Reference
The solar glossary for home buyers, sellers, and agents
Solar comes with its own vocabulary — and at a home sale, the wrong assumption about a lien, a lease, or a net-metering rate can cost real money. Here is every term that matters, in plain English.
Financing & ownership
Third-Party Ownership (TPO)
Any arrangement where a company — not the homeowner — owns the solar equipment. Leases and PPAs are the two forms. TPO grew to more than half of the U.S. residential solar market in 2024, and it is the financing type that most complicates a home sale, because the buyer must assume the agreement or the seller must buy it out.
Solar lease
A fixed monthly payment to use solar equipment a third party owns. You pay for the panels regardless of how much power they produce. At a sale, the buyer must qualify to assume the lease or the seller pays it off. See our solar leases at closing guide.
Power Purchase Agreement (PPA)
Like a lease, but you pay per kilowatt-hour the system produces rather than a flat amount, usually with an annual price escalator. Also third-party owned and subject to transfer or buyout at sale.
Solar loan
A loan used to purchase the system, which the homeowner then owns. The loan is almost always held by a finance company (GoodLeap, Mosaic, Sunlight, Dividend), not the installer — so an installer bankruptcy usually doesn't affect it. Most solar loans file a UCC-1 lien on the equipment.
Escalator
A clause that raises your lease or PPA payment every year, commonly 1.9–2.9%. Over a 20–25 year term it can push payments well above the original rate, so buyers assuming an agreement should read it carefully.
Buyout / payoff
The amount required to purchase a leased or PPA system outright, or to pay off a solar loan. At a sale this figure — and who holds it — must be confirmed in writing, especially if the original financier has gone bankrupt.
Liens & title
UCC-1 fixture filing
A financing statement a lender files (often with the county and/or Secretary of State) to secure its interest in the solar equipment. It's routine, but title and escrow must locate and address it before a home can sell or refinance cleanly. See our UCC lien guide.
PACE lien
Property Assessed Clean Energy financing repaid through the property tax bill. Unlike a UCC filing, a PACE obligation attaches to the property itself and typically must be paid off at sale because it can take priority over the mortgage. See our PACE lien guide.
Secured party
The company named on a UCC-1 filing as holding the security interest — i.e., who must be paid or must release the lien. After a bankruptcy, the secured party of record may have changed to a successor servicer.
Utility & net metering
Net metering (NEM)
A billing arrangement that credits you for excess power your system exports to the grid. Older, more generous "grandfathered" rates can be worth thousands per year — and in many states they do not automatically transfer to a buyer. See how net metering transfers at resale.
Net billing (NEM 3.0)
A successor to traditional net metering (notably California's 2023 change) that pays a lower, market-based rate for exported power, lengthening payback periods and making batteries more attractive.
Permission to Operate (PTO)
The utility's formal sign-off allowing a newly installed system to turn on and export. A system without PTO isn't legally operating, and a missing PTO can surface as a problem at sale.
Interconnection agreement
The contract with the utility that connects your system to the grid. It lists your equipment and your net-metering terms, which makes it one of the most useful documents to have when identifying a system.
SREC (Solar Renewable Energy Certificate)
A tradable credit earned for the clean energy your system generates, sold in certain state markets (PA, NJ, MD, MA, DC, OH, VA and others). Who owns the SRECs after a sale depends on the contract — the homeowner may have signed them away to the installer or financier. See our SREC transfer guide.
Equipment & warranties
Inverter
The device that converts panel DC output into usable AC power. String inverters serve a whole array; microinverters sit under each panel. Inverters carry their own manufacturer warranty (10–25 years) and are the most common component to need replacement.
Workmanship warranty
The installer's warranty covering installation labor, racking, wiring, and roof penetrations (typically 10–25 years). It is the only warranty tied directly to the installer's survival — and the one at risk when an installer goes bankrupt.
Degradation
The gradual decline in a panel's output, roughly 0.4–0.5% per year. A healthy 10-year-old system should still produce about 95% of its first-year output; well below that suggests a fault worth investigating.
Performance (power) warranty
A panel manufacturer's guarantee that output won't fall below a specified percentage over 25–30 years. Distinct from the product warranty, which covers physical defects.
At the transaction
Lease assumption
The process by which a buyer takes over a seller's solar lease or PPA, subject to the servicer's credit approval. Starting it early is the difference between a smooth closing and a delayed one.
Finaled permit
A solar permit the local jurisdiction has inspected and closed out. An open or unfinaled permit can block a sale or trigger lender conditions. See open solar permits at closing.
Solar disclosure report
An independent document that consolidates a system's ownership, financing, liens, permit status, warranties, installer standing, and net-metering into one place for a real estate transaction — what SolarDisclosure™ produces.
Turn the jargon into a clear answer
A SolarDisclosure™ report identifies exactly which of these apply to a specific home — the lien, the lease, the servicer, the warranties, and the net-metering — before you buy, sell, or list.
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