Selling a Minnesota Home With Solar Panels You Still Owe On: Challenges and Benefits
Solar panels can make a home more appealing, but when you still owe money on them, the sale has an extra step. What you owe, and to whom, determines how smoothly closing goes.
First, Know What You Have
- Owned outright: No balance. The system simply stays with the home.
- Solar loan: You own the system and owe a lender.
- Lease or PPA: A third-party company owns the panels and you pay monthly for the system or the power.
The Challenges
Payoff can reduce your proceeds. Paying off the loan from sale proceeds is the most common approach, much like a mortgage payoff at closing. Once the loan is paid, the system transfers to the buyer as a fixture with no extra conditions. Some lenders allow a buyer to take over the loan, but the buyer must meet the lender’s credit requirements and be approved. If a transfer fails, the loan may have to be paid off at closing, which lowers what you walk away with.
A lease needs the buyer’s approval. The buyer is usually asked to assume the lease, subject to the solar company’s approval, which includes a separate credit check. Until that’s done, you stay responsible for the lease, and selling without the provider’s written approval can put you in default, at least with some providers. Approvals can take a few weeks, so start early.
Liens can interfere with the buyer’s mortgage. A UCC-1 filing on leased panels can block a buyer’s loan, but sellers can usually clear it by transferring the lease or buying it out. Contact your solar company before you list.
Appraisals may not count the system. Fannie Mae, Freddie Mac, FHA and VA guidelines treat leased and PPA systems as personal property and exclude them from appraised value. The buyer’s lender will also need to review the lease or PPA documents.
The Benefits in Minnesota
No property tax penalty for solar. Solar energy systems are exempt from property tax valuation in Minnesota, so the added home value won’t raise your property taxes, and the exemption applies automatically. That’s a strong point to share with buyers. thegrantmap
Net metering and utility programs. Minnesota requires utilities to offer net metering for solar systems under 40 kW. Xcel Energy also offers Solar*Rewards, which pays a small amount for each kWh the panels generate. Buyers can ask about transfer of these benefits with the property.
Added value, with caveats. Zillow data puts the average value boost from solar at about 4.1%, roughly $13,500 on the average Minnesota home. That’s an estimate, and as noted above, leased systems may not count in an appraisal.
Fewer hoops when the system is paid off. With an owned system, the buyer doesn’t need to sign anything new or get approval from anyone. Prepaying a lease works similarly: the buyer gets solar with no monthly bill, which can be a nice selling point.
A tougher market for new solar. The 30% federal homeowner solar credit ended after 2025, so buyers who install their own system in 2026 or later can’t claim it. An existing, working system may look more attractive to solar-minded buyers than it would have a few years ago.
Your Options as a Seller
- Pay off the balance at closing (loan) for the cleanest sale.
- Transfer the loan or lease to a qualified buyer, if your provider allows it.
- Build the payoff into your price. You can raise your asking price to cover the balance, but expect to justify it with documentation on the system’s value and performance.
- Offer concessions. Seller concessions or closing cost help can offset the payoff and make the deal more attractive.
- Buy out or prepay a lease before closing so the buyer takes a system with no ongoing payments.
Get Ready Before You List
- Request a payoff quote or a copy of your lease or PPA and the provider’s transfer process.
- Gather warranty documents, permit and interconnection approvals, and net metering agreement details.
- Tell your agent and title company about the system and any filings on the property.
- Let buyers’ lenders know about the lease or loan early to avoid delays at closing.
A solar balance doesn’t have to derail a sale, but it does take planning. Contact our office and we’ll help you work through the options before you list.