The saying, there’s nothing new under the sun, is unfortunately true when it comes to scams, be they old snake oil salesmen or today’s pseudo-scientists peddling fake cures for serious diseases.
The first word in the term con artist, meaning a person who tricks people to get their money, is short for the word confidence. That is precisely how these tricksters operate. They gain your “CONfidence” and “CONvince” you to fall for their nefarious scheme.
Solar scams have become a favorite of current con artists, with seniors often being their favorite prey. Why seniors? Because scam artists see them as trusting and therefore vulnerable. They know that many older people own their homes outright and may have abundant savings; that aging people may exhibit diminished cognition and even dementia; and can be susceptible to anxiety-inducing tactics and intimidated into hasty, impulsive action that they or their survivors may later regret.
American seniors buy into fraudulent transactions costing more than $3 billion a year. Many frauds are perpetrated by rooftop solar scammers.
Advantages of Solar Energy
The benefits of solar are many, and becoming increasingly compelling as we confront the challenges of a changing climate. Installing solar panels cuts down on electricity costs, saving you money while helping to preserve our environment. This natural, renewable energy source that converts sunlight to energy is clean and green. More and more municipalities as well as developers and homeowners are opting for solar. Should you?
Installing a rooftop solar system has several benefits. Foremost among them, it helps reduce your personal and our entire planet’s carbon emissions, so it is not only financially viable but also environmentally-friendly. A solar system requires minimal maintenance, provides savings you will enjoy on your monthly utility bills and adds value to your home. Thus, it can be a good investment … if you choose wisely and well.
SPPAs Are Not a Homeowner’s BFF
Not all or even most purveyors of solar are scam artists. Some are. Most unfortunately, lax government regulations make it easier for companies to fast-talk seniors into a Solar Power Purchase Agreement (SPPA) that benefits the company far more than the homeowner.
According to the federal Environmental Protection Agency (EPA), an SPPA “is a financial arrangement in which a third-party developer owns, operates, and maintains the photovoltaic (PV) system, and a host customer agrees to site the system on its property and purchases the system's electric output from the solar services provider for a predetermined period. This financial arrangement allows the host customer to receive stable and often low-cost electricity, while the solar services provider or another party acquires valuable financial benefits, such as tax credits and income generated from the sale of electricity.”
Read that last portion carefully. Who receives the valuable financial benefits? Not the homeowner, who does not own the system, but the company.
The framework of this program is called a Solar Services Model. SPPA companies call themselves Solar Service Providers. While appearing reputable and focused on helping the senior homeowner, they may talk them into signing 20-year agreements to purchase electricity at a lower rate than from the provider utility such as SDG&E. If the homeowner dies (a likely scenario if they are on their late 70s or 80s at the time of purchase), the contract is not voided.
At that juncture, the new homeowner must continue the SPPA for a monthly fee until the contract has been completed. Alternatively, the person selling on behalf of the deceased homeowner must make a one-time pre-payment of the years remaining on the contract; if the contract has completed its sixth year, the seller can buy out the contract and own the equipment.
If there is a dispute between the deceased person’s seller, the new buyer and the SPPA company, the problem can bring the escrow process to a screeching halt. The company obviously would prefer receiving the recurring monthly payment as opposed to the overall pre-payment. This dilemma can cause an overwhelming, time-consuming hassle for the seller, who may be a family member already grieving the loss of their relative and enmeshed in a host of financial and related issues.
Is It Green or Is It a Scheme? Buyer Beware!
Older homeowners and the people who love them need to be cognizant of all facets of any major, expensive, home renovation; including up-front, ongoing and possible future costs. Stay clear of door-to-door salespeople and out-of-the-blue telephone/text solicitations.
When considering a solar installation, you need to carefully research the topic based on reliable print/online sources such as the EPA’s https://www.epa.gov/greenpower/solar-power-purchase-agreements. If you decide to go green, great, but make sure that greening the environment is not putting a bunch of green – as in your hard-earned dollars – into the pocket of an SPPA scammer.
We strongly urge you to do your homework, consider your options, obtain more than one quote, and avoid making a quick decision, especially if pressured to do so. Consult with a trusted family member, financial professional, or a Realtor who specializes in senior realty services.
And always remember: whether someone is offering you a “free” vacation or “free” rooftop solar, if a deal sounds too good to be true, it probably is.
**First published in the Professional Fiduciary Association of California (PFAC) Newsletter
Friday, September 24, 2021
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