That “too good to be true” solar contract? It might be.
Have you been handed a solar contract that sounds fantastic — zero money down, big monthly savings, and “guaranteed” incentives? Before you pick up the pen, stop.
Shady solar companies often hide traps right in the contract. Those traps can lead to decades of debt, surprise escalations in payments, liens on your home, or even trouble selling your property.
This lawyer‑researched guide walks you through solar contract red flags that should set off alarm bells — plus actionable tips on how to spot and avoid them.
Why solar contracts can be dangerous if you don’t read them carefully
Solar agreements are legally binding. With one signature, you can lock yourself into 20‑plus years of payments, restrictive clauses, or hidden ownership terms.
Homeowners in Texas, New Jersey, California, and many other states have ended up in lawsuits over fine print they didn’t spot.
While each state has its own consumer protection statutes — like Texas Deceptive Trade Practices–Consumer Protection Act (DTPA) or New Jersey Consumer Fraud Act (NJCFA) — the burden is often on you to prove the company misled you. Spotting these issues upfront is your best line of defense.
7 Contract Red Flags That SCREAM SCAM
If these show up in your solar contract, you should be hearing sirens in your head. Each one has sunk homeowners into years of debt, lawsuits, or lost home sales. Here’s what they are, how to spot them fast, and the legal risk behind them.
The Contract Doesn’t Clearly Say Who Owns the Panels
If the paperwork doesn’t clearly state whether you’re buying or leasing your solar panels, you’re walking into legal quicksand. In a purchase, you own the panels outright once paid for — giving you control over selling or refinancing your home. In a lease or Power Purchase Agreement (PPA), the company or its lender owns the system, meaning you can’t decide what happens to it. Many home sales collapse when buyers refuse to take on a solar lease.
Certain states, like California, require this distinction to be obvious under legislation like the Home Solicitation Sales Act. If it’s missing, that in itself may be grounds for a consumer protection claim. But catching it before you sign is far easier than fighting it later.
Tips to avoid:
- Locate the “Ownership” clause immediately.
- If you see terms like lease, PPA, or third‑party ownership but were told otherwise, stop and demand clarification in writing.
Escalating Payments Hidden in the Fine Print
Some solar contracts contain “escalator” clauses — automatic yearly payment increases, often 2–4% per year. That seemingly small percentage compounds into thousands over time. A $150 monthly lease can balloon to $270 or more before you’ve paid it off.
These increases are enforceable if the contract discloses them, even if the salesperson failed to mention it. Certain states, like New York, require that payment terms be conspicuously clear in home improvement contracts — but enforcement usually happens after the homeowner has already been trapped.
Tips to avoid:
- Search your contract for “annual adjustment,” “escalator,” or “inflation.”
- Use a calculator to see the 20‑year total before agreeing to sign.
No Performance or Output Guarantee
Without a written guarantee of how much electricity your panels will produce — stated in kWh per year — there’s nothing holding the company accountable if your system underperforms. This means you can end up paying both your electric bill and solar payments with no relief.
Some states, like Nevada, require solar contracts to list expected energy output. If yours doesn’t and your state has no such requirement, you lose a critical legal lever against a company that oversold their system’s performance.
Tips to avoid:
- Look for a section guaranteeing annual energy production in kilowatt‑hours.
- If there’s no number, or it’s buried in marketing materials but not in the contract, that’s a dealbreaker.
Harsh Early Termination Penalties
If you decide to cancel — even for valid reasons like faulty performance — some companies will demand the entire remaining balance immediately. These penalties are designed to financially chain you to the contract, no matter what.
While some states, such as Texas, allow challenges under the DTPA for “grossly excessive” penalties, the cost of litigation is high. Maryland and others sometimes strike down punitive liquidated damages clauses, but not without court involvement.
Tips to avoid:
- Read the “Early Termination” or “Cancellation” section word for word.
- Watch for language that accelerates the whole loan/lease amount upon cancellation.
UCC‑1 Lien Buried in the Agreement
Many solar financing contracts include a UCC‑1 lien — this is a legal claim against your property by the lender. While not always bad in itself (it’s standard for certain loans), undisclosed liens can be a nightmare when you go to refinance or sell. Some homeowners only discover them when a bank refuses to close on a loan.
In Florida and other lien‑friendly states, these filings are routine. Filing one without clear consent can be argued as deceptive under unfair trade laws, but removing the lien takes paperwork, time, and sometimes litigation.
Tips to avoid:
- Search for “UCC‑1,” “security interest,” or “fixture filing” in the contract.
- If you see one and it wasn’t disclosed verbally, get advice before signing.
Non‑Transferable Terms When Selling Your Home
Some contracts say the solar agreement can be transferred only to a buyer who qualifies with the same lender, or they force you to remove the panels before selling. This is one of the fastest ways to scare off buyers.
While certain states like Arizona require solar providers to process transfer approvals within a set number of days, that still doesn’t stop a buyer from getting cold feet when they see restrictions.
Tips to avoid:
- Look for “transfer” or “assignment” clauses.
- If the contract requires lender approval or makes the buyer re‑qualify, know that your pool of buyers will shrink dramatically.
Verbal Promises Don’t Match the Written Contract
You might be told you’ll get a rebate, or that the payment includes maintenance, but if it’s not in the written contract, the law usually says it doesn’t exist. Under the parol evidence rule, courts in virtually all states enforce the written terms over verbal assurances.
Some exceptions exist for proven fraud, but you’ll need solid evidence — recorded conversations, written confirmations — to make that stick.
Tips to avoid:
- Go line by line and compare the sales pitch to the written terms.
- If there’s a mismatch, demand it be corrected in writing before signing.
| Red Flag | Spotting Tip | Legal Risk |
| Ownership unclear | Look for “lease” or “PPA” | Loss of control in resale |
| Payment escalator | Search for % per year | Long-term cost spike |
| No output guarantee | Check for kWh/year | No recourse for low output |
| Harsh termination | Read cancellation section | Extreme penalties enforceable |
| UCC lien | Search “UCC‑1” | Can block refinance or sale |
| Non‑transferable | Look for transfer restrictions | Fewer willing buyers |
| Verbal mismatch | Compare promises vs terms | Written contract rules |
How to Avoid Solar Contract Scams
Spotting the red flags is just the first step. Here’s how you avoid solar scams and protect yourself before signing anything:
- Have an independent lawyer review your solar contract.
- Give yourself at least 48 hours to read through the agreement.
- Search for the red flag terms listed above.
- Walk away from any deal that pressures you to sign immediately: legitimate offers will still be there tomorrow.
What to Do if You Spot a Red Flag
If you see any of the warning signs above, pause immediately:
- Stop signing and request a legal review.
- Ask the company to remove or revise the clause in writing.
- If they refuse, consider it a sign to take your business elsewhere.
If You’ve Already Signed a Bad Contract
Even if you’ve already signed, you still have options:
- Check for a cooling‑off period in many states, you have 3 business days to cancel home‑solicited contracts.
- Gather all documents, contracts, emails, brochures, and sales notes.
- File complaints with your state Attorney General and the FTC.
- Get legal advice quickly: Many claims have short time limits, especially fraud or misrepresentation cases.
Spotting Red Flags is Step One, Stopping the Harm is Step Two
Bennett Legal Can Help You Fight Back
Seeing red flags in a solar contract can feel confusing and overwhelming. One page promises savings, while the fine print hides liens, escalators, or harsh penalties that could tie up your home for decades. Many homeowners only discover the damage when it is too late — but you don’t have to make the same mistake.
At Bennett Legal, we help families spot scams before they sign, and fight back when deceptive companies bury traps in their contracts. We know the pressure tactics, the misleading promises, and the tricks solar sales reps use — and we know how to stop them from becoming your reality.
Here is how we take action for homeowners:
- We review your contract line by line. If there is a hidden lien, escalator, or unfair clause, we flag it immediately.
- We expose deception. When a company misrepresents ownership, financing, or incentives, we build the case for fraud or breach.
- We protect your home. From UCC lien removal to contract disputes, we take legal steps that safeguard your title and credit.
- We empower you to decide. With clear legal guidance, you can walk away from predatory deals and choose solar on your terms.
You do not have to face shady contracts alone. Bennett Legal will help you uncover the truth, protect your family, and make sure your home never gets locked into a scam.
📞 Call Bennett Legal today for a free consultation. We will review your solar contract and give you the tools to shut down red flags before they cost you everything.
