Material Terms and Conditions
The contract that you sign will generally contain provisions explaining the scope and extent of your cancellation rights. Some contracts may be much more favorable to the homeowner, while other contracts may be stricter. These contract provisions are important for two reasons: first, it is important to know whether you can actually cancel the contract after installation; second, these provisions inform the contractor of the damages the contractor will incur as a result of any cancellation.
The California Solar Rights Act (Government Code §§ 65850 et seq.) requires all "local agencies" (which includes municipalities and counties) to develop an expedited permittance process for small rooftop solar energy systems. The Solar Rights Act also made common the "right of rescission" provision commonly found in "Door-to-Door Sales" cases . This gives consumers a right of cancellation within 5 days of signing the contract – as long as none of the parties to the contract hold an active license with the Contractors State License Board.
Unfortunately, this right does not apply if the contractor has an active license. California law generally does not favor a construction lienor’s right to withhold non-final progress payments for construction work or materials. Even when such a right exists, it may be waived or limited by agreement of the parties. As a result, many solar panel contractors may make special arrangements with subcontractors or suppliers which would entitle them to a "final payment" or deposit of some sort after the work has been completed.
Contract Cancellation Specifications and Grounds to Cancel
The grounds on which you can cancel a solar panel contract will depend on the law of the jurisdiction in which you installed your panels and the policy of your installer.
In Australia, if you signed the agreement in your home, you may be entitled to a ‘cooling off’ or ‘free-look’ period. The period is set down in the law of each state and territory and can be 1 business day in some states or as long as 10 business days in others. In a situation where the consumer has had time to reflect on the benefits and drawbacks of a solar panel system after it has been installed, many consumers will hope that the free-look period has been extended to account for the additional time required to assess the effectiveness of the system. Unfortunately, these cooling off periods will generally not apply where the agreement has been partially performed by installation of the solar panels. There is some provision in Queensland for an extension of time where the panels have been installed but not connected to the grid, however this is uncommon in other jurisdictions.
The Australian Consumer Law (‘ACL’), the national law governing consumer sales transactions, provides statutory guarantees that solar panels will be supplied: These ACL provisions concerning quality also independently provide grounds for removal of faulty panels in the event of permanent failure. Although these statutory guarantees cannot be excluded, they may only be relied on if a consumer has given comprehensive notice of likely loss and damage caused by the faulty panels. The power of the court to order removal of the panels, and appeal by the installer can cause delays to the removal process.
Similar protections are in place in New Zealand under the Consumer Guarantees Act 1993.
The Costs of Contract Cancellation
One of the big reasons to read the fine print of your proposed solar panel contract is the cancellation policy, specifically what it says about the financial implications for cancelling the installation after the fact. Often, you’ll find a rather hefty fee associated with this, but that’s not always the case. It may be as simple as forfeiting your deposit after you’ve signed and scheduled the installation, or it may go so far as to include the requirement of paying full contract value, plus an additional cancellation fee that might equal what you paid in total. When such provisions are present, they’re often borderline unenforceable if challenged legally, but it could mean your moment of "realization" happens at the worst possible time – a few days before the panels are scheduled, for example. There’s also the very real possibility that you’ll have a hard time getting the money back if you challenge their efforts to keep every cent of your money, even after the contract has been cancelled. If you ever sign a contract, it’s nearly impossible to enforce that contract terminate provisions if it goes too far, even if you can get that point across before the panels actually go up.
How to Cancel a Solar Panel Contract
A consumer has a right to cancel a solar panel contract within three days of signing. The consumer must return the panels and any other equipment installed in their homes unless the time for cancellation has expired. In order for a consumer to prevail under the three-day right of cancellation, he or she must follow exact procedures. If the installer cancels an installation, he or she must refund all money within ten days after canceling the contract. The easiest way to make sure the contractor follows the three-day right of cancellation law is to cancel the contract in writing during the three-day period. The cancellation must be sent by "I.C.E." — personal delivery, mail, or facsimile to the contractor’s address under the contract.
An example of a cancellation letter is below:
Date
Name of Installer
Street Address
City, State, Zip
RE: Cancellation of Purchase and Installation of Solar Panels
Dear Installer:
Under Roman Civil Code Section 7173 , I hereby tender cancellation of the attached contract for the sale and installation of solar panels and other equipment per address set forth below.
My copy of the contract is enclosed.
The following are specific instructions on returning the panels and all related equipment per Roman Civil Code Section 7165."
Address of Panels
Date of Install
Signature of Homeowner
Printed Name of Homeowner
Address, City, State, and Zip of Homeowner
Phone Number of Homeowner
Homeowner is required to tender any security devices, documentation, or other information that would allow them to remove panels in a serviceable condition.
Homeowner is to allow Contractor a reasonable period of time to remove panels. Homeowner may extend the period of time needed for removal based upon circumstances beyond homeowner’s control. Immediacy of removal shall not be required or necessary but without loss of a day no later than one week from the date of the cancellation.
Homeowner may cancel this contract within three (3) business days after the receipt of a final signed and dated contract or before performance of the contract. To cancel this contract, mail, fax, or deliver a signed and dated copy of this cancellation notice or any other written notice to Installer at the address listed above. I hereby cancel this transaction.
Date
Signature
What Are the Alternatives to Cancellation
Options other than Cancellation
While cancellation of a contract is often a goal for consumers who believe they’ve purchased a defective product, its not necessarily the best or only option. More often than not, these agreements are long-term agreements (2-20 years). If you cancel the contract, you usually lose the benefit for which you entered into the contract.
One alternative to consider is whether you can negotiate a modification of the important contract terms. For example, if you were promised solar panels that would be able to supply all your needs for electricity at your home, and instead the system is undersized and installed in such a way that frequent shade from trees prevents it from functioning properly, a decision may be made to re-position and/ or resize the array . A company may agree to make these changes in order to avoid having to replace the entire system. It is important to keep in mind that the mandatory warranty requirements, such as the warranty that a solar system will operate at a minimum 80% output at a specific level of irradiance and during the first 10 years of a 25-year warranty is not generally modifiable by the consumer without a loss of warranty protection. You may also consider seeking to have a third party replacement person make the necessary repairs to the system, with the promise that the sellers will reimburse you for the cost of replacing the panels and/or materials (as well as any missing materials). If you are considering the cancellation of a contract, you should consult an attorney.