The Board of Directors of Nā Hale O Maui (NHOM), after review of several solar power lease agreements (Purchase Power Agreement, Power Service Agreement, etc.), has determined that it is in the best interest of NHOM and our Homeowners to prohibit solar energy lease/power purchase agreements on our properties. We find that these agreements are extremely complex, and difficult to understand. This much is very clear: these Agreements favor the Solar Company; not the Homeowner, and they contain numerous clauses that may create significant problems for Homeowners who want to refinance or sell their homes.
The majority of NHOM properties are financed under the Federal National Mortgage Association (FNMA) “Fannie Mae.” The FNMA My Community loan program has enabled our income-qualified families to purchase our community land trust homes with a low down payment. These loans must conform to FNMA guidelines, including FNMA issued guidelines regarding Leased Solar Panels. None of the power lease agreements that we have reviewed conform to the FNMA guidelines.
This is why NHOM and our Homeowners simply cannot agree to participate in solar power lease agreements that could preclude the mortgage financing of their homes in the future for any refinancing or sale to another income qualified household.
Nā Hale O Maui continues to believe that solar energy is a viable alternative to fossil fuels. When appropriate, we encourage our homeowners to buy their solar energy system.
The homeowner will receive an initial credit of up to 50% of the selected contractor’s bid, subject to any reduction for reasonableness in year 1. The credit will be reduced over a period of 15 years, in equal annual amounts, from a maximum of 50% in year 1 to 0% by the start of year 16. The ECI credit will be added to the Limited Resale Price or Limited Refinancing Price calculation.
Additional Solar Lease issues:
- “Every person or entity with an ownership interest in the Property has agreed to be bound by this agreement;”
- “Homeowner are the only fee simple owner of the Property (i.e., you have full and exclusive ownership rights to the Property;”
- Homeowner to obtain from Mortgagee, HOA, any other person with an interest in Property all authorization necessary…;”
- Customer indemnify, defend, protect, save & hold harmless – survive termination or expiration of lease;
- Roof not returned to not to original condition, i.e., sound and watertight condition that are architecturally consistent with home;
- Short or no warranty period on watertight conditions at roof penetrations;
- Limited warranties; “cosmetic” repairs at System owner’s discretion
- Right to approve “creditworthiness” of new Lessee (sale of Home);
- Death of homeowner treated as a transfer;
- Lease binding upon Owner’s estate and heirs;
- Customer to provide written notice of proposed FEE SIMPLE sale;
- Homeowner required to pay for power even in event system inoperable;
- System Owner right to estimate power when meter in accurate or inoperable;
- Waive right to trial – individual binding arbitration;
- No performance bond to be provided by System Owner;
- Penalties, fees, interest charges;
- Obligation to pay is absolute; no abatement, defense, counterclaim, setoff, recoupments, reduction;
- Governed by laws of other states; Arbitration under other state provisions.