraises higher than the same hardware in a cheap energy market. Residential appraisal fees typically run $250 to $500, and the leasing company may require you to pay for it.
Can You Negotiate the Price
Contract prices aren’t always final. Where your agreement uses FMV, there’s built-in room to disagree about what the system is worth. Even with a predetermined schedule, leasing companies occasionally accept less than the listed price, particularly when the alternative is an uncooperative homeowner or a system nearing end-of-term with an uncertain future.
Keep your expectations realistic. Most leasing companies have little incentive to move much. Your strongest lever is your own independent appraisal, submitted alongside the company’s number, so a counteroffer rests on facts rather than a request for a discount. If you’re selling the home and the buyer refuses to assume the lease, the leasing company faces the cost of removal, and that scenario opens more room than a homeowner simply trying to save money while staying put. Treat negotiation as a low-risk move that occasionally pays off, not a reliable strategy for cutting your price in half.
Steps to Complete the Purchase
Once you’re inside a buyout window, the process is fairly standard, though details vary by company.
- Pull your contract details. You’ll need your lease agreement number, the system’s activation or permission-to-operate date, and the equipment specs including panel count and inverter model. These are usually in the leasing company’s online portal.
- Submit a formal buyout request. Most companies require written notice, sometimes called a Notice of Intent to Purchase. Certified mail with return receipt gives you a paper trail confirming when the company received it.
- Review the payoff statement. The leasing company issues a document showing the total due: the buyout price, any remaining lease payments, and administrative fees, which are commonly a few hundred dollars. The payoff amount is typically valid for 30 days.
- Send payment. Companies usually require a wire transfer or cashier’s check rather than a personal check, since they want cleared funds.
- Get your bill of sale. This document transfers ownership and proves you own the system. Keep it permanently for insurance, home sales, and any future warranty claims.
Accuracy at the request stage prevents the most common delays. Wrong system specs or a request submitted outside your window can get rejected and push you to the next eligible date.
Clearing the Lien From Your Property
Solar leasing companies typically file a UCC-1 financing statement with the state, which functions as a lien on the equipment. That filing puts the world on notice of the company’s security interest in the panels on your roof, and it can complicate home sales and refinancing even after you’ve paid the buyout price.
After you complete the purchase, the leasing company is responsible for filing a UCC-3 termination statement to cancel the original filing. Don’t assume this happens automatically. Follow up within 30 days of payment to confirm it’s been submitted, and verify the record through your state’s UCC filing database, which most Secretary of State offices maintain online.
If you carry a mortgage, send your lender a copy of the UCC-3 and the bill of sale. Servicers track liens against your property, and a stale solar lien in their records can create problems when you sell or refinance. Some companies also charge a document processing fee to release title documents; Tesla, for example, charges $150 where a UCC-1 or notice of solar contract is recorded on the property.2Tesla. Transferring Ownership of Your Solar System
What Changes Once You Own the System
Under a lease, the solar company handles maintenance, monitoring, and often insurance on the equipment. The moment you buy, all of that shifts to you.
Contact your homeowners insurer before or right after closing the buyout. Owned solar panels need to be included in your dwelling coverage, and your policy limit may need to increase to reflect the added property value. Premium increases are generally modest, though they vary by location and system size. Waiting leaves a coverage gap between when the leasing company drops its equipment coverage and when yours picks up.
You’ll also need access to the system’s monitoring software to track performance and catch problems early. Enphase, for instance, runs an ownership transfer process that moves the product warranty and monitoring account access to the new owner.3Enphase. Transfer of Ownership Other inverter makers have similar processes. Skip this step and problems can run undetected for months.
Check whether the panel manufacturer’s warranty transfers with ownership or needs separate registration. Most major manufacturers offer 25-year performance warranties, and these generally follow the equipment rather than the original purchaser, but confirming in writing avoids disputes later.
Tax Credits and SRECs After the Buyout
A common misconception is that buying out the lease qualifies you for the federal residential clean energy credit. It doesn’t. The IRS excludes used or previously owned clean energy property from the credit.4Internal Revenue Service. Residential Clean Energy Credit The panels were already installed and claimed by the leasing company, so purchasing them secondhand doesn’t count as placing new property in service. That benefit was captured years ago and doesn’t transfer.
What you do gain is ownership of any Solar Renewable Energy Credits the system produces going forward. During the lease, the solar company almost always keeps SREC rights. Once you own the system, those credits are yours, and in states with active SREC markets that can mean hundreds of dollars a year depending on the market and your output. Check whether your lease requires a formal assignment of SREC rights or whether they transfer automatically with the equipment.
If You’re Buying Out Because You’re Selling the Home
If a buyout is on the table because you’re planning to sell, you have options beyond purchasing the system yourself. Most buyers can assume the existing lease and take over monthly payments for the remainder of the term. Leasing companies typically run a credit check on the buyer and handle the paperwork at closing.
Trouble starts when the buyer fails the credit check or refuses to take on the lease. From there you generally have three paths: buy out the system yourself and sell with owned panels, prepay the remaining lease balance at a discounted net present value so the buyer inherits the system with no payments, or negotiate removal with the leasing company. None are free, and any of them can slow a sale if they surface late.
Buying out before you list tends to be cleanest from the buyer’s side, since it eliminates the lease entirely. The buyout cost eats into your proceeds, so run the numbers to see whether the home value increase from owned panels offsets the price.
Buying at the End of the Lease
If you don’t buy during the lease term, you’ll face a decision when the contract ends. Most agreements give you three choices at expiration: purchase the system at its then-current fair market value, renew the lease on updated terms, or have the leasing company remove the panels and restore your roof. FMV at the end of a 20- to 25-year lease is typically low, since the equipment has been depreciating the whole time and may be approaching the edge of its warranted performance life.
End-of-term is often the cheapest opportunity to purchase, but the panels are also the oldest. If the system still performs well and the price fits, buying at lease end makes sense. If output has degraded significantly, you may come out ahead letting the company remove the old system and starting fresh with a new installation that qualifies for current tax credits.