“Solar Panel Debt May Blow the Sale”

This is the first time I have run into this situation, but it will come up again, so be aware. This is what transpired. Maggie and Jim applied for a mortgage, they were buying a $240,000 home, putting 20% down, a simple transaction to do, right? Wrong!

The purchase agreement indicated that the buyers would take over the existing obligation, which had a remaining term of 8 years and we included the obligation into the debt ratio. Including this obligation, the debt ratio was fine. 

The sellers had solar panels installed a couple of years earlier. They had an agreement to pay the for the panels over a 10 year time period and the obligation became a lien against the title. The seller’s indicated that they were not aware that the obligation was secured by the property. Not sure how that is possible. 

This is the part that is stupid, the lender would not allow a subordination to keep the obligation in place and the company that owns the obligation is not willing to keep the obligation in place as the new first mortgage was going to be higher than the existing first mortgage. At this point, buyer and seller are renegotiating the transaction, so that the obligation can get paid off at the closing.

 Hopefully it works out for all parties to the transaction.