AB 942: California's Solar Lease Transfer Rights Law, Explained
AB 942 tackled one of the biggest real-world pain points in residential solar, what happens to a 20–25 year lease or PPA when the homeowner sells. Here's what the law actually did.
The Problem AB 942 Addressed
Homeowners with solar leases or PPAs had been reporting consistent friction when selling:
- Buyers balking at inheriting long-term contracts with escalating payments.
- UCC-1 liens filed by solar providers complicating title clearance.
- Buyers' mortgage lenders refusing to fund until the lien was released.
- Transfer-approval delays stretching close dates by weeks.
- Ambiguous disclosure of transfer requirements at contract signing.
What AB 942 Actually Does
Key provisions codified in Civil Code § 1689.12 and related sections:
- Mandatory transfer-terms disclosure at contract signing. Solar providers must clearly disclose the buyer credit qualification thresholds, transfer fees, and any terms that can block transfer.
- UCC release within 30 days. Providers must release UCC-1 financing statements within 30 days of a contract transfer or buyout, eliminating the title-friction problem.
- No extended-term requirement. Providers cannot require a buyer to sign a contract with a longer remaining term than the seller had.
- Good-faith transfer processing. Providers must process transfer applications within defined timelines; persistent delays can be reported to the California Department of Consumer Affairs.
- Consumer-friendly language. Contracts must disclose in plain language that the contract may survive a home sale and that the buyer will need to qualify.
What AB 942 Did NOT Do
The law did not eliminate friction entirely:
- Buyer credit qualification is still required. A bad-credit buyer can still be denied.
- Escalator terms are still inherited, buyers still get your 2.9% annual payment increase.
- Buyers can still negotiate a lease buyout at closing as a condition of purchase.
- Transfer fees still apply (typically $100–$500).
Practical Impact for 2026 Sellers
- Your provider has a 30-day clock on UCC release. Reference this if they stall.
- Pre-qualify your buyer with the solar provider before accepting an offer.
- If the provider delays transfer processing, file a complaint with the California Department of Consumer Affairs, AB 942 gives regulators enforcement authority.
- If your contract predates AB 942 (signed before January 2025), provisions still apply to post-effective-date transfers.
Practical Impact for 2026 Buyers
- Request full disclosure of the existing solar contract before offer.
- Verify the UCC release is processing in your escrow timeline.
- Negotiate contract transfer or buyout as part of your offer — don't leave it to inspection.
- If you don't want to assume the contract, you can legitimately make the seller's lease buyout a condition of your offer.