How To Cancel a Solar Lease: Your Exit Options Explained
Life happens. It’s either your finances are taking a hit, you’re moving, selling the house, or you realize that your solar lease contract is costing more than it saves you, and canceling the lease is your best option.
Read on to learn how you can cancel a solar lease agreement.
Before Signing, Read & Understand Every Fine Print in the Solar Lease Contract.
Solar lease contracts are long and legal-heavy. But if you want to avoid future crises and regrets, read it thoroughly to prevent avoidable frustration.
When reading the solar lease contract, understand:
- How much is the annual rate increase (or escalator clauses)? Best if it is only below 2%.
- When can you buy out the solar system, and how is the buyout price calculated?
- Are there fees for transferring the solar lease to a new owner?
- What are the guarantees if the solar system underperforms compared to projections?
- What are the financial consequences if you cancel the solar lease agreement?
As you do, think long-term. Consider whether you plan to move out in 10 to 15 years. Solar lease agreements run 25 to 30 years, as long as the solar panel system lives. Are you going to stay where you live for that long?
If you’re planning to sell your house instead, know that solar lease agreements can complicate the selling process more than they increase value.
But if you’re already under contract and now you’re looking for an exit, the following are options to consider if you need to know how to cancel a solar lease.
1. Early Solar Lease Cancellation Provisions
If you want to cancel the lease you just signed before the panels hit your roof, you have more leverage, but you have to act fast.
1 to 3 Days After Signing
Under the FTC Cooling-Off Rule, you typically have 3 business days after signing the contract to cancel. But this provision applies only if you signed the agreement at home or during a door-to-door sales pitch. If you went for in-office signings, we’re afraid the provision doesn’t apply.
If the rule applies in your case, all you have to do is send a written “Notice of Cancellation”, which is mostly a form included in your contract, by mail or email within that 3-day window.
After the 3-Day Window
If the provider’s crew hasn’t arrived yet after 3 days of signing, companies may allow cancellation – but with administrative fees.
These fees may cover the “soft costs” of the agreement. This may include site surveys, structural engineering reports, and local building permit filings. Costs typically range from $500 to $2,500.
In your contract, check for “Installation Deadline”. If the solar provider fails to install the system within that timeframe, you may be able to cancel the solar lease without penalty due to the provider’s “failure to perform.”
2. Buy Out the Solar System & Own It
In some cases, solar lease agreements allow you to buy the solar panel system outright before the lease term ends, often after 5 or 6 years. Instead of continuing monthly payments to your solar provider, you pay a lump sum to take full ownership of the solar system.
However, not all providers are equal. SunPower, for instance, allows buyouts in the 7th year, while Sunrun offers buyout options in the 5th year, and every 5 years thereafter. That is why you should always read the contract agreement before signing. Know what you’re signing for.
As mentioned above, you should also understand how the buyout price is calculated. Sometimes the buyout price is high, since it is mostly based on fair market value (FMV). If energy prices in your area have risen significantly at the time you want to buy out, the solar system may be valued higher and cost you more than keeping the lease.
Either way, always read the agreement and clarify procedures with your solar provider.
3. Transferring the Solar Lease to the New Homeowner
If you decide to sell the house and your buyer agrees to assume the solar lease agreement, contact your solar provider as soon as possible.
Ideally, you should know how the process works, as outlined in your signed solar lease contract. If you missed that, consult your provider before selling the house.
Source: Solar.com
Buyer Qualification & the Documentation of the Transfer
Not everyone qualifies for an assignment of lease (or the transfer of a solar lease to a new homeowner).
Your solar provider may first require your prospective buyer to pass a credit check. This will help the solar company assess whether your buyer can take over the monthly payments.
If he qualifies, both parties would sign a “Transfer Agreement” or “Assignment of Lease”. This document officially reassigns all the terms, conditions, and production guarantees to the new homeowner.
The process may sound easy and smooth, but expect potential friction and challenges. Most buyers view long-term leases as a financial burden. In addition, this can impact the buyer’s loan qualification, as lease payments can be counted as additional debt.
To avoid needless friction, each party should know what to expect in solar panel leases as a buyer and a seller of a home.
4. Get a Lawyer To Help You
If you are a victim of solar panel fraud or deceptive tactics, legal counsel can help.
Some solar providers use shady marketing tactics that promise “free” panels and a zero electricity bill. This is fraudulent inducement, and a lawyer can argue that the contract is unenforceable.
Or, if the solar panel system was never installed, was installed poorly, or never reached the stage of being allowed to operate (PTO), a lawyer can send a demand letter to terminate the solar lease agreement for non-performance.
If your case fits in seeking legal help, here’s what you can expect from them:
| What They Can Do | What It Means |
| Review your complex solar lease contracts | A lawyer can help you identify the hidden fees, predatory terms, and “non-reliance” clauses that attempt to shield the company from verbal promises made by salespeople. |
| Negotiate settlements | Instead of a full court case, a lawyer can negotiate with your solar provider for a lower termination fee or a restructured lease agreement. |
| Report to regulators | They can help you file formal complaints with the Consumer Financial Protection Bureau (CFPB), the FTC, or your State Attorney General, which puts regulatory pressure on the company. |
Many solar fraud lawyers offer a free case review to see if you have a strong enough claim to cancel your solar lease contract without any upfront cost.
How To Get Out of a Solar Panel Contract: Key Takeaways
If you’re already on the hook and should cancel the solar lease agreement before it ends, go back to where you started.
Re-read the agreement. Understand what you can do. Consult with your solar provider. Weigh which is more feasible: selling and transferring the lease or buying out the equipment.
Source: Solartap
If you need a deeper understanding, a lawyer can simplify the legal jargon.
But preventing a crisis is always better than managing it. Before signing anything, the wisest course to take is to “always thoroughly read” the solar lease agreement.
If you’re unsure what is written, don’t hesitate to ask your provider. If the provider is unclear or shady, consult a lawyer first to understand the legal terms.
Now you know how to cancel a solar lease. But solar leasing isn’t the only way to go green. Decide whether a lease, solar loan, or community solar best fits your energy needs today and in the decade ahead.
Get a free solar quote today. A solar quote can help you determine the best solar option for you.
FAQ
Can you cancel a solar panel contract after installation?
Yes, you can cancel a solar lease after installation, but it’s harder. Most contracts require early termination or buy-out fees unless fraud, misrepresentation, or a breach of contract gives you legal grounds to exit.
How to cancel a Tesla solar lease?
To cancel a Tesla solar lease, review your agreement for termination terms, then request early termination through Tesla or your provider. Expect costs for removing leased solar panels and other solar cancellation fees unless the company breached the contract.
How to get out of a solar contract before installation?
Before installation, getting out of solar panel contracts is usually easier. You may qualify for a penalty-free cooling-off period (often 3 days, sometimes up to 30). After that, you can still cancel, but you might lose your deposit or pay administrative fees worth $500 to $2,500.
