Occasionally we get asked about what happens to a solar loan if you die. Is the estate still liable for the remainder of the contract? Does an existing lease or PPA contract continue after death?
People avoid talking about death for a reason: It can be a very uncomfortable topic to discuss. Unfortunately, because of that, people don’t always proactively plan for it, which can sometimes leave friends and family with the task of dealing with their loved one’s estate instead of mourning their passing.
In short, a loan for solar panel installation is just like any other financial obligation, such as a home mortgage, car loan, or credit card debt. If you pass away, your estate may still be obligated to pay off the remainder of the payments, and a lease or PPA may stay attached to the home and get passed along to whoever inherits or buys it.
Though death is a difficult topic to discuss, we want to provide you with essential information about what happens to a solar panel loan after someone dies. It’s a simpler answer than you might think, but it still requires some important preparations.
Who Is Responsible For The Loan On My Solar Panel Installation After I Die?
When you sign that dotted line, you probably aren’t thinking about what will happen to your solar panels if you pass away, but it’s important to think about it in case the unexpected occurs. In short, your solar loan will be treated just like any other outstanding debt.
This means that the terms of your solar loan will be folded into the administration of your estate. “Estate” in legal terms, is just the full collection of all your assets and debts. (You don’t need to own a mansion to have an “estate” when you pass away.)
If you have a last will and testament, it will typically account for all of your possessions, and what you might owe. The “Executor” you name in that document will take care of your estate on your behalf as specified in your will. However, if you do not have a last will and testament, the administration of your estate, which includes your solar loan's terms, will be handled through a probate court.
Here’s what you need to know about probate court when it comes to your solar loan:
- Probate court is the part of the legal system that deals with estates, ownership, and other related matters.
- The probate court will determine how your debts will be paid before any remaining assets are transferred to your heirs as an inheritance.
- Your estate may be held responsible for repaying the debt in full, from your assets, or it could be permitted to keep making regular loan payments.
- Depending upon the solar loan terms, your spouse, common-law partner, or cosigner may also be held responsible for the repayment of the remainder of the loan.
In order to avoid the formalities of a probate court, we recommend you prepare a last will and testament that includes what to do with your installed solar loan.
What Are The Differences Between Solar Loan, Solar Lease, and PPA If I Die?
There are three primary financial instruments you can use to pay for your solar power system over time: a loan, a lease, or a power purchase agreement (PPA). Deciding between solar financing options for your solar installation is important because they have advantages and disadvantages. By understanding how they differ, you can make sure everything is taken care of when you pass away.
What Happens To A Solar Loan After Death
If your death occurs before you have paid off your solar loan, your estate will be responsible for the full repayment of the remainder of that loan. Again, this is similar to what happens with other large financial obligations, like a mortgage payment or car loan.
Most solar loans fall under the umbrella of home renovation, so they come with payment options, loan lengths, and interest rates that are specific to your financial situation and credit history.
For homeowners, solar loans are enticing because you are making payments toward actually owning your solar panels, and can spread out those installation costs over time to align with the expected savings on your utility bills. This means you would be able to enjoy the full benefits of the solar energy system, including the Solar Tax Credit and greater return on your investment once you pass the solar payback period, without the need for a large cash payment.
What Happens To A Solar Lease/Solar PPA After Death
The core differences between a solar lease and a Power Purchase Agreement (PPA) are simple:
- Solar Lease: You pay a set monthly fee to rent your panels, and get to use any power that they produce for no additional cost.
- Solar PPA: You pay a set monthly fee per kilowatt-hour (kWh) of electricity generated by your solar panels.
In either case, you don’t own your panels—the solar company does, which has pros and cons. If you die before you fulfill the terms of your leasing agreement or PPA, that company won’t automatically take back the panels. They do own them, but they can’t simply remove them from your property without consent.
Therefore, you should assign someone in your will to take on the responsibility of the solar panel contract. If you don’t specify a beneficiary on your solar lease, then your estate will likely be held responsible.
For either scenario, you have a few options:
- Your heir(s) or estate can continue making monthly payments on the PPA or solar lease after death. This is often deemed preferable if the property is staying within the family.
- They can pay off the remaining balance to buy out the lease. This often happens if the estate or a family member plans to sell the home.
- If they want to sell the home, they could also transfer the lease/PPA to the new homeowner. This can be trickier, as it involves the coordination of multiple overlapping actors, including the various financial institutions involved in the sale of the home itself.
You can also break the lease or PPA agreement to end the contract early, but this will often come with early termination fees or penalties that would still be owed by the estate. (Check your lease for specifics.) In this case, you’ll want to provide a death certificate to the lender and talk with their customer service about your options.
It All Depends On The Terms Of Your Solar Panel Agreement
When acquiring solar panels, many people gloss over the fine print in their loan conditions. However, it’s important to understand the contract in its entirety to have a thorough grasp of all the details contained in your solar panel system agreement.
If you have questions, it may be helpful to consult with a lawyer or accountant to understand the obligations that you’re agreeing to. This conversation can help you and your heirs evaluate how the loan or lease might affect them in the event of your death, and how they should proceed. You can also use this as an opportunity to include information about your solar panel financing in your estate planning.
What Happens To A Solar Panel Loan After A Death
Going solar is a good investment for your home and the planet, but it’s helpful to think about the future of your solar loan if you unexpectedly pass away before it’s paid off. In short:
- If you die before you've completed the terms of your solar panel loan, your estate and family may be held liable for the outstanding balance of the debt.
- Having outstanding bills when you die may be annoying, but it is no different from other unpaid obligations from secured loans, such as a home mortgage or car loan.
- What matters most is that you convey the solar panel loan terms and related financials to your family and executors clearly and understandably before you die.
- You should include your preferences and the terms of your loan, lease, or PPA in your last will and testament.
Certain loan providers, including those that Palmetto works with, perform contract validation checks at the point of sale to ensure that consumers are fully informed about their solar energy investment, and the obligations that come with it. Although there are no state or federal obligations to do so, these firms are motivated to do the right thing.
Talking about death is a touchy subject, but planning for the unexpected is important, especially when it comes to a substantial investment like solar panels. By considering all of your options, planning ahead of time, and folding your solar loan in your end-of-life documents, you can help to safeguard the value of your legacy.
Interested in installing renewable energy on your home? Palmetto offers a Free Solar Design and Savings Estimate for customers looking to save on energy costs and can help you select financing that aligns with your planned future.
