Solar Panels on Common Area Roofs; Have a Policy Yet?

The California Solar Rights Act (“Act”), found at Civil Code §§ 714 and 714.1, provides certain protections for homeowners seeking to install Solar Energy Systems (i.e., solar panels) on their properties (“Systems”). The intent of the Act was to prevent associations from broadly banning Systems for aesthetic reasons—whether through an explicit ban, or through onerous architectural restrictions that greatly increase System costs or reduce performance. To that end, the Act rendered void and unenforceable any provision of an association’s governing documents that “effectively prohibits or restricts the installation or use of a solar energy system.” Civ. Code § 714(b). The Act does permit associations to place “reasonable restrictions” on the installation or use of Systems, as defined in Civil Code § 714(b).  However, in reality, those “reasonable restrictions” are extremely limited in scope.  To illustrate, any restriction which increases the cost of a System by more than $1,000, or which decreases its performance by more than ten percent (10%), from what was originally proposed by the homeowner is not a “reasonable” restriction and therefore unenforceable. Civ. Code § 714(d)(1)(B).

For planned developments with detached homes, the application of the Act is relatively straightforward because it applied to Systems that were installed on a homeowner’s “separate interest.”  However, what was less clear was the extent to which the Act applied to homeowners within condominium developments.  In a condominium development, a System would not be installed within or upon a homeowner’s separate interest.  Rather, the System would be installed on common area components such as the roofs, garages or carports.

This issue was at the heart of AB 634 which was signed into law in 2017. AB 634 amends Civil Code § 714.1 and adds Civil Code § 4746. Under the new law, which became effective January 1, 2018, associations are prohibited from establishing policies prohibiting the installation or use of Systems installed on the roof of the building in which the owner resides, or a garage or carport adjacent to the building that has been assigned to the owner for exclusive use. It also adds an exemption to the membership approval requirements associated with granting exclusive use of common area to allow for such grants for System installations. Civ. Code § 714.1(b)(1)-(2).  In simple terms, condominium associations are no longer able to broadly prohibit Systems from being installed on common area roofs, garages or carports.

The enactment of AB 634 raises significant concerns, especially with respect to the impact the installation of a System will have on warranties covering the roof and related components—warranties which are often rendered void by the installation of a System. However, this typically extends only to the portion of the roof affected by the System.  Moreover, many solar companies warrant their work for ten-to-fifteen years, which includes all roof penetrations made in connection with the installation. Finally, the newly codified Section 4746 of the Civil Code authorizes a HOA to “[r]equire the owner and each successive owner of the solar energy system to be responsible for . . . costs for damage to the common area, exclusive use common area, or separate interests resulting from the installation, maintenance, repair, removal, or replacement of the solar energy system.” Thus, an association may (and should) transfer this responsibility on the installing homeowner—preferably through the homeowner signing a maintenance and indemnity agreement with the association as a condition of the association’s approval of the System.

Additional concerns raised by AB 634 relate to the treatment of applications for the installation of Systems in a multi-story condominium project, particularly where multiple units share the same roof. Civil Code § 4746 addresses this concern by permitting an association to require the applicant/homeowner to submit a “solar site survey showing the placement of the [S]ystem” and the “equitable allocation of the usable solar roof area among all owners sharing the same roof, garage, or carport.” This is to prevent any one homeowner from monopolizing the entire area for his or her System to the detriment of his or her neighbors who may want to install System in the future. Association may therefore restrict the applicant’s System to that homeowner’s equitable share of the roof space. For example, if there are five (5) units under the same roof, then only 1/5^th of usable roof area may be utilized for any individual homeowner’s System.  For some condominium communities, this may result in homeowners not being able to install Systems simply because the usable area allocated to them (and thus the number of solar panels they may have) is not large enough.

To address these and other concerns, a condominium association should adopt guidelines addressing the policies and procedures governing the application and installation of a System on common area roofs, garages and carports. At a minimum, the policy should parallel the language of the new law by requiring applicants to:

1. Notify all owners of a unit within the building of the proposed installation;
2. Submit a solar site survey that (a) is prepared by a licensed contractor, (b) shows the placement of the proposed System, (c) depicts the usable area of the location in which the proposed System will be installed, and (d) includes a determination of an equitable allocation of the usable solar area among all owners sharing the same roof, garage, or carport;
3. Obtain and maintain a homeowner liability coverage policy, and provide the HOA with a copy of same within fourteen (14) days of approval of the application; and
4. Execute and record a maintenance and indemnity agreement whereby the applicant assumes responsibility for the costs of repairing damage to, among other things, the common area resulting from the installation, maintenance, repair, removal or replacement of the System. Such an agreement should also address what happens when the System needs to be removed/re-installed to accommodate community-wide roofing projects the association may undertake in the future.

The foregoing are just a few examples of what should be included in such a policy.

-Blog post authored by TLG Attorney, Matthew T. Plaxton, Esq.