Lease, PPA and loan: who owns what
| Solar lease | Power purchase agreement (PPA) | Solar loan | |
|---|---|---|---|
| Who owns the panels | The leasing company | The PPA provider | You (subject to the lender's lien) |
| What you pay for | A fixed monthly rent for the system, usually with an annual escalator | The electricity the system produces, per kWh, usually with an escalator | Principal and interest on the system price |
| Typical term | 20 to 25 years | 20 to 25 years | 10 to 25 years |
| Tax credit | Goes to the owner (the company) | Goes to the owner (the company) | Yours, if you have the tax liability to use it |
| Early exit | Buyout of the system or the remaining payments, or transfer to a new homeowner | Buyout or transfer, on the contract's schedule | Pay off the loan; TILA rescission if disclosures were defective and the loan is home-secured |
| Main legal levers | State UDAP, Consumer Leasing Act, cooling-off rules, breach of performance guarantee | Same as lease | TILA, FTC Holder Rule, state UDAP, cooling-off rules |
One point trips up almost everyone with a financed system: the installation contract and the loan are two contracts, often with two different companies. Cancelling or winning against the installer does not by itself cancel the loan. Every notice you send goes to both, and the FTC Holder Rule is what connects the lender to the installer's conduct (see the TILA guide).
What a buyout costs and how to negotiate it
Inside the cooling-off window a cancellation costs nothing. After that, lease and PPA contracts typically offer an early buyout in one of three forms, and which one your contract uses is worth thousands:
- Remaining payments. You pay every payment left on the term, sometimes discounted, sometimes not. This is the most expensive version and the one many contracts default to.
- Scheduled buyout. The contract includes a table of buyout prices by year, usually declining as the system ages. Often only available after a minimum period, commonly year five or six.
- Fair market value. The greater of an appraised value and a floor. Ask who does the appraisal and whether you can challenge it.
Homeowners commonly report buyout figures from a few thousand dollars on a small, older system to $40,000 or more on a large, recent one. The number is negotiable when you have leverage, and leverage in this business means documented complaints: a misrepresented pitch, a production shortfall against a guarantee, roof damage, missing disclosures, a defective cancellation notice. Companies settle those for reduced buyouts, waived escalators, or removal at their cost far more readily than they settle "I want out." Get every offer in writing, and get a written release of all obligations and liens as part of any payoff.
Selling your house with solar on it
With a lease or PPA, you normally do not cancel when you sell; you transfer the agreement to the buyer, who has to qualify with the solar company (credit check, application, signatures), or you buy the system out and sell the house with owned panels. With a loan, the lender usually requires payoff at closing or a formal assumption. The practical advice from real estate agents who have been through it: start the transfer process the day you list, not the day you get an offer, because the solar company's turnaround can take weeks and a buyer's lender may refuse to close over an unresolved solar lien. If the buyer will not take the agreement, your options are a payoff from sale proceeds or a negotiated buyout, and the equity math should be done before you price the house.
The UCC-1 lien problem
Lease, PPA and most loan providers file a UCC-1 financing statement, a public notice of their interest in the equipment, and some also record a fixture filing in the county property records. It is not technically a mortgage, but title companies and lenders treat it as a cloud on title, which can stall a sale or a refinance. Providers will usually issue a temporary release or subordination for a refinance and a termination on payoff, but only when asked, in writing, with lead time. If you have paid off a system and the filing is still on record, demand a termination statement; under the Uniform Commercial Code the secured party must file it on request once nothing is owed.
What happens if you just stop paying
Almost always a mistake. A missed lease or loan payment is a default under the contract: late fees, acceleration of the balance, reporting to the credit bureaus, collections, and a lawsuit or arbitration in which your good claims arrive as defenses to their claim rather than as your case. Companies also disable monitoring or production on some systems after default. Withholding payment feels like leverage; legally it hands the other side the initiative. Keep paying, put the money you are disputing in a separate account if it helps, and let an attorney decide when and whether a payment stop is part of a strategy (for example, after a valid TILA rescission notice, where the obligation to pay is itself in dispute).
Will cancelling hurt my credit?
A clean cooling-off cancellation, a completed buyout with a written release, a transfer accepted by the company, or a successful legal rescission generally should not damage your credit, because in each case the account is closed as paid or cancelled. What damages credit is defaulting, walking away without a release, or letting the account go to collections while you argue. If a company reports a cancelled or rescinded account as delinquent, dispute it with the bureaus in writing and with the company under the Fair Credit Reporting Act, and keep your release letter for that purpose.
When the solar company goes bankrupt
Since 2023 a long list of residential solar companies, including some of the largest installers, have shut down or filed for bankruptcy. Two things usually happen. The installation and service obligations (warranty work, monitoring, performance guarantees) become claims in the bankruptcy, which means they are effectively gone unless another company assumes them. And your loan or lease is sold or assigned to another servicer, who will tell you that your obligation continues. Often it does. But the FTC Holder Rule means the new holder took the contract subject to every claim and defense you had against the original seller: a system that never worked, a guarantee that was breached, a pitch that was false. Do not accept "the installer is gone, so is your complaint." Put the new servicer on written notice of the claims immediately, and check whether the bankruptcy case has a deadline for consumer claims.
Can I just take the panels down?
Not on a lease or PPA. The equipment belongs to the company, and removing or disabling it without authorization is treated as breach and can be pursued as conversion (taking someone else's property), while the payments continue. On a loan you own the panels, but removing them does not remove the debt, and the lender's lien may cover the equipment. If you win rescission or a cancellation, the company is normally responsible for removal and for restoring the roof; make removal and roof repair explicit terms of any settlement rather than assuming them.
Know your exit number before you negotiate.
In your free consultation we identify your contract type, the buyout method it uses, any lien filings, and the complaints that give you leverage, so you walk into the negotiation knowing the realistic number.
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Related guides
Sources
- 16 CFR Part 433, FTC Holder Rule
- 16 CFR Part 429, FTC Cooling-Off Rule
- 12 CFR 1026.23, Right of rescission (Regulation Z)
- CFPB, Issue Spotlight: Solar Financing (August 2024)
- Uniform Commercial Code section 9-513, Termination statement (Cornell LII)
- CFPB: Fair Credit Reporting Act dispute process
Reviewed September 2026. General information, not legal advice. Statutes and rules are summarized; the linked primary sources control.