Solar panels add a layer of complexity to Florida foreclosures that many homeowners do not anticipate. What happens to the panels depends on whether you own them outright, financed them through a loan, lease them from a solar company, or have a PACE (Property Assessed Clean Energy) assessment. Each situation creates different legal and financial obligations for you, the lender, and the new property owner.
Owned Solar Panels (Paid in Full)
If you purchased solar panels outright and they are permanently installed on the roof, they are generally classified as fixtures under Florida law. Fixtures are part of the real property and transfer with the property when it is sold — including at a foreclosure sale.
This means the new owner gets the solar panels along with the house. You cannot remove them without potentially facing a claim for property damage. The panels actually increase the property's value at auction, which can help reduce your deficiency exposure.
Financed Solar Panels (Solar Loan)
If you financed the solar panels through a solar-specific loan, the situation is more complicated. Solar lenders often file a UCC (Uniform Commercial Code) financing statement to secure their interest in the panels. This creates a competing lien:
- The mortgage lender has a lien on the real property (house and fixtures)
- The solar lender claims a security interest in the panels specifically
In a foreclosure, the question becomes whether the panels are fixtures (part of the real property, subject to the mortgage lien) or personal property (subject to the solar lender's UCC filing). This is a legal question that courts decide based on factors like how permanently the panels are attached, the intent of the parties, and the specific contract language.
If the solar loan is still outstanding after foreclosure, you remain personally liable for the balance. The solar lender can pursue you for repayment regardless of what happens to the property.
Leased Solar Panels
Solar leases are fundamentally different because you never owned the panels — the leasing company does. The panels are their property installed on your roof under a lease agreement.
After foreclosure:
- The lease is a personal contract between you and the solar company
- The panels remain the solar company's property
- The new property owner may be asked to assume the lease
- If the new owner refuses, the solar company may need to remove the panels
- Your lease obligation may continue even after you lose the property, depending on the contract terms
Solar leases are typically 20 to 25 years with early termination fees of $10,000 to $20,000 or more. Review your lease carefully with an attorney to understand your obligations after foreclosure.
PACE Financing: The Super-Lien Problem
PACE loans (Property Assessed Clean Energy) are a special category of solar financing that creates the most significant issues in foreclosure. PACE loans are structured as property tax assessments, which means they have the same priority as property taxes — ahead of the mortgage.
This super-priority status means:
- The PACE assessment survives the mortgage foreclosure
- The new owner takes the property subject to the remaining PACE payments
- This reduces what buyers will bid at auction (reducing property value)
- Many mortgage lenders refuse to allow PACE financing for this reason
If you have a PACE assessment and are facing foreclosure, the combination of the mortgage debt and the PACE obligation may make the property particularly difficult to sell. A short sale may need to address both the mortgage and the PACE assessment to clear title for the buyer.
Impact on Selling Before Foreclosure
Barrett Henry, a REALTOR with 23+ years of real estate experience and Broker Associate at REMAX Collective, notes that solar panels can complicate a pre-foreclosure sale in several ways:
- Buyers may not want to assume a solar lease
- Solar loan payoffs must be factored into the sale proceeds
- PACE assessments must be satisfied at closing
- UCC filings from solar lenders can cloud the title
Despite these complications, selling before foreclosure is still often the best option for preserving your credit and avoiding a deficiency judgment. An experienced agent can work through the solar-related issues as part of the sale process.
Steps to Take If You Have Solar Panels and Face Foreclosure
- Determine your solar arrangement — owned, financed, leased, or PACE
- Review your contract — understand your obligations, transfer provisions, and termination costs
- Contact the solar company — inform them of the foreclosure and discuss options
- Factor solar debt into your strategy — any exit plan (sale, short sale, bankruptcy) must account for the solar obligation
- Consult an attorney — solar panel issues in foreclosure involve complex lien priority questions
Have solar panels and facing foreclosure? Contact us today for a free consultation. We can help you navigate the additional complexities.