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How Does the UCC Lien Work?
If you’ve recently financed solar panels or other large purchases, you may have encountered the term "UCC lien." Understanding how it works is essential, especially if you’re a homeowner wondering how it impacts your property. Let’s break it down in simple terms.
What Is a UCC Lien?
A UCC lien is not a traditional real estate lien that you might associate with mortgages or property taxes. Instead, it’s a lien against personal property under the Uniform Commercial Code (UCC). In the case of solar panels, this lien applies to the solar panels and associated equipment installed on your home, not the home itself.
How Does It Work?
Think of a UCC lien as similar to the lien a bank places on your car when you finance it. While the car may be parked in your driveway or garage, it’s not technically part of your house—it’s considered personal property. Similarly, solar panels are classified as removable personal property, even though they’re installed on your roof or property.
The lender or solar company uses the UCC lien to secure their interest in the solar panels until your loan is paid off. If you default on the loan, the lien gives the lender the legal right to repossess the panels.
Key Points About UCC Liens on Solar Panels
Not a Real Estate Lien:
A UCC lien does not encumber your house. It only affects the personal property associated with the lien, such as your solar panels and their related equipment.
Does It Affect Selling Your Home?
You can still sell your home with a UCC lien in place. However, buyers or their lenders may require you to pay off the lien before the sale is finalized, as the lien is tied to the solar panels and not the real estate itself.
Can You Remove the Solar Panels?
Removing or relocating the solar panels without settling the lien may violate the terms of your financing agreement. This could lead to legal complications or repossession of the panels.
Why Do Lenders File UCC Liens?
Filing a UCC lien is a standard practice to protect the lender’s financial interest. It ensures that, in the event of non-payment, they have recourse to recover their investment.
What Should You Do if You Have a UCC Lien?
Understand Your Loan Agreement: Review your financing documents to understand the terms and conditions of the lien.
Communicate With Your Lender: If you’re planning to sell your home or make changes to your solar panels, notify your lender in advance.
Seek Legal Advice: If you’re unsure about the implications of the lien or encounter issues, consulting a legal professional can help you navigate the situation.
The Bottom Line
While a UCC lien might sound intimidating, it’s simply a way for lenders to secure their investment in the solar panels or other financed equipment. It doesn’t prevent you from selling your home or making changes, but it does require careful attention to your loan obligations. By understanding how it works, you can ensure you’re prepared to handle any scenarios involving the lien.
If you have questions about UCC liens or need assistance with your solar panel financing, don’t hesitate to reach out to a legal or financial expert. Having the right information can save you time and stress.
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I felt completely stuck when Encor went out of business, leaving me with an unfinished solar system that didn’t work, failed inspections, and a loan I still had to pay. On top of that, they misled me about tax credits and savings, and I ended up paying more in taxes and insurance instead. Prevost Law Firm stepped in and took care of everything. Their team handled my case with professionalism and compassion, and I’m so grateful for the outcome. If you're struggling with solar issues, you need to call them. (Cara J.)
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My experience with Encor Solar was a disaster. They installed a system that didn’t work, used an unlicensed subcontractor, voided my roof warranty, and lied about the need for batteries during power outages. When they went out of business, they left me with an unfinished system and no way to fix the mess they created. Prevost Law Firm was amazing—taking on my case and delivering results that exceeded my expectations. They are true advocates for homeowners, and I’m so grateful for their help. If you're facing a similar situation, I can’t recommend them enough! (John S.)
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Working directly with Mr. Prevost was excellent. Having worked with several attorneys in several fields regarding general real estate matters, I was very pleased with my specific niche case against UCC-1 filings regarding solar liens. Mr. Prevost knew exactly how things would play out in handling the matter and communicated each stage clearly with me as to what I should do and what his team would need from me in the process. (Cody McDonald)
"Changed Our Lives
We can’t thank Prevost Law Firm enough for what they’ve done for us. My wife and I felt utterly defeated and trapped by the $73,590 loan for a solar panel system that never even worked. Encor, the installer, went out of business before the system passed inspection, but Solar Mosaic still demanded we pay for it. As disabled homeowners, we felt taken advantage of and didn’t know where to turn.
From the first phone call, their team made us feel like we weren’t alone in this fight. They listened to our story, fought tirelessly on our behalf, and never gave up until they got results. Thanks to them, our $73,590 loan was completely canceled, and we were refunded every single dollar of the $28,493 we had already paid into the loan. Best of all, we got to keep the solar panels for free!
When we got the news, we were overwhelmed with relief and gratitude. My stroke has already made life challenging enough, and this financial nightmare had only added more stress. Now, thanks to Prevost Law Firm, we can breathe again and finally focus on getting the panels working for us.
To anyone dealing with a solar panel loan disaster: don’t wait—call Prevost Law Firm. They are incredible, and they truly fight for people like us. We are so grateful we found them, and we hope others in similar situations will reach out for their help.
Bart and Diana Daniels
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Nothing herein is intended, and does not, create an attorney client relationship and is for informational purposes only. The Prevost law firm is licensed in Texas and is licensed to practice law in all Texas state courts and in multiple Federal Courts and Arbitration in 46 states. Solar sales are governed by both state and federal law. The attorney client relationship will only be created after the parties enter into a signed letter of representation.