Avoiding bad deals
7 red flags hidden in solar contracts (and how to find them in 5 minutes)
The sales pitch is one thing. The 20-page contract you actually sign is another. Most solar contracts contain at least one clause that benefits the installer at the homeowner's expense. The good ones disclose them clearly. The bad ones bury them on page 14.
Below are the 7 specific clauses to look for, why each one matters, and where they typically hide. You can audit any contract in 5 minutes once you know the patterns.
The 7 contract red flags
- Escalator clause (lease/PPA only) — the per-kWh rate increases 1-3% annually for the term. Usually buried in the rate schedule. A 2.9% escalator on a 25-year PPA more than doubles your year-25 rate.
- Production guarantee with a tiny cap — many installers offer a 'production guarantee' that's capped at 5 years or limited to 90% of estimate. Real guarantees run 25 years and pay you the difference at retail rate.
- Workmanship warranty under 10 years — a 5-year workmanship warranty is the installer telling you year 6 is your problem. Industry standard for serious installers is 25 years (matches the panel manufacturer warranty).
- Mandatory binding arbitration with installer-chosen arbitrator — strips your right to sue and lets the installer pick the referee. Look for 'JAMS,' 'AAA,' or specific arbitrator selection language.
- Early-termination or cancellation fee outside the 3-day window — Texas allows a 3-day right of rescission on most home solicitation contracts. Beyond that, fees should be limited to actual costs incurred. Watch for percentage-based 'liquidated damages.'
- Roof warranty void on penetrations — some installers explicitly disclaim responsibility for roof leaks at panel mounts. Industry-standard workmanship warranty covers them.
- Vague 'partner installer' language without naming who actually shows up — if the contract says 'Kaizen or its partners,' get the specific subcontractor's name in writing before signing.
Where each red flag typically hides
| Red flag | Typical location in contract |
|---|---|
| Escalator | Schedule A or rate exhibit, attached to back |
| Production guarantee cap | Section labeled 'Performance' or 'Warranty' |
| Workmanship warranty length | Warranty section or separate warranty document |
| Arbitration clause | 'Disputes' or 'Governing Law' section |
| Cancellation fees | 'Term' or 'Termination' section |
| Roof penetration disclaimer | Buried in 'Limitations' or 'Exclusions' |
| Partner-installer language | 'Performance of Services' section |
5-minute audit checklist
- Search the PDF for 'escalator' and 'rate increase'. If found, read the full clause.
- Find the 'workmanship' or 'labor' warranty length. Confirm it's 10+ years (25 ideal).
- Find the production guarantee. Confirm it runs the full term (not 5 years) and pays at retail rate.
- Find 'arbitration' or 'disputes'. If binding, check who selects the arbitrator.
- Find 'cancellation' or 'termination'. Confirm there's no penalty beyond Texas's 3-day window.
- Find any reference to 'partners' or 'subcontractors'. Get the specific name in writing.
- Find roof / penetration / leak language. Confirm it's covered by workmanship warranty.
What a clean contract looks like
A clean solar contract has no escalator (or discloses it clearly on page 1), runs production + workmanship warranties for the same term as the manufacturer warranty (25 years on a Kaizen install), and names the install crew specifically. Cancellation matches Texas's 3-day right of rescission with no liquidated damages beyond that. Disputes default to court, not installer-chosen arbitration. Roof penetrations are explicitly covered.
If you see all seven red flags absent, you're looking at a fair deal. If you see two or more present, slow down and get the contract reviewed by a real estate attorney before signing.
Common questions
Frequently asked
- Can I cancel a solar contract after signing?
- Texas gives you a 3-day right of rescission on door-to-door home solicitation contracts (Texas Business & Commerce Code Chapter 39). Beyond that, you're bound by whatever cancellation terms the contract specifies. Always cancel within 3 days if you have any doubt — you can re-sign later if you're sure.
- Should I have a lawyer review my solar contract?
- For a $25-40k purchase you'll live with for 25 years, yes — at least once. A real estate or consumer-contracts attorney can review a 20-page solar contract in 30-60 minutes for $200-500. Cheap insurance.
- Is binding arbitration always bad?
- Not always. Arbitration via a neutral organization (JAMS, AAA) is fine. Arbitration where the installer picks the arbitrator is bad. Read carefully and look for the actual arbitrator selection language.