The American Land Title Association (ALTA) recently published Endorsement 50 (Residential Solar – Loan Policy) to address a common title issue affecting residential loans with solar panels.

Properties with leased or financed solar panels often have UCC-1 financing statements, solar panel leases, or power purchase agreements recorded in the public records. Historically, these filings have created underwriting complications, requiring lenders to obtain subordinations, terminations, or releases to ensure their mortgage maintains first lien position and complies with Fannie Mae and Freddie Mac selling guide requirements.

The ALTA 50 endorsement provides specific title insurance coverage against the risk that these solar-related documents constitute a lien senior to the insured mortgage. This allows title companies to delete exceptions for solar power purchase agreements, solar panel leases, and UCC-1 financing statements from the loan policy while protecting the lender's first lien position. We recommend lenders request the ALTA 50 endorsement whenever a solar lease or UCC-1 filing related to solar equipment appears in the title commitment. 

Texas does not currently have a promulgated state-specific form equivalent to ALTA 50. In practice, Texas title companies have been addressing solar panel UCC-1 filings through alternative approaches: taking the position that solar UCC-1 filings or leases do not constitute valid liens on real property under Texas law or working with underwriters on a case-by-case basis.

Clients should review their internal compliance and underwriting policies to establish a standard procedure for solar-equipped properties. When submitting closing document requests, Clients will need to include a note requesting the ALTA 50 Endorsement and it will be added to the Closing Instructions. Please contact compliancegroup@docsdirect.com with any questions.