Solar panels have been showing up on the roofs and in the yards of more and more homes in recent years. So naturally, more homes with solar panels are hitting the market.
But this raises several questions — practical and financial — that must be addressed whether clients are interested in buying or selling a home with existing solar panels.
First, let’s start with some general awareness.
Solar panel salespeople and installers will insist that solar panels add value to a home and save on energy costs. They back this up with stats from the National Bureau of Economic Resources claiming a nationwide 3.5% increase in value. CNBC quoted Zillow findings that ranked Maryland in the top 10 solar premiums with a 3.8% increase or +$11,000 for the median home value.
However, the real value — or lack thereof — can depend on many factors, such as type of ownership, cost of electricity in that area, location and mindset of buyers in that market, as well as the age and productivity of the system itself.
From there, it all boils down to three key items that agents and title professionals need to keep in mind to help buyers and sellers make smart decisions during the sales process.
Are the Panels Owned, Leased or Under a Power Purchase Agreement?
Some systems are owned outright. This will ultimately provide value to the homeowner as long as the system is in working order. However, in Maryland, most home solar panels are under a lease or power purchase agreement (PPA).
The agreements are recorded as lien/easement/agreement and can be found at www.mdlandrec.net. Under these agreements, the solar company owns the panels and sells the electricity they generate back to the homeowner. In theory, the homeowner will purchase electricity at a rate that is lower than the rate offered by the local power company.
Yet, many times, a solar company may actually be charging a higher rate.
Determine Whether Production and Rates are Favorable
The official electric shopping website of the Maryland Public Service Commission offers a look into the current price per kWh for electricity (https://www.mdelectricchoice.com/shop/). This price must be compared to the price in the agreement obtained from the solar company to determine potential savings. In some cases, the agreement price per kWh offers little to no savings. In this scenario, the seller should be advised to consider the cost of terminating their agreement and purchasing the system at the current fair market value.
If the rates are favorable, now it’s time to show potential buyers why the solar panels are a great addition to the total package.
Accurately Communicate the Value
Regardless of whether the solar panels are leased or owned outright, always be clear and direct about the arrangement and what it means for the new homeowner. It’s also important to accurately state the benefits in terms that the consumer can understand.
A great example: “The solar system currently saves the owner approximately $500 per year.”
The bottom line is that selling a home with solar panels requires a bit more research and responsibility to understand and communicate the benefits of the additional investment. But as long as you do the work and know the numbers, solar panels could prove to be an asset that helps sellers find a buyer faster — and at a higher price.
Learn more about how solar panels increase property values:
Senior processor Linda Stearns has spent 13 years with Advantage Title. So we know that she’s at her best when she’s facing a challenge. She loves to dive deep, investigate and solve problems.
If you’ve worked with Linda, you know how dedicated she is to her job. But in our Team Member Spotlight Q&A, you’ll learn a lot more about her — we did. That’s why we’ll be cranking up “Feels So Good” by Sonique whenever we want to put a smile on her face.
Are you an early bird or a night owl?
Definitely an early bird. I’m usually awake at 4. The first thing I do is get up and do chores. Then I’ll make coffee and sit down at my desk.
Sometimes I’ll wake up out of my sleep in the night and happen to remember something I forgot to do that day, so I’ll get up and do it.
What was the first thing you saved for and bought with your own money?
My first car. It was a Hyundai. I was 20 or 21. It was the bottom of the line, but I’d been driving an ’83 Mustang with a hole in the floor. So when I bought that car, it made me feel like I was doing something.
I bought my house when I was 25, and that was the next big thing.
What’s the first thing you’re going to do when the pandemic is over?
Hug my mother. My mom is older and diabetic. I go and visit her through the front door, but that’s it.
If you could snap your finger and be an expert at anything, what would it be?
The ultimate job that I would love to do would be as a child advocate. They are the voice of the children in the court system.
My daughter is living my dream. She works for a nonprofit that works with the foster care system.
What’s the best advice you were ever given?
Say what you mean and mean what you say. Don’t say it unless you mean it.
What energizes you at work?
I usually love when there is some sort of title flaw that I have to investigate — those rare things you have to really look into. Maybe you have to go back and fix a deed, find people who should have signed off a certain way or there’s an unreleased mortgage or lien.
I’ve always loved that part when you have to dig and do the research. It’s the challenge of it.
What do you do to fix a bad day?
Music can honestly change my mood quickly. Lately, I’ve really been liking LANY. I still like a lot of ’90s stuff.
I have a song that really always picks me up. It’s by Sonique and it’s called “Feels So Good.”
If you want to close the sale, you must have a clean title.
It’s not as easy as it might seem.
A clean title means there are no standing claims against the property and that the owner has the full legal right to sell the property. Our job as your title company is to do the digging to ensure that the title is clean and ready for a smooth transfer of ownership.
But often, it’s not smooth at all.
We often find hidden claims against the property that must be resolved for the sale to go through. Some are easily resolved. Others … well … others can be a challenge.
Here’s a brief rundown of some of the claims that we see most often:
Mechanic’s Liens
A mechanic’s lien is typically placed on the property prior to a contractor doing work to improve the property. It covers the cost of materials, equipment, and labor associated with the project. When the job is completed and paid for, it’s the contractor’s responsibility to release the lien. If that doesn’t happen for any reason, it becomes an issue to be resolved prior to settlement.
Bankruptcy Liens
A bankruptcy filing connected to someone holding title to a property is another common problem we see. When the bankruptcy situation is resolved, the lien must also be addressed. From time to time, that doesn’t happen and it takes some effort from the title company to clear the title.
Child or Spousal Support Liens
When a lien is filed for delinquent child support or spousal support, it can be still be connected to the title, waiting to be discovered, even generations later.
Delinquent Tax Liens, Fraud & Forgery
Similarly, liens related to unpaid or late tax returns can hold up the process if left unresolved. Fraud and forgery are also common in the event that one person on the title signs the name of another person on the title, typically a spouse.
This is just the beginning of a long list of issues that can throw a wrench into your sale. It’s why our team works hard to examine the title on each property that comes across our desks, all part of the work we do to bring your deal to the closing table.
The Maryland “Non-Resident” Real Estate Withholding Tax is 8% for Individuals (8.25% for LLCs, Estates, and Entities) on the PROCEEDS or GAINS from the sale of a property.
A Full Exemption is possible if a seller can certify any of the special situations listed below.
Principal Residence
Principal Residence — Active-Duty Military, Certain Government Employees
Tax-Free Exchange for purposes of 1031 of the Internal Revenue Code
Transferor/Seller is receiving zero proceeds from this transaction because proceeds are going to another seller/owner (ex. consignor)
The transfer is pursuant to an installment sale under 453 of the Internal Revenue Code
Transfer of inherited property is occurring within 6 months of date of death
Transferor/seller is the custodian of an individual retirement account (IRA)
The transfer is pursuant to a specific Internal Revenue Code section
A Partial Exemption is possible, especially if a seller has paid income tax in the state of Maryland.
Before a seller fills out the Exemption Request, they will need to collect:
Mailing Address of Buyer’s Title Company
Settlement Statement from Purchase
Preliminary/ Estimated Settlement Statement from Sale (Ask the Title Company)
Upon review, a full or partial Exemption Certificate will be mailed to the Title Company within 21 days of receipt.
If a Seller fails to submit the Exemption Form 21 prior to settlement, they can complete a Refund Form and follow the same instructions listed above. https://www.marylandtaxes.gov/forms/21_forms/MW506R.pdf (Post Settlement)
If you or your client have any questions, don’t hesitate to reach out to our team.
If you are selling commercial property, it is likely that you have sold properties held in a corporation. Advantage Title has a strong commercial side and is capable of handling your commercial deals as well.
However, it is still possible to have a residential property be held in a corporation. So what do we need to know when the owner of the record is a corporation?
Let us help.
The first thing we will need is a copy of the Articles of Organization, a copy of the Bylaws, the EIN # for the corporation, and a Certification of Resolution. The Certification of Resolution will tell us who has the Signing Authorization for this property. Once we have these documents, we will verify that the cooperation is in good standing with the state.
For the contract of sale, the seller will be the name of the corporation. The seller will sign as “*Name, Officer, Name of Corporation.*” For example, “Jessica Scott, President, ABC Company.”
At settlement, we will disburse funds into a separate bank account for the corporation.
That’s it! The rest of the transaction will proceed as normal. As always, feel free to call or text Business Development Manager Jessica Scott at (443) 487-1584 to guide you through the process.
What do you do when you have a listing coming to the market but the owner is in an LLC? Does anything change? How does the sale work?
We can help.
When a property is in an LLC, it means that the business is holding the title to the property. While the sale isn’t too different from a traditional owner sale, there are quite a few documents we will request in the transaction. So it is prudent to make sure you let your seller know ahead of time what documents to collect for clearing the title.
We will need:
A copy of the Operating Agreement
A copy of the Articles of Organization (signing Authorization)
EIN # for LLC
Proceeds Disbursement Authorization
On our end with the title, we will verify that the LLC is in good standing with the state.
When writing the contract of sale, be sure to have the seller as the name of the LLC and the signatures to be “*Name of LLC by Name of Signer*” and their member status. For example, Advantage Title LLC by Jessica Scott, Member.
And there you have it! Selling a property in an LLC is easy! If you have questions, contact Advantage Title directly when your next LLC listing pops up. We’ll be happy to walk you through it.
