How to resolve difficulty refinancing with solar panels?
July 24, 2020 6:50 PM   Subscribe

My lender insists they need to see a PPA, but I don't believe I have one because own the system outright. Am I misunderstanding something? Or if I'm not, how can I get them to drop this ask?

I had a solar power generating system installed at my house in 2017. I purchased the system outright; there is no lease involved and I make no payments to the company which designed and installed the system. That company still has an account for me, which holds digital copies of my paperwork, and they track production of my system (and pass it on to my state to track my SRECs.) My only monthly electricity statement is with my local power company which tracks net metering.

When my house was appraised for refinancing, the appraisal mentioned the solar system. My loan processor asked for a PPA (power purchasing agreement.) I checked my records and found no such document, so I looked up the definition of a PPA. I responded to the processor that I owned the system outright and sent copies of the purchase agreement and the receipt for payment in full. Today she responded to me that the loan officer still required a PPA.

I'm stumped. How do I prove that the solar company has no ownership of my system? Is there something I'm missing? I've reviewed all the paperwork I can find and the only purchase agreement I can find is with the company that sells my SREC.
posted by Sublimity to Home & Garden (7 answers total) 2 users marked this as a favorite
If you had a leased system you'd usually have a lien against the property; they should be able to supply you with proof of such a lien if there is one. If they're not willing to check, then you probably need to bail and find another financier. Make sure your point of contact knows why you're bailing, as they're the one who'll lose the commission.

Note that I assume you did not use a PACE loan to finance the system -- those also apply liens to the property, so all bets are off if you did.
posted by aramaic at 7:11 PM on July 24, 2020

You bought it outright. They're probably novices who once handled a transaction involving a PPA and now think that ALL solar installs involve PPA. Politely tell them that the solar install is a part of the house just like the air conditioning system is and stop wasting your time. If they persist, tell them (or their loan processor) to go talk to their manager. If they still persist, give them one last warning and then move on to another lender.
posted by intermod at 8:42 PM on July 24, 2020 [6 favorites]

Specifically, you might ask them to review the title commitment, which will show that there is no lien on the property. If there were a lien, it could take precedence over the mortgage, which is why they are being hardline about it. Send a email (or upload a memo, depending on how you provide docs), affirming that you own the panels as evidenced by the purchase records, there is no lease or ongoing obligation, the title company will show there is no lien, and ask that they escalate to their underwriting manager if needed to clear the exception.
posted by tinymojo at 9:43 PM on July 24, 2020 [3 favorites]

Ah, right--a concern about a lien makes perfect sense. Tinymojo, I appreciate the framing you supplied and will use that in my next communication. Thanks, all!
posted by Sublimity at 7:24 AM on July 25, 2020

Would it help to get a statement from your power utility describing how you are billed? Which would show you are strictly billed on the net usage at the meter, with no interest in the power generated by solar? I mean, it's kind of a PPA with their interest being zero, or independent confirmation of the non-existence of a PPA, however you look at it. Maybe your lender is just reluctant to believe only the information provided by you without confirmation.
posted by ctmf at 12:25 PM on July 25, 2020

IANYL - this is not legal advice, please call your electric provider or public utility commission.

PPA - power purchase agreement for the kWh of energy you are producing. A PPA typically spells out how the power you are generating is paid for, it is not necessarily about who owns the panels themselves (although ownership of the panels might help determine WHO is paid for the energy).

If is very possible the lender wants to see how you are compensated for the power generated by the panels, and it is not seeking to confirm the ownership of the panels. There are a variety of reasons why the lender may want to see the payment arrangement. The lender may want to confirm that as the owner you are receiving the payments. If you do have a PPA, the lender may want be a party to that agreement so that it may receive the payments in the event you default on your mortgage. Or it may just want to verify the amount of the payments for income purposes.

From your statement it looks like you are subject to net metering - so you are correct that a PPA should not exist. You need to focus on explaining that your net metering arrangement is the functional equivalent of the PPA, not that you own the panels.

I think ctmf is on the right track. Your electric provider should be able to provide you with information on your rate schedule (or tariff) that spells out how net metering works, and how you are compensated for the energy you are generating. I would start with googling- "(your electric provider) + net metering + tariff". If that doesn't work, call your provider and ask for a copy of your tariff. Make sure they look up what tariff you are on - most customer service reps are going to assume that you are on the basic residential tariff and send you that.

If that fails, you could also contact your state utility commission rather than your electric provider. Your public utility commission may be able to help you find your net metering tariff. They may also be able to provide you with some documentation that spells this out in a way that the lender can understand.

It is also possible that the underwriter you are dealing with at your lender has a checklist that requires you to show a PPA - and this person doesn't understand that a net metering agreement would be the functional equivalent of that provision. At that point, you would probably need to ask the underwriter to kick you up the chain. However, I don't think you can do that until you provided the information on net metering.
posted by donovangirl at 10:11 AM on July 27, 2020

Thanks everyone. As an update, I sent the following in an email on Saturday:
I found this information from Sunrun, the company that installed my solar system:

On this page, the definition of a PPA on that page is:

“A Power Purchase Agreement is a type of Third-Party Ownership (TPO) financing model where there is a two-party contract. The system is not owned by the homeowner but instead, the power is purchased at a fixed rate from the solar company that owns the system.”

I do not have a PPA, because I own the system outright. As the prior documents I sent (purchase contract and receipt from Costco), I bought the system outright in 2017. Sunrun has no ownership of it. I do not pay them for my electricity. I have not paid them anything since the system was purchased in 2017.

My system is interconnected with the grid and is monitored by net metering with Eversource. My only monthly billing for electricity happens with Eversource.

If further clarification is needed, perhaps it would be best to schedule a phone call to discuss further. Please let me know how to proceed.
And got a response this morning that "We are all set with the explanation below."

It ain't over til its over, of course, but it looks like I may be past this challenge. I appreciate the discussion and helpful suggestions.
posted by Sublimity at 1:46 PM on July 27, 2020

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