Property Managers: How to Handle Broken Solar on Rental Property

man fixing broken solar panel on house

Many homeowners are seeing benefits from installing solar, but does it make sense to add solar panels to a rental unit? Property owners need to consider different options for solar (leased, purchased, community). If they buy, they need to factor in maintenance and upgrades. They also need to think about the upfront cost compared to any benefits from having the solar panels. In addition they need to think about the impact of broken solar on rental property and what happens if they decide to sell the building with solar

If a property owner decides to install solar  on rental property, it can entice tenants who value green energy sources and those looking to lower their own electric bills. This works great … until there’s a problem. 

What Happens When Solar on Rental Property Breaks?

Like anything, solar panels or some part of the solar energy system can break, and it may not be obvious until a bill comes in. That can lead to unhappy tenants. 

Recently an agent who manages rental property with solar ran into this issue. The solar panels on the rental property had been in place for years, and the owner used them as a selling point to reduce the tenant’s electric bill. Imagine the tenant’s surprise and outrage at receiving a $500 electric bill which was significantly higher than previous months. 

What happened? The solar panels weren’t generating energy properly for at least a month, which resulted in a much-inflated bill. 

The first step is to get the solar panels fixed, either by the company who leases them or by a reputable solar repair service if the owner bought the panels. Once this happens, electric bills should return to normal. 

That leaves the outstanding bill the tenant has complained about. Here’s what our legal advice team suggested: 

  • The landlord should take the average monthly electric bill of this rental for the 12 months prior to the bill from the time the solar wasn’t working properly.
  •  If the $500 amount for the month with broken solar is higher than the average monthly electric bill, then the landlord should credit the tenant the difference on the next month’s rent. 
  • When doing so, the landlord should provide in writing how the credit was calculated in detail. 
  • The landlord should retain a copy of this document, and the property manager should retain a copy as well. 

For any tenant issues, property managers should document the problem, including retaining copies of email or other correspondence from the tenant, along with their response and steps they take. If the tenant is still unhappy and decides to take additional action, the property manager may need documentation of the issue and response. 

Get Advice from the CRES Legal Team 

If you have a legal question related to solar panels, a tenant issue, or anything else, wouldn’t you be relieved to know you have access to free legal advice? CRES clients do.  Clients can call CRES ClaimPrevent® Legal Services 7 days a week and receive a response from an experienced attorney within 4 hours or the next business day. Plus, every recommendation is confirmed in writing. It’s just one of the things we do to help clients prevent claims. 

Can we help you with your E&O policy?  Learn more about E&O in your state.  

What kinds of issues have you faced with tenants who receive unexpected expenses on property you manage? 

This blog/website is made available by CRES Insurance Services for educational purposes to give you general information and understanding of legal risks and insurance options, not to provide specific legal advice. This blog/website should not be used as a substitute for competent legal advice from a licensed professional attorney in your state. Claims examples are for illustrative purposes only. Read your policy for a complete description of what is covered and excluded.

Originally Published September 23, 2020

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