Solar Installations – Security Interest Perfection; Mortgage ??
The solar power boom is occurring across the United States and abroad, and domestically Congress’ extension of the solar tax credit will help to continue fueling the boom.
Financing solar installations is an evolving process, with solar financiers typically offering three solutions: leases, power purchase agreements (PPAs), and loans.
Many solar financiers today offer at least the following three products: leases, power purchase agreements (PPAs), and loans. The first two are third-party ownership (TPO) products—i.e., ownership of the system remains with the financier and the customer pays a monthly sum (fixed or dependent on energy production) to access that system. In a loan arrangement, the customer owns the system and remits to the financier a monthly payment of principal and interest to pay down the debt.—https://financere.nrel.gov/finance/content/residential-solar-and-uniform-commercial-code-primer-solar-financiers-rights-home-foreclosur
So what are the pros and cons of these financing choices? Attorney Douglas P. Cushing, from Jordan Ramis PC in Oregon, explores this question in his article Legal Issues with Solar Panels:
The first question will be whether the installed system is a fixture or deemed part of the building improvements. A fixture is personal property, so a UCC filing would be the method used to secure a lender. Does that determination also control the claims of an installer who may expect the right to claim a mechanic’s lien that attaches to a building?
Clearly, the importance of properly categorizing the solar energy assets is key. More questions arise when looking at the solar assets intended for commercial scale rather than residential.
Samuel Hon
President at First Corporate Solutions, Inc.