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Solar Energy - What Are The Trade-Offs? What Do You Need to Know?

In today?s world, owners are, by their own initiative, seeking to be environmentally conscious. Outside clothes drying is coming back strong (we already talked about this in a separate blog). Solar installations are in vogue. One can place anything on their own home or in their own yard, but be careful if you are in a development where architectural approval is needed for changes to the exteriors of the buildings or erection of things on the roof or common area or other areas. Why? Because you may go out and spend a lot of money for something you cannot install.

This is what California law says on the subject (paraphrased), and some commentary:

If you purchase a solar system without checking first with the HOA Board and getting approval of a system and placement of it, the installer will probably recommend a roof system. The owner in a condo does not own the roof so there are attorneys that take the position no owner may have a solar installation in a condo. And, for those attorneys that would believe the law allows for a solar installation even on a condo roof, there is a statute that requires 2/3 membership approval for any grant of exclusive use of common area to any owner (see Civil Code Section 1367.03) so even then, a Board could be found to be acting outside its legal authority to grant an owner the right to place a solar system on the roof of a condominium building. This puts a Board in a "damned if you do" and "damned if you don't" say yes to solar - in a condominium development. So maybe the answer here is to put a voting measure to the members of the condo association to see if they want to allow individuals to have solar energy systems placed on the roofs. If there are more owners than space, a condo board might look at (or appoint a committee to look at) some system that could serve more than one owner.

In a townhouse or "planned development" situation, it is different. An owner actually owns the roof, even if the association maintains it, and thus, the owner has more rights that are not conflicting with other laws (like in the condo situation). The homeowner?s association does not own the roof in this situation, but it certainly does have an interest on what might be placed on it if it maintains it. So, the Board cannot say no, but it can say "wait, there are some restrictions."

In any case, the Association Board or architectural committee has a say in what might be installed (or what might not be installed). Some HOA boards have been forward-thinking and have adopted a policy on solar installations explaining what is acceptable, getting whatever approval requirements are needed accomplished as part of the process. Those that do head off many disagreements. Others do not even know what options there are and so owners go ahead and do whatever they want, driving the board crazy.

It?s like having a satellite dish policy. If a Board is proactive, and the owners are directed to what is acceptable, when they shop, they will be able to tell the salesperson what is acceptable, rather than having the salesperson tell them what is acceptable ("practicing law without a license??").

People are mostly like sheep - really! - The majority of people tend to follow, not lead, and the average person does not want to cause trouble if they can avoid it, so giving written guidance to owners tends to set boundaries that are accepted.

Sometimes, owners just do not like the fact that the Board has any say at all so they do not ask for approval. Some owners get themselves into a real dilemma by signing a contract for an expensive system and of course, that results in more incentive to fight for it.

Some limitations that any association may impose on solar systems were found to be reasonable by the legislature when Civil Code Sections 714 and 714.1 were approved. However, after these statutes were enacted, a new law was passed that prevented giving the roof common area up to any one owner for a solar installation. This creates a real dilemma - one law won't allow an Association to prevent any solar installations, but does allow associations certain controls. Another law requires a board to seek member approval for any exclusive use of the roof such as in a condo association.

I don't even believe attorneys agree on which law controls. And of course, there are Owners who want to know why a Board should have any say at all? The answer is so that aesthetics and maintenance issues that may arise may be addressed (such as allowing the same or similar systems so that aesthetics are consistent, protecting warranties, etc.). Certain systems may allow for reasonable maintenance of the roof and removal of the systems when roofs are replaced. And of course, if the roofs are tile roofs, walking on them and installing systems can break tiles, one has to know how to walk on the tiles to keep from breaking them. Some roof warranties may be adversely affected or even voided unless the roofing contractor installs the system or can send a person up to supervise installation of a solar system. There is more at risk in a solar installation than the owners' ability to facilitate solar power (which of course is also an important consideration.) These would be concerns of the association. See the notes and highlighted portions below.

The statute permitting solar installations says this:

714. (a) Any covenant, restriction, or condition contained in any
deed, contract, security instrument, or other instrument affecting
the transfer or sale of, or any interest in, real property that
effectively prohibits or restricts the installation or use of a solar
energy system is void and unenforceable.

SO, ostensibly, the associations may not prohibit systems (above) - but may provide reasonable limitations (see below).

(b) This section does not apply to provisions that impose
reasonable restrictions on solar energy systems. However, it is the
policy of the state to promote and encourage the use of solar energy
systems and to remove obstacles thereto. Accordingly, reasonable
restrictions on a solar energy system are those restrictions that do
not significantly increase the cost of the system or significantly
decrease its efficiency or specified performance, or that allow for
an alternative system of comparable cost, efficiency, and energy
conservation benefits.
...
(d) For the purposes of this section:
(1) (A) For solar domestic water heating systems or solar swimming
pool heating systems that comply with state and federal law,
"significantly" means an amount exceeding 20 percent of the cost of
the system or decreasing the efficiency of the solar energy system by
an amount exceeding 20 percent, as originally specified and
proposed.
(B) For photovoltaic systems that comply with state and federal
law, "significantly" means an amount not to exceed two thousand
dollars ($2,000) over the system cost as originally specified and
proposed, or a decrease in system efficiency of an amount exceeding
20 percent as originally specified and proposed.
(2) "Solar energy system" has the same meaning as defined in
paragraphs (1) and (2) of subdivision (a) of Section 801.5.
Note that the statute allows for HOA application and approval processes.
This is important too. Hopefully, the HOA board is evolved enough to have
a reasonable policy on solar installations (I have written many so know some
HOAs are aware of this statute). Read on:
(e) Whenever approval is required for the installation or use of a
solar energy system, the application for approval shall be processed
and approved by the appropriate approving entity in the same manner
as an application for approval of an architectural modification to
the property, and shall not be willfully avoided or delayed.
(f) Any entity, other than a public entity, that willfully
violates this section shall be liable to the applicant or other party
for actual damages occasioned thereby, and shall pay a civil penalty
to the applicant or other party in an amount not to exceed one
thousand dollars ($1,000).
(g) In any action to enforce compliance with this section, the
prevailing party shall be awarded reasonable attorney's fees.
...
The following are very important portions of the law, as without them, the other members of the HOA are not protected from the costs associated with installation, damage or removal of systems.

714.1. Notwithstanding Section 714, any association, as defined in
Section 1351, may impose reasonable provisions which:
(a) Restrict the installation of solar energy systems installed in
common areas, as defined in Section 1351, to those systems approved
by the association.
(b) Require the owner of a separate interest, as defined in
Section 1351, to obtain the approval of the association for the
installation of a solar energy system in a separate interest owned by
another.
(c) Provide for the maintenance, repair, or replacement of roofs
or other building components.
(d) Require installers of solar energy systems to indemnify or
reimburse the association or its members for loss or damage caused by
the installation, maintenance, or use of the solar energy system.

There are questions in the minds of many about how far any Owner or Board can go in making demands about solare, and there is the conflicting law to consider in condo associations about having to get other owners (who also own a share in the roof) to agree to the use.

Maybe its a good idea to look at all the possibilities, such as other types (than roofing systems) of photovoltaic systems or other types of installations that may be used in already granted exclusive use areas such as patios, balconies or back yards, or perhaps group systems that can be installed for those owners that want to take advantage of solar energy and contribute to the costs.

It's complicated. It's best to work with solar experts to determine what systems are available for your HOA, and only one attorney (as two might disagree and confuse you) on this and get a written opinion to back your policy, as there is protection from individual liability for boards if they act in good faith (which includes getting the advice of an expert where expertise is required).

Full post as published by California Condo & HOA Law on February 06, 2009 (boomark / email).