Solar Panels on a San Diego Home: Owned vs. Leased and What Buyers Should Ask

by Trevor Landress

If the home you want has solar panels, the first question is whether the system is owned or leased, because that decides who gets the savings and what happens when the home is sold. The California Contractors State License Board says a lease or a power purchase agreement may require a buyout or a buyer who will assume the contract.

The short answer

An owned system is part of the home. A leased system belongs to the leasing company.
A power purchase agreement means you buy the power at an agreed rate, often with an annual escalator.
A lease or PPA may need to be bought out or transferred to the buyer when the home sells.
Ask for the contract, the transfer terms and any lien language before you write an offer.

Three ways to have solar

The Contractors State License Board's consumer page on solar lays out the options:

Option	How it works	Who owns the system
Buying	You pay with cash or a loan, including programs such as PACE	You
Leasing	You pay fixed monthly payments, typically over about 20 years, while you use the power	The leasing company
Power purchase agreement (PPA)	The company installs the system at no upfront cost and you buy the power at an agreed rate, often with an annual escalator	The company

The Board adds that with a PPA you may have to pay for all of the power produced, even unused power, and that you should ask whether a fixed rate is available.

What changes when the home sells

San Diego Gas & Electric's financing comparison treats an owned system as an upgrade that may raise a home's sale price or marketability. A lease is different: you either buy out the remaining balance or transfer the lease to the buyer. The utility says the transfer depends on the buyer's credit and willingness, and the leasing company may have to give written consent.

The Board makes the same point, noting that selling a leased home may require a buyout or a buyer who will assume the lease. For a buyer, that means a leased system can be a hidden condition of the deal. For a seller, it means starting that process before listing, not after an offer arrives.

Tax and incentive questions

SDG&E's comparison says a purchaser, as owner, can claim the tax credit and a lessee cannot, because the leasing company keeps those benefits. The Board says a buyer keeps the incentives, while alternative financing can raise your property tax or utility bill, and some programs may place liens on your home. I am not a tax professional, so ask a CPA how those rules apply to you.

Questions to ask about a home with solar

Is the system owned, leased or under a PPA?
Can I see the full contract, including any escalator, buyout terms and lien language?
What happens if I sell the home, leave the lease early or the system underperforms?
Will the company approve a transfer to me, and what credit does it require?
Who handles maintenance, the warranty and disputes?
Are all savings and power output claims in writing?
How old is the roof under the panels?

The Board also suggests asking how long you will stay in the home, because savings can take years to recover the system's cost, and whether the roof faces south, southwest or southeast without shade.

If you are signing up for solar

Confirm the contractor holds a valid license authorized for solar work, and check it on the Board's license lookup.
Solar salespeople generally must be registered with the Board as home improvement salespeople.
The contract should list all costs, the installation timeline, the equipment and panel count, and any guaranteed power minimum.
The contractor should pull all required permits. I cover how to check them in my permit history guide.
Get signed lien release forms from contractors, subcontractors and suppliers, and do not let a lender pay the contractor before the work is done.
California law lets you cancel within three business days without penalty, and construction should not begin during that period.

Where solar fits in a purchase

A system on the roof is part of what you are buying, so your inspection should include it, along with a look at the roof. I explain how to use an inspector's findings in how to read a home inspection report. In a condo or townhome community, ask the association about its rules, as I describe in my HOA fees guide.

Solar also pairs with other ways to cut utility costs. My guide to water-saving rebates covers one of them.

My advice for San Diego buyers and homeowners

Find out on day one whether the system is owned, leased or under a PPA.
Read the lease or PPA, especially the escalator, the buyout terms and the transfer clause.
Ask the lender whether a leased system affects your financing.
Have the roof inspected, not just the panels.
Check the installer's license and the permits before you rely on the system.

A note on advice

I am a REALTOR®, not a lender, attorney, tax professional or financial advisor, so this guide is general information. Your lender can tell you what you qualify for, and a CPA or attorney can answer tax and legal questions.

Call or text me at (619) 402-4614 or send me a message.

Call or text (619) 402-4614 Contact Trevor Landress

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Frequently asked questions

What is the difference between owning and leasing solar panels?

With a purchase you own the system. With a lease, the leasing company owns it and you pay fixed monthly payments, typically over about 20 years.

What is a solar power purchase agreement?

The company installs and owns the system at no upfront cost, and you buy the power at an agreed rate, often with an annual escalator.

What happens to a solar lease when I sell my home?

You may need to buy out the lease or transfer it to the buyer, and the transfer depends on the buyer's credit and the leasing company's written consent.

How do I check a solar contractor?

Confirm the contractor holds a valid license authorized for solar work using the Contractors State License Board's license lookup.

Can I cancel a solar contract?

The Board says California law lets you cancel within three business days without penalty.

About the author

Trevor Landress is a San Diego REALTOR® with Coldwell Banker West (DRE# 02126901). He was born and raised in San Diego and has been licensed since 2021.

Trevor helps homeowners sell, guides first-time buyers through the home buying process and assists investors with their next acquisition. His work includes negotiating offers, analyzing market trends, building pricing strategies and running marketing campaigns for his listings.

He serves clients across San Diego County, from coastal communities like La Jolla, Del Mar and Carlsbad to neighborhoods inland.

Trevor is part of the Campbell Group, a three-generation real estate team, and he and the Campbell Group consistently rank as a top producing team at Coldwell Banker West each month. He writes these guides to help San Diego buyers and sellers navigate an ever-changing market. To talk through your plans, call or text (619) 402-4614 or contact Trevor Landress.

How I help San Diego home buyers

I help buyers sort out their budget, understand their loan options with a lender, search for homes, write and negotiate offers, keep track of inspection and contingency deadlines and stay organized through closing.

How I help San Diego home sellers

I help sellers price their home, prepare it for the market, market it to buyers, review and negotiate offers and manage the steps from an accepted offer to closing.