California promotes the use of solar energy systems. Accordingly, associations cannot (i) prohibit solar energy systems, (ii) impose restrictions that significantly increase their cost, or (iii) impose restrictions that significantly decrease their efficiency. (Civ. Code § 714.)
Solar Water Heating. For solar water heating systems, associations cannot impose requirements that will increase by an amount exceeding 10 percent (10%) of the cost of the system, but in no case more than one thousand dollars ($1,000), or decreasing the efficiency of the solar energy system by an amount exceeding 10 percent (10%), as originally specified and proposed. (Civ. Code § 714(d)(1)(A).)
Solar Energy Systems. For solar energy systems, associations cannot impose requirements that will decrease efficiency by more than 10% or increase system costs by more than $1,000 from those as originally specified and proposed. (Civ. Code § 714(d)(1)(B).) As provided for in Civil Code § 714.1, associations may impose reasonable provisions that restrict the installation of solar energy systems installed in common areas. "Reasonable" restrictions are those where solar units were comparable in performance and cost to unapproved type of unit homeowner sought to install on the roof of his home. (Palos Verdes v. Rodman.)
Exclusive Use Roofs. Townhouse owners with exclusive use common area roofs have a better argument that they have a right to install solar panels on their roofs. However, if the association is obligated to maintain those roofs, it raises significant issues related to the increased cost of maintenance and whether those costs can be billed to the owners who install solar panels.
Common Area Roofs & Carports. Members have the right to install solar energy panels on a common area 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. Per Civil Code § 714.1 and § 4746, the following guidelines apply:
- the system must meet applicable building codes;
- the system must receive the association's approval (which cannot be unreasonably withheld);
- the association may include provisions for the maintenance, repair, or replacement of roofs or other building components;
- the association may require installers indemnify the association and pay for any damage;
- the association may require a site survey showing placement of the panels and equitable allocation of usable area among owners sharing the same roof, garage, or carport;
- applicants must notify each owner of a unit in the building on which the installation will be located of the application to install a solar energy system;
- the owner and each successive owner must maintain a homeowner liability coverage policy at all times and provide the association with the corresponding certificate of insurance within 14 days of approval of the application and annually thereafter;
- disclose to prospective buyers the existence of the solar energy system and their responsibilities to maintain and pay any damage to the common areas.
Architectural Review. If an application is not denied in writing within 45 days from the date of receipt of the application, the application shall be deemed approved, unless that delay is the result of a reasonable request for additional information. If approvals are willfully avoided or delayed, an association can be penalized up to $1,000. (Civ. Code § 714(f).) Aesthetics are a proper part of the architectural review process, provided it does not significantly increase the cost of the installation. (Tesoro v. Griffen.)
Recommendation: Whenever a solar energy system is installed by an owner on a common area roof (or anywhere in the common areas), a maintenance covenant should be prepared by legal counsel for signature by the owner and recordation with the County Recorder obligating the owner (and all future owners) to properly maintain the system, repair any damage to the common areas related to or arising from the owner's solar energy system, and indemnifying the association in the event it is sued because of the solar energy system.
Aesthetic Considerations. A homeowner in the Tesoro del Valle Master Homeowners Association installed solar panels on a slope adjacent to his property without HOA approval. For aesthetic reasons and because of slope structure restrictions, the HOA wanted the panels on the owner's roof. The owner refused and the association sued. The homeowner argued that "aesthetic considerations" were an improper part of the review process and violated Civil Code § 714. The court disagreed. It ruled that "an evaluation of a proposed solar energy system--just as any other proposed improvement--would involve consideration of aesthetics."
Cost Considerations. Expert testimony by the association showed that the cost of installing the solar panels on the owner's roof was actually cheaper than installing them on the slope. Based on the testimony, the court ruled that the HOA's guidelines were not unduly burdensome and, therefore, reasonable.
Redesign. The owner then argued that once the architectural committee disapproved his original application, it had a duty to redesign his solar energy system to meet their guidelines. Again the court disagreed. The court found that the law imposed no such burden on associations. Per statute, the only obligation by the committee was to inform the owner of the basis for its denial of his application. The court ruled that "the burden is on the homeowner to submit an application that is complete and sufficient to generate [architectural committee] approval." (Tesoro del Valle v. Griffen.)
Recommendation: If an association's architectural guidelines are reasonable, they are enforceable. If boards are unsure about their guidelines, they should have an architect and legal counsel review them.
Licensed Installer. Contractors installing solar energy systems are required to hold an A, B, C-10 or C-46 license.
HOA Solar Panels. Associations can install solar panels for heating swimming pools and other electrical needs. The cost to install them can be covered by a special assessment, a loan or solar leases and power purchase agreements (PPA). Under a Solar Lease or PPA, a third party pays for and owns the solar installation, taking advantage of the tax benefits and selling the electricity generated to the association. The advantages to the association are (a) no or minimal up-front costs, (b) lower energy rates and (c) certainty about the rates/tariffs the association will be paying for energy for years to come (typically 15-20 years).
ASSISTANCE: Associations needing legal assistance can contact us. To stay current with issues affecting community associations, subscribe to the Davis-Stirling Newsletter.