Solar Panel Contract Disputes

The residential solar industry has experienced explosive growth, with over 4 million homes in the United States now equipped with solar panels. Unfortunately, this rapid expansion has also brought a surge in consumer complaints about misleading sales tactics, underperforming systems, installation problems, and confusing lease agreements. Whether you purchased, leased, or entered a power purchase agreement (PPA) for solar panels, you have legal protections when companies fail to deliver on their promises. The FTC's Consumer Protection resources provide guidance on your rights when dealing with deceptive business practices. This comprehensive guide explains your rights in solar panel disputes and how to recover damages when solar installations go wrong.

Understanding Solar Contract Types

How you acquired your solar system determines your legal rights and remedies:

Cash Purchase

You own the system outright after paying the full purchase price (typically $15,000-$35,000). You're responsible for maintenance but retain all incentives, including the federal Investment Tax Credit (ITC) and any state rebates. Equipment warranties and workmanship guarantees protect you against defects.

Solar Loan

You finance the purchase through a solar loan, typically over 10-25 years. You own the system and qualify for tax credits, but must make monthly loan payments. Interest rates typically range from 3-8%. The system serves as collateral, and a UCC-1 filing may be recorded against your property.

Solar Lease

A leasing company owns the system installed on your roof. You pay fixed monthly lease payments (typically $50-$250) for 20-25 years. You don't own the system and don't qualify for tax incentives. The leasing company is responsible for maintenance but may place a lien on your property.

Power Purchase Agreement (PPA)

Similar to a lease, but you pay per kilowatt-hour (kWh) of electricity produced rather than a fixed monthly payment. Rates are typically lower than utility rates initially but may include annual escalators of 1-3%. You don't own the system or qualify for incentives.

Feature	Purchase	Loan	Lease	PPA
System Ownership	You	You	Company	Company
Federal Tax Credit	Yes (30%)	Yes (30%)	No	No
Maintenance Responsibility	You	You	Company	Company
Typical Contract Length	N/A	10-25 years	20-25 years	20-25 years
Early Termination	N/A	Pay off loan	Buy out ($10K-$30K+)	Buy out ($10K-$30K+)
Impact on Home Sale	Increases value	Must pay off or transfer	Buyer must assume or buyout	Buyer must assume or buyout

Common Solar Panel Disputes

1. Misleading Savings Projections

The most common complaint involves inflated savings estimates. Salespeople frequently:

• Overestimate system production based on ideal conditions rather than actual local weather
• Underestimate future utility rate increases to make savings look unrealistic
• Ignore shading from trees, buildings, or other obstructions
• Fail to account for system degradation (panels lose 0.5-1% efficiency annually)
• Misrepresent net metering credits and utility buyback rates

2. Performance Guarantee Failures

Many solar contracts include production guarantees promising the system will generate a certain number of kilowatt-hours annually. When systems underperform:

• Companies may blame weather, shading, or homeowner behavior
• Monitoring systems may be inaccurate or manipulated
• Compensation for underperformance may be inadequate
• Calculation methods may differ from what was promised

3. Installation Defects

Poor installation can cause serious problems:

• Roof damage: Improper mounting causing leaks, structural damage, or voided roof warranties
• Electrical issues: Faulty wiring, inadequate grounding, or fire hazards
• Code violations: Installations that don't meet local building or electrical codes
• Aesthetic problems: Panels not installed as shown in proposal or causing visual issues
• Permit issues: Installations without proper permits, creating problems for home sales

4. Lease and PPA Problems

Third-party ownership arrangements create unique disputes:

• Escalator clauses: Annual payment increases that eventually exceed utility rates
• Buyout costs: Extremely high termination fees ($15,000-$30,000+)
• Home sale complications: Buyers refusing to assume contracts, deals falling through
• UCC filings: Liens on property affecting refinancing or sale
• Maintenance disputes: Companies slow to repair underperforming or broken systems

5. Door-to-Door Sales Fraud

High-pressure door-to-door sales tactics frequently involve:

• Misrepresenting affiliation with utility companies or government programs
• Claiming "free" solar with no explanation of actual financing
• Using bait-and-switch tactics—different terms at signing than discussed
• Forging signatures or altering documents
• Failing to provide required disclosures or cancellation rights

Federal Protections for Solar Consumers

FTC Cooling-Off Rule (16 CFR 429)

For contracts signed at your home (including door-to-door sales), you have 3 business days to cancel without penalty. The seller must:

• Provide two copies of a cancellation form
• Include a dated contract with cancellation rights clearly stated
• Refund any payments within 10 days of cancellation
• Return any trade-in or pick up equipment at their expense

FTC Act (15 U.S.C. 45) - Unfair and Deceptive Practices

The FTC prohibits unfair or deceptive acts in commerce. Solar companies violate this law when they:

• Make false claims about savings or system performance
• Misrepresent contract terms or obligations
• Use deceptive advertising or sales tactics
• Hide material information consumers need to make decisions

Truth in Lending Act (TILA) - 15 U.S.C. 1601

For financed solar purchases, TILA requires disclosure of:

• Annual Percentage Rate (APR)
• Total finance charges
• Amount financed
• Total of payments
• Payment schedule

State Contractor Licensing Requirements

Solar installers must be properly licensed. Working with unlicensed contractors can void warranties and leave you without recourse:

State	License Required	Regulatory Body	Lookup Tool
California	C-46 (Solar) or C-10 (Electrical)	Contractors State License Board	cslb.ca.gov
Texas	Electrical Contractor License	TX Dept of Licensing and Regulation	tdlr.texas.gov
Florida	Solar Contractor (CVC56754)	FL Dept of Business & Professional Reg	myfloridalicense.com
Arizona	KB-1 (General Residential) or CR-11	AZ Registrar of Contractors	roc.az.gov
New York	Home Improvement Contractor	NY Dept of Consumer Affairs (varies by county)	Varies by locality

State Consumer Protection Laws

State laws provide additional protections and remedies, often including attorney's fees and multiple damages:

State	Primary Law	Solar-Specific Protections	Damages Available
California	CLRA (Civ. Code 1750); Bus. & Prof. 17200	Solar Energy System disclosure requirements	Actual damages + attorneys' fees; UCL: restitution
Texas	DTPA (Bus. & Com. Code 17.41)	Home solicitation transaction protections	Up to 3x actual damages + attorneys' fees
Florida	FDUTPA (Fla. Stat. 501.201)	Home solicitation sale cancellation (501.031)	Actual damages + attorneys' fees
New York	Gen. Bus. Law 349	Home energy system contracts (Gen. Bus. Law 395-g)	Actual damages or $50 (whichever greater) + attorneys' fees
Massachusetts	Ch. 93A	Strong home improvement contractor regulations	2-3x actual damages + attorneys' fees

Solar Warranties Explained

Solar systems typically come with multiple warranties that provide different protections:

Panel Manufacturer Warranty (25 years typical)

• Product warranty: Covers defects in materials and workmanship (10-12 years typical)
• Performance warranty: Guarantees panels will produce at least 80-85% of rated output after 25 years
• Linear degradation: Better warranties guarantee no more than 0.5-0.7% annual degradation

Inverter Warranty (10-25 years)

• String inverters: 10-12 years typical
• Microinverters (Enphase): 25 years
• Power optimizers (SolarEdge): 25 years

Workmanship/Installation Warranty (1-25 years)

• Covers installation defects, roof penetrations, wiring issues
• Varies significantly by installer—get this in writing
• May be voided by using third-party for repairs

Step-by-Step: Resolving Your Solar Dispute

1. Document the problem: Photograph any visible issues. Download production data from your monitoring system. Compare actual production to contract guarantees. Save all communications.
2. Review your contract: Identify exactly what was promised—savings projections, production guarantees, equipment specifications, warranties. Note any dispute resolution requirements or arbitration clauses.
3. Check cancellation rights: If within 3 business days of signing at home (or longer in some states), exercise your right to cancel under the FTC Cooling-Off Rule.
4. Contact the solar company: Put your complaint in writing. Specifically cite contract provisions that were violated. Request a specific remedy (repair, replacement, refund, contract modification).
5. File regulatory complaints: Contact your state contractor licensing board, state attorney general consumer protection division, and the FTC if appropriate.
6. Check for class actions: Major solar companies (Sunrun, Vivint, Tesla/SolarCity) have faced multiple class action lawsuits. Search for active cases you might join.
7. Send a formal demand letter: If informal resolution fails, send a written demand citing specific legal violations and damages.
8. Consider legal action: Small claims court for smaller amounts; civil court or arbitration (if required) for larger claims. Some consumer protection laws allow attorney's fees recovery.

Calculating Damages in Solar Disputes

Underperformance Damages

• Lost energy value: (Promised kWh - Actual kWh) × utility rate per kWh × number of years
• Lost net metering credits: Value of credits you should have received
• Excess utility costs: Electricity purchased because system underperformed

Installation Defect Damages

• Repair costs: Cost to fix roof damage, electrical issues, or code violations
• Diminished property value: If defects cannot be fully corrected
• Consequential damages: Water damage from roof leaks, damaged belongings, temporary housing

Contract Fraud Damages

• Rescission: Full refund of all amounts paid, plus system removal
• Out-of-pocket losses: Money spent based on false representations
• Benefit of the bargain: Difference between promised and actual value

Lease/PPA Exit Damages

• Buyout amount: If contract was fraudulently induced, seek elimination of buyout requirement
• Excess payments: Difference between payments made and fair value received
• Lien removal costs: Legal fees to remove UCC filings or liens

Small Claims Court Limits

For disputes within these limits, small claims court offers a faster, less expensive option:

State	Small Claims Limit	Filing Fee
California	$12,500	$30-$75
Texas	$20,000	$48-$98
Florida	$8,000	$55-$300
Arizona	$3,500	$17-$72
New York	$10,000	$15-$20

Selling a Home with Leased Solar Panels

Leased solar systems create significant complications when selling your home:

Option 1: Buyer Assumes the Lease

• Buyer must qualify with the leasing company (credit check required)
• Some buyers refuse or are unable to assume
• Must disclose lease terms to potential buyers

Option 2: Buy Out the Lease

• Buyout amounts typically range from $10,000-$30,000+
• May be able to negotiate lower buyout if threatening legal action
• Seller can factor buyout into sale price negotiations

Option 3: Prepay Remaining Lease

• Pay all remaining lease payments upfront
• Buyer gets "free" solar electricity during remaining term
• May be more attractive to buyers than assumption

Frequently Asked Questions

Can I cancel my solar contract after installation?

If you're still within the cooling-off period (3 business days for door-to-door sales, potentially longer in some states), yes. After installation, cancellation is more difficult—you'd need to prove fraud, misrepresentation, or material breach of contract to void the agreement. Some contracts include early termination provisions, but these typically involve paying the remaining balance or a buyout fee.

My solar panels aren't producing what was promised. What can I do?

First, document the underperformance with monitoring data. Review your contract for production guarantees—many contracts guarantee specific annual kWh production and provide compensation (usually bill credits) for shortfalls. If the company refuses to honor guarantees, send a formal demand letter. If production is significantly below estimates due to installer error (wrong system size, poor placement, shading issues), you may have a claim for fraud or breach of contract.

The solar company went out of business. Are my warranties still valid?

Panel manufacturer warranties remain valid regardless of the installer's status—contact the manufacturer directly (e.g., LG, Panasonic, Q Cells). However, workmanship warranties from the installer are typically lost if the company closes. For leased systems, the financing company (often different from the installer) should still service the system or assign a new maintenance provider.

Can I remove a UCC filing from my property?

UCC-1 filings for solar leases are technically against the equipment, not your property, but they can complicate refinancing or sale. If you pay off or buy out the lease, the company must file a UCC-3 termination statement. If they fail to do so, you can demand removal in writing. Wrongful refusal to remove a UCC filing may violate state consumer protection laws.

The salesperson lied about my utility rates and savings. Is that fraud?

Yes, material misrepresentations about savings, utility rates, or system performance can constitute fraud under state consumer protection laws. Document what you were told (ideally in writing), compare to reality, and calculate your damages. Many states provide multiple damages for intentional fraud—Texas DTPA allows up to 3x actual damages, for example.

My roof is leaking after solar installation. Who is responsible?

The solar installer is responsible for any roof damage caused by improper installation. Document the leak with photos and videos. Get a written assessment from a roofing contractor. The installer's workmanship warranty should cover repairs, and if they refuse, you may have claims under your state's home improvement contractor laws. In California, contractors must carry at least $1 million in liability insurance.

Resources

• EnergySage: energysage.com - Solar marketplace with installer reviews and comparison tools
• DSIRE Database: dsireusa.org - Database of state incentives, rebates, and solar policies
• State Contractor Boards: Verify installer licenses and file complaints
• FTC Consumer Complaint: reportfraud.ftc.gov - File complaints about solar fraud
• State Attorney General: Consumer protection divisions handle solar complaints