A Story That Almost Went Wrong
A homeowner in Westchester got a solar proposal from a well-known installer. It looked like a standard purchase. Good pricing. Big system. Clean presentation. His wife started reading the fine print and asked one question: Do we actually own this? They didn't. Every version of the contract, including the ones labeled cash purchase, was a prepaid lease. The disclosure page said it in bold: YOU WILL NOT OWN THE SYSTEM. This is not a rare situation. It is a contract structure used by multiple installers operating in Westchester County right now. Most homeowners never catch it because the sales rep at the kitchen table calls it a purchase. Here are the seven red flags to look for before you sign anything.
1. The Words Lease or Lessor Anywhere in the Document
If you are told you are buying a system, the contract should say purchase, buyer, and seller. If you see lease, lessor, lessee, or prepaid lease agreement, you are not buying. You are leasing, regardless of what the rep told you. In the case above, every page of the contract used lease language. The rep never mentioned it.
2. Ownership Transfer at Fair Market Value
Some prepaid lease contracts include a clause that says ownership transfers to you at year 6. That sounds good until you read the fine print. The transfer price is typically listed as fair market value, with $0 described as anticipated but not guaranteed. Those are different words in a contract. If the financing company gets acquired, changes its policy, or decides fair market value is $3,000 instead of $0, the homeowner has no leverage because the contract does not lock in a price. If the transfer price is not $0 in writing, it is not $0.
3. Tax Credits or RECs Assigned to Someone Else
In a true purchase, you claim the tax credits. In a prepaid lease, the financing partner (called a TPO, or third-party owner) holds title to the system and captures the credits. This matters more than ever in 2026. The 30% federal residential solar tax credit (Section 25D) expired for homeowners on December 31, 2025. But TPOs can still access commercial credits (Section 48E) through their financing structure and pass a portion of the savings into your pricing. The question is how much of that discount actually reaches you versus how much the TPO keeps. The same applies to Renewable Energy Credits (RECs). If the contract assigns RECs to the TPO or financing partner, they are monetizing your roof's clean energy production. You should know that before you sign.
4. Battery Grid Services Clauses
Even if you are not installing a battery today, many contracts include clauses about battery storage. These clauses typically give the financing company control over your battery for grid services programs, where the utility pays for stored energy during peak demand. In the contract we reviewed, the TPO kept 70% of the grid services revenue. The homeowner got 30% for a battery sitting on their property, connected to their electrical panel, on their roof. If you add a battery later under the same contract, these terms activate. With NYSERDA offering a $250/kWh rebate for battery storage in Con Edison territory ($200/kWh in NYSEG territory), more Westchester homeowners are considering batteries. Read the grid services language now, before that decision gets made for you.
5. Assignment Clauses
This is the one almost nobody reads. An assignment clause lets the financing company sell, transfer, or assign your contract to any third party without your consent. That means the company you signed with might not be the company you are dealing with in year 3. The original sales rep is long gone. The new company may have different policies, different customer service, and different interpretations of the anticipated $0 transfer. You have no say in the matter because you agreed to the assignment clause on page 14.
6. Insurance Requirements Naming the Financing Company
In a prepaid lease, the TPO owns the equipment on your roof. Because of that, some contracts require you to take out an insurance policy (or add a rider to your homeowner's policy) naming the financing company as an additional insured. It is usually not a huge cost. But it is another obligation buried in the fine print that the sales rep probably did not walk you through. And it is another sign that you do not own the system, because owners insure their own property. They do not insure it for someone else.
7. Panel Count That Ignores Shading
This one is not about contracts. It is about the proposal itself. The installer in our example quoted 29 panels on a roof with heavy tree coverage on three sides. We flew a drone to the property and found that only 21 panels sat in positions where they would actually produce meaningful energy. The other 8 would have been expensive shade ornaments. A good solar design starts with a shade analysis, not a panel count. For reference on what a fair quote looks like, see our Westchester solar cost breakdown. If your proposal maxes out every square foot of roof without accounting for trees, dormers, chimneys, or orientation, ask for the production modeling. Specifically, ask for the annual kWh estimate per panel position. If the installer cannot provide that, the proposal is a guess.
None of This Is Illegal
Every clause described above is legal. Prepaid leases are a legitimate financing structure. TPOs are real companies with real contracts reviewed by real attorneys. The problem is not the structure. The problem is disclosure. When a homeowner sits down at their kitchen table and hears you are buying a solar system, they should actually be buying a solar system. When the contract says something different from what the rep said, that is where trust breaks down.
What Westchester Homeowners Should Do Before Signing
Read the full contract, not just the summary page. Look for the seven red flags above. If you see language you do not understand, have an attorney review it before you sign. This is a 25-year commitment bolted to your roof. If you want an independent look at whether solar makes sense for your home, you can upload your Con Edison or NYSEG bill to our free energy analysis tool. No contract. No commitment. Just the numbers for your specific situation.
Want to see your exact rates?
Upload your bill and we'll show you what you're paying per kWh, peak vs off-peak.