Solar Panel Lease Has Priority Over Bank Foreclosure

Question: In a recent column you said that, after a bank foreclosure of a first mortgage of a home, the solar panels belong to the buyer who purchased the home at the foreclosure sale. The attorney for the title company that our brokerage firm uses said that your answer was wrong. The title company attorney said that, if a solar panel company financed the sale or lease of the solar panels, and the solar panel company recorded a UCC-1 financing statement, the solar panel company would still own the solar panels after the foreclosure of the first mortgage. Who is correct? You or the title company attorney?

Answer: The title company attorney. Under a complex statute, A.R.S. §47-9334(D), a solar panel company that leases or finances solar panels, and timely records a UCC-1 financing statement, still owns the solar panels after installation at the home, despite the foreclosure of the first mortgage. Therefore, if the buyer of the home after the foreclosure sale doesn’t want to make the payments to the solar panel company for the solar panels, the buyer of the home will probably have to pay the solar panel company for the cost to remove the solar panels, which can be $8,000-$10,000.

Note: Most buyers at foreclosure sales want to continue to make the lease payments or financing payments for the solar panels, because solar panels generally increase the value of a home.