If you signed a solar lease and now feel stuck, you are far from alone. Thousands of homeowners across the country are locked into 20 to 25-year solar lease agreements that are complicating their home sales, straining their budgets, or simply not delivering what was promised.
The two main exits are a buyout or a cancellation, and understanding the difference between them could save you tens of thousands of dollars.
This guide covers everything people search about getting out of a solar lease: how solar leases work, what a buyout actually costs, when cancellation is possible, what your legal rights are, and which path makes sense for your situation.
What Is a Solar Lease and How Does It Work?
A solar lease is an agreement where a third-party company installs solar panels on your roof, and you pay them a fixed monthly fee to use the electricity the system produces. You do not own the panels. The leasing company owns them, claims the federal tax credits, and typically monitors the system for the full contract term.
Solar leases usually run 20 to 25 years. They are structured as third-party ownership (TPO) arrangements, meaning the solar company retains all legal rights over the equipment sitting on your home. In many cases, the company also files a UCC lien against your property, which shows up during title searches and must be resolved before you can sell.
How Is a Solar Lease Different From a Solar PPA?
These two are often confused. With a solar lease, you pay a fixed monthly amount for use of the equipment regardless of how much power it generates. With a solar power purchase agreement (PPA), you pay per kilowatt-hour of electricity the system actually produces.
Both are TPO arrangements. Neither gives you ownership of the panels. For the purpose of this article, the exit options and cancellation rights are largely the same for both.
What Is a Solar Lease Escalator Clause?
This is one of the most common sources of regret among solar lease customers. Most solar lease agreements include an annual escalator clause that increases your monthly payment by 1% to 5% every year.
A 3% escalator on a $150 monthly payment means you could be paying $270 per month by year 20 of your lease. In markets where utility rates have not risen as fast as the escalator, homeowners eventually end up paying more through their lease than they would have paid their utility company outright.
What Is a Solar Lease Buyout?
A solar lease buyout is when you pay the leasing company a lump sum to purchase the solar system outright before the lease term ends. Once the buyout is complete, you own the panels, the lien is removed from your property, and you are no longer bound by the lease agreement.
Buyouts sound simple, but the pricing is where things get complicated.
How Much Does a Solar Lease Buyout Cost?
Buyout costs typically range from $10,000 to $40,000 depending on system size, how many years remain on the lease, and how the contract calculates the buyout price. There are two main methods leasing companies use:
| Buyout Method | How It Works | Best For |
| Scheduled buyout price | A fixed amount listed in your contract at specific milestones (year 5, year 10, etc.) | Homeowners whose contracts include these provisions |
| Fair market value (FMV) | An independent appraisal of what the system is worth today | Older systems that have depreciated significantly |
| Net present value of remaining payments | Sum of all future lease payments, discounted | Usually the most expensive option |
Fair market value calculations consider the age of the system, expected future energy production, current installation costs for similar systems, and local electricity rates.
For newer systems, FMV can actually be higher than what you would have paid to install new panels from scratch. For systems that are 8 to 10 years old, FMV drops considerably as equipment depreciates, which may work in your favor.
Before you agree to any buyout price, get the exact payoff figure in writing and compare it against what a new solar system would cost you today.
What Is Solar Lease Cancellation?
Solar lease cancellation means terminating the agreement entirely, with the panels removed and no further financial obligation to the leasing company. This is different from a buyout, where you keep the system.
Cancellation can happen in a few ways: a penalty-free window early in the contract, a negotiated exit, or through a legal challenge based on how the agreement was sold to you.
Can You Cancel a Solar Lease Without Paying?
In most cases, outright cancellation after the early window has passed will cost you something. However, there are situations where homeowners have been able to cancel without penalty or with significantly reduced fees, particularly when the original sales process involved misrepresentation.
Solar Lease Buyout vs. Cancellation: Side-by-Side Comparison
| Factor | Buyout | Cancellation |
| You keep the panels | Yes | No |
| Lien removed from property | Yes | Yes |
| Typical cost | $10,000 to $40,000 | Varies; possibly $0 to $25,000 |
| Adds value to home sale | Yes | No, but removes a complication |
| Best timing | When selling a home or upgrading | When misrepresentation occurred, or financial hardship exists |
| Impact on credit | None if paid | Depends on method |
When Does a Buyout Make More Sense?
A buyout is usually the better option when you are planning to sell your home and want to simplify the transaction. Homes with owned solar systems are significantly easier to sell. Buyers do not need to qualify with the leasing company, no lease transfer paperwork is needed, and the system can be marketed as an asset rather than a liability. Research from the National Renewable Energy Laboratory shows owned solar systems can add meaningful value to home sale prices, while leased systems often do not, and may even deter buyers.
A buyout also makes sense if you want to add battery storage or expand your system. Most solar lease agreements prohibit modifications to the leased equipment or require company approval for any roof work.
When Does Cancellation Make More Sense?
Cancellation is often the better route when the lease agreement itself was problematic from the start. Common reasons homeowners pursue cancellation include:
- The salesperson made promises about bill savings, tax credits, or net metering that were not accurate
- The escalator clause was not clearly explained before signing
- You were not given a proper right-to-cancel notice within the required window
- The system consistently underperforms the production guarantee in the contract
- The company that sold you the lease has gone bankrupt or been acquired, and service has deteriorated
What Are Your Legal Rights When Trying to Get Out of a Solar Lease?
This is where many homeowners are surprised to learn they have more options than they thought.
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FTC Cooling-Off Rule
The Federal Trade Commission’s Cooling-Off Rule gives consumers the right to cancel any sale over $25 made at their home within three business days, no questions asked.
This rule was designed precisely for door-to-door and in-home sales situations, which is exactly how most solar leases are sold. The solar company must provide a written notice of this right at the time of signing. If they did not, that failure itself may extend your cancellation rights.
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State-Level Cancellation Rights
Many states have their own cooling-off periods that go beyond the federal three-day window. Some states provide five, ten, or even thirty days for home solicitation sales. The length of your state’s window, and whether the solar company properly disclosed it, matters significantly when building a cancellation case.
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Misrepresentation and Contract Defects
If the sales representative told you something inaccurate, such as that you would receive the federal tax credit (you do not under a lease, the company does), that your electric bill would drop to zero, or that you could cancel solar contract anytime, those statements may be grounds for challenging the contract.
A deceptive trade practices claim does not require you to prove intent on the part of the company. You only need to show that what you were told materially differed from what you received.
At Solar Equity Solutions, our team has reviewed and successfully cancelled over 5,000 solar contracts across virtually every major solar company operating in the United States. We are accredited by the Better Business Bureau, and our experience spans GoodLeap, Sunrun, Tesla Energy, SunPower, Mosaic, and dozens of regional installers.
What Happens to Your Solar Lease When You Sell Your Home?
This is one of the most searched questions about solar leases, and for good reason. When you sell a home with an active solar lease, you have three options:
- Transfer the lease to the buyer: The buyer must qualify with the leasing company, agree to the existing payment terms including escalators, and sign a transfer agreement. Real estate agents report this process can add 30 to 60 days to a closing. Many buyers refuse to assume the obligation, which shrinks your pool of potential buyers.
- Buy out the lease before closing: You pay the lump sum, take ownership of the system, and sell the home with panels included as an owned asset. This simplifies everything but costs money upfront.
- Negotiate with the buyer to cover transfer costs: Some sellers offer a price reduction or credit to offset the lease assumption. This can work but reduces your net proceeds from the sale.
The leasing company’s UCC lien on your property means the issue cannot simply be ignored. It must be resolved one way or another before the title can transfer cleanly.
How to Get Out of a Solar Lease: Step-by-Step
Step 1: Pull out your contract
Find your original lease agreement and locate the cancellation, buyout, and escalator sections. Look for any scheduled buyout prices listed at specific years.
Step 2: Check your state’s cancellation window
Confirm whether you are still within any state-mandated cooling-off period based on your contract date.
Step 3: Request a payoff quote in writing
Contact the leasing company and ask for the current buyout price in writing. Do not accept a verbal figure.
Step 4: Review for misrepresentation
Think back to what you were told during the sales process. Were promises made about savings, tax credits, or system performance that did not materialize?
Before signing anything or making a payment, have your contract reviewed by someone experienced in solar cancellations. The specific language in your agreement and the circumstances of your sale often determine what options are available.
You can also file a complaint with the Consumer Financial Protection Bureau at consumerfinance.gov or your state attorney general’s office, particularly if hidden fees or deceptive practices were involved.
Solar Equity Solutions has helped cancel solar agreements with every major company in the industry. If you are not sure where to stand, reach out to our team for a review. Our BBB accreditation and track record of over 5,000 cancelled contracts speaks to the experience we bring to each case.
Frequently Asked Questions
What does it cost to cancel a solar lease?
Costs range from $0 (within a cooling-off window or for valid legal reasons) to $25,000 or more for early termination fees in standard contract exits.
Can I just stop paying my solar lease?
No. Stopping payments triggers default, potential collection activity, and can damage your credit. Always pursue a formal exit.
What is the difference between a solar lease buyout and a payoff?
They refer to the same thing: paying a lump sum to purchase the system and end the lease. “Payoff” is more commonly used when selling a home.
Does a solar lease affect my home sale?
Yes. The UCC lien must be resolved, and buyers must either assume the lease or you must buy out before closing. It can complicate or delay a sale.
Who owns the solar panels on my roof if I have a lease?
The leasing company owns them. You only pay for the right to use the electricity they produce.
Can I negotiate a lower buyout price?
Sometimes. Older systems with significant depreciation may support a fair market value argument that results in a lower price than the standard contract formula.
What happens to my solar lease if the company goes bankrupt?
Your lease does not disappear. It typically gets sold to another company as an asset. SunPower’s 2024 bankruptcy is a real example of this, where thousands of homeowners found their leases transferred to new servicers.
Is canceling a solar lease bad for my credit?
Only if it results in unpaid balances sent to collections. A properly negotiated exit or legal cancellation does not impact your credit.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Individual results vary. Consult a licensed attorney for guidance specific to your agreement and state.