How to pursue a home solar lawsuit

Answers to frequently asked questions about common issues with solar companies

If you are having issues with a solar company, you’re not the only one. And figuring out how to get compensation can be tricky. There are many options available to you if you have problems with your contract or services. In most cases, having an attorney can increase the likelihood of finding a good resolution. 

Below are some of the top questions we receive about solar companies.

How does a residential solar company — like Sunrun, Freedom Forever, and Tesla Energy — make money?

Residential solar companies like Sunrun typically make most of their money from government rebate incentives and customer agreements for leasing solar panels. 

  1. Incentives: Residential solar companies receive incentives for selling solar energy products. Each time they sell solar panels, the racking system, or inverters, they get revenue from their customers and third parties. These sales also make them eligible for certain tax credits. 
  2. Tax Credits: These take the form of tax credits for the sale of Solar Renewable Energy Certificates (SRECs), solar energy rebate incentives, and investment tax credits (ITC). Solar companies like Sunrun, Freedom Forever, and Tesla Energy can access federal and state-level tax credits in addition to other incentives based on where the solar panels are installed. 
  3. Customer Agreements: When residential solar companies sell products, they get immediate revenue from those sales and similar incentives. If they lease the products to customers, they make money on the leasing agreement monthly fee and the interest. 

What laws apply to residential solar companies like Sunrun, Freedom Forever, and Tesla Energy?

Laws that apply to residential solar companies include Federal Trade Commission (FTC) regulations, safety standards, and consumer financial protection laws. State consumer protection laws apply too. These laws are all meant to protect customers from unsafe business practices or services and unfair goods or services. 

Federal Trade Commission Regulations

The Federal Trade Commission interprets and enforces laws to protect customers against financial fraud like deception, abuse, and physical safety. The FTC handles claims of abusive, deceptive, or unfair business practices. They regulate things like solar company marketing practices to prevent false advertising and deceptive pricing

Safety Standards

Safety standards come from many places like the International Residential Code, International Fire Code, National Electric Code, and Interconnection Standards. These all apply to the physical safety of the products and services provided by solar companies. 

Financial Protection Laws

Home solar installation agreements often involve loan to pay for the purchase and installation. Laws like the Truth in Lending Act set requirements for what information must be provided to consumers, and how. 

What laws apply to door-to-door sales of solar panel installation?

Many laws apply to door-to-door sales for solar panel installation, overseen by the FTC and state regulators.

The “Cooling Off” rule is perhaps the most important. This rule states that you have three days from the time you agree to a solar panel sale to cancel the agreement. It does not matter where you made the agreement with the salesperson or whether you invited them into your home. 

Federal law (16 CFR 429) governs sales in your home. If you rent or own a home, you can cancel any solar sale you make. You must tell the salesperson you know you have the right to the cooling off period. 

If you sign an agreement in your home, it has to include the following information:

  • A “Notice of Cancellation” with all the blanks filled in;
  • The seller’s address;
  • The terms of payment are clearly stated; and
  • The correct date of sale.

If it is missing any of this information or you change your mind, you can cancel the contract. A lawyer can review your situation, look at your signed contract, and possibly help you out of a contract within that cooling period or after. 

How do I file a complaint against a solar panel company?

If you have an issue with solar companies like Tesla Energy, Sunrun, or Freedom Forever, you have several steps available to you for filing a complaint:

  1. You can start by filing a complaint with the company directly. This is an option for customers and those who do not have an agreement alike. With this option, you may or may not get a resolution for your claim. 
  2. You can file a complaint with your state licensing board. These licensing agencies have specific rules solar companies must follow. If they break them, you can follow their respective information on filing a complaint. This is a way to file an official legal complaint. 
  3. You can also file a complaint with the state Attorney General’s office. Each state differs in handling these, so you might get a resolution for your complaint, but you might not. This is a way to file an official, legal complaint. 
  4. You can submit a complaint to the solar panel company’s BBB page. This does not fall under an official, legal complaint category, and it isn’t a guarantee of follow-up action for your issue, but it gets your issue known. If you are lucky, the solar panel company might follow up with customers and give you a response. 
  5. You can file a claim in your court. Which court you can use is based on state law, and an attorney can help you determine which court is best. 

An attorney can help you determine which complaint type is best for your situation. 

What do people sue residential solar companies over?

People sue residential solar companies over many things, like issues with their contracts, problems with installation, false advertising, or unfair business practices. 

The Campaign for Accountability (CFA) and the Consumers Union have raised concerns about residential solar companies with the Federal Trade Commission. The Federal Trade Commission is aware of issues like:

  1. Misleading sales tactics that trick homeowners into buying or renting solar panels, 
  2. Unscrupulous sales practices that result in confusing wording on energy tax credits and false promises of utility savings, 
  3. Homeowners facing issues in buying or selling homes with solar panels due to the terms of a contract with the solar company.

If you have an issue with your residential solar company, a lawyer can help review what legal options you have and whether you can sue. 

Can a lawyer help me get compensation from a residential solar company?

Winning a lawsuit or settlement for compensation against a residential solar company will depend on the specifics of your situation.

You would need to review your contract and state law and determine what legal paths are available to you based on your situation. If you are in a situation where a solar company has broken the law and harmed you financially, a lawyer can help you navigate these legal complexities and maximize the compensation you can get from a residential solar claim. 

Are there class action lawsuits against residential solar companies?

There have been lawsuits against some residential solar companies, including class actions. Some of them have involved employees and contractors working for the companies, while others have involved customers

For instance, in 2021, a lawsuit was filed by a group of California consumers over defective micro inverters in the solar panels provided by SunPower. SunPower settled in 2022 for $4.75 million. 

In North Carolina in 2022 a lawsuit from former employees of Power Home Solar claimed that Power Home unlawfully terminated the employees during a massive layoff without proper warning, pay, or ERISA benefits. 

How can I sue a residential solar company like Sunrun, Tesla Energy, or Freedom Forever?

If you have an issue with solar companies like Tesla Energy, Sunrun, or Freedom Forever, you might be able to sue them in court. There are several options that may be available to you, however, the best resource for determining how to sue a residential solar company is an attorney. Attorneys can review the contract you have with a given company and provide legal advice on your options moving forward. 

Depending on your contract and the amount of money you are trying to sue the companies for, there are a few different options:

First, you can use consumer arbitration. Consumer arbitration is a legally binding alternative to suing in court. You can still hire an attorney to represent you, but with this avenue you present your side of the story to a neutral third party arbitrator. They make the final decision after conferring with both sides. This might be the only option you have for suing a residential solar company, depending on the terms of your contract. 

Second, you can take the solar company to small claims court. Small claims courts have limits on how much you can ask for and what type of compensation you can get. For example, if you have an issue with an installation process or a malfunctioning part and want the install repeated or the part repaired, small claims court wouldn’t necessarily be the right choice. However, if you wanted to sue a residential solar company over a dollar amount, it might be. 

You can file a claim in your state or federal court. Which court you can use is based on state law. You might, for example, be able to file a claim at the state or federal level depending on the claim you are making. Issues that relate to federal laws governing residential solar companies might rely on this route. 

An attorney can help you determine which option is best given your issue, your contract, and what you want in compensation. 

Do residential solar companies require arbitration?

Many residential solar companies have arbitration clauses that require you to use consumer arbitration rather than go to court. If you have an arbitration clause in your contract, you won’t be able to sue solar companies in state and federal courts. 

With arbitration, you and the solar company provide information to a neutral third-party arbitrator. That arbitrator reviews the information and makes a binding decision, similar to a judge. (Companies often include this option in their contracts to eliminate the possibility of class action lawsuits)

There are several organizations that companies can hire to hear arbitration cases. Based on publicly reported data, claims against Sunrun & Freedom Forever have been arbitrated with JAMS, while Tesla Energy has had claims decided by the American Arbitration Association.

It is up to the party bringing a legal claim to review the terms of a solar contract to see if arbitration is required. An attorney can help you review your contract in detail to determine whether you have to use binding arbitration should issues arise. 

How do I report a solar scammer, like a fake door-to-door salesperson?

If you encounter any scams or fraudulent activity from your solar company or another other solar company, you need to report it to the following:

  1. Your local police. They will make an official report and follow up with necessary action or community warnings. 
  2. File a complaint with the Federal Trade Commission here: FTC Report Fraud. The FTC needs official reports on fraudulent activity to follow up with those responsible and take action. 
  3. If you are experiencing fraud with a solar company with whom you already have a contract, many of them have dedicated fraud departments and ask that you file a separate report there for similar reasons. 

Can I cancel my solar contract? 

Cancellation policies vary by the solar company, and it can be tricky to get out of them. 

Some companies have one-month cancellation options where you can cancel within the first 30 days with no penalties. Those who don’t are still held to the FTC’s three-day “cooling off” period, during which time you can cancel the contract you signed. 

You may also have options to cancel in situations where a company doesn’t live up to its obligations under the residential solar contract. (Though even if you are in the right, it may take an attorney to get the company to listen):

  1. Your solar contract has expired.
  2. You are willing to pay a cancellation or buyout fee required by your solar contract.  
  3. You might be able to cancel your solar contract if you can prove that the solar company failed to meet its obligations. This could be installing your solar panels within a certain time frame or delivering specific services. 
  4. If there was a guarantee in your contract, like a warranty, system size, or power generation, and it turned out inaccurate, you might be able to get out of the contract because the company failed to disclose something they needed to. 
  5. If a catastrophic event prevents your contract from being fulfilled, you might be able to use the “force majeure” clause. 

An attorney can help you review what options are available to you, given your situation and your contract. 

How do you break a contract with a solar company?

If the company hasn’t broken their obligations under the contract and you still need to get out of it, there may be other ways: 

  1. Some contracts have buyout options. These usually don’t apply until you’ve had a contract for six years or more. With a buyout, you can break your contract early by paying the rest of the money owed early in a lump sum. 
  2. You might be able to transfer instead of canceling your solar contract if you sell your house and the new owner is willing to take over the existing contract. 
  3. If you are lucky, your contract might let you purchase the solar system in its entirety at the current market value, and then you can break any contract you have with the solar companies thereafter. 
  4. If you go through a bankruptcy proceeding this may have implications for your contract with a residential solar company.

What happens if I don’t pay my solar loan?

Not paying your solar loan can lead to losing collateral you put up for a secured loan (like your home). It can also have negative impacts on your credit. This depends on what type of financing you received for your solar loan. 

Secured solar loans are where you secure the loan (or promise to pay) with collateral (which is then taken by the lender if you can’t pay the loan amount). If you have equity in your home, you might have taken out a home equity loan or home equity line of credit. Home equity loans let you repay in installments, but a home equity line of credit gives you revolving credit you can borrow and reuse multiple times so long as you pay it back. If you default on a secured solar loan, the lender can repossess your solar panels, and if you continue to default on the home equity loan, the bank might take additional action, like a foreclosure on your house. 

Unsecured solar loans are where you don’t offer any assets as collateral. With these, you didn’t offer your home or part of its value in exchange for the loan, so the lender can’t foreclose on your. However, lenders can take additional action for non-payment, including sending your debt to a collection agency and reporting you to credit rating agencies. 

Do solar loans affect my credit score?

Yes, solar loans can affect your credit score. Firstly, the new debt gets reported to reporting agencies and added to your credit report when you take out any new loan. This brings changes to the number of credit lines you have (which can be good for the score) and to, the amount of debt you have (which can be harmful to the score), and the debt-to-credit ratio (which can start as harmful to the score but become good as you pay down the solar loan). 

As you pay your monthly installments, that gets reported to the credit agencies. The longer you make payments and change the debt-to-credit ratio, the better your credit score gets. 

Similarly, each timely payment boosts your credit score, but each late payment hurts it. Missed payments hurt it too. If you fail to pay multiple installments in a row, it can result in your solar lender sending the debt to a debt collector. This hurts your credit even more. 

If you a solar loan is impacting your credit, you should know about your rights under laws including the Fair Credit Reporting Act and the Fair Debt Collection Practices Act.

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