Path-Q Solar

How should a landlord compare solar financing when the property is owned through a partnership or separate legal entity?

Answer

Compare financing based on the actual borrowing entity's eligibility, cash flow, guarantees, security, tax treatment, ownership rights, and default consequences. A partnership or property entity may require personal or parent guarantees and may not be evaluated like an individual owner or operating company.

Key points

  • Identify who owns the system, borrows the funds, receives project benefits, and is responsible for repayment.
  • Compare recourse, collateral, covenants, reserve requirements, prepayment terms, and transfer restrictions.
  • Model entity-level cash flow separately from property-level and personal cash flow.
  • Have tax and legal advisers assess allocation of deductions, credits, depreciation, partnership interests, and related-party arrangements.

What it depends on

  • Entity structure and governing agreements
  • Borrower financial statements and credit
  • Property cash flow and tenancy
  • Financing security and guarantee requirements
  • Applicable tax and legal treatment

Risks and trade-offs

  • A lower advertised rate may come with broader guarantees, fees, or restrictive covenants.
  • Cross-collateralization can expose other property or personal assets.
  • Entity changes, property sale, or partner disputes may trigger consent or repayment requirements.

Information you may need

  • Organizational chart and partnership agreement
  • Property and borrower financial statements
  • Term sheets and full fee schedules
  • Guarantee, collateral, and covenant provisions
  • Professional tax and legal analysis

Your next step

What to do next

Ask lenders to quote the same ownership and guarantee structure, then compare total cost, recourse, transferability, and default exposure with entity advisers.

Path-Q

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Some details may depend on your location, installer, utility, incentives, regulations, or specific property.

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