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Solar Customers Surprised by Hidden Liens

Feb 18, 2016

As public records search experts, we at All American Document Services have seen all manner of hidden liens. SolarCity, one of the nation’s largest solar contractors, is now finding itself in hot water after dozens of complaints started rolling in about hidden leans, inaccurate disclosures, and deceptive sales tactics surrounding the company’s zero-down, 20-year lease on solar systems. Many homeowners who signed contracts with SolarCity are reporting minimal savings. In some cases, electric bills have skyrocketed. What’s worse? Some consumers have received UCC letters from their banks notifying them that SolarCity had placed a lien on their home.

Is SolarCity Part of a Larger Problem?

This is a cause for concern, especially coming from a supposedly reputable company like SolarCity, which has received an excess of $500 million in tax subsidies as part of Obama’s green energy program. As you’ll see, hidden liens can be snuck into contracts of all kinds. Without a reputable and thorough document search and abstract company, these hidden liens can affect new homebuyers, sellers, investors, and businesses.

Fixture Filing or Lien?

SolarCity’s contract states that their UCC-1 Fixture Filing is intended to give notice of its rights to the installed solar system specifically, and that it’s not a lien on the home. According to lien laws, by attaching a fixture filing to a property, SolarCity would be second in line behind the original mortgage lender in collecting proceeds from a default. The bottom line is that banks consider fixture filings liens, and many homeowners who have entered into lengthy contracts like those offered by SolarCity will end up paying fees to their bank for the additional lien. Other contracts have provisions that allow solar companies to block the sale of a home until they convince the buyer to sign another contract.

Arizona Lawmakers Offer a Remedy

Legislators in Arizona have passed some of the nation’s most comprehensive transparency laws, many of which are designed to protect consumers from secretive liens like those used by SolarCity. The following requirements, which many people would expect to be mandatory already, went into effect January 1st.

In Arizona, all contracts must contain:

10-point font with no blank spaces;

The total price, including interest, over the life of the contract must be clearly stated;

Potential tax ramifications;

Disclosure of impacts or restrictions if the buyer transfers or modifies the property;

Schedule detailing depreciation;

An option to cancel for up to three business days after the purchase.

Solutions from All American Document Services

While the rest of the country catches up with Arizona’s transparency laws, All American Document Services will continue to offer accurate investigative solutions that mitigate risk. We are a full-service public records research and retrieval company that offers peace of mind to lenders, corporations, and real estate professionals across the country.

For more information, please visit our homepage or contact us today.

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