Dec292025
Real Estate Q&A Series

How can I sell an inherited house when there’s a UCC lien for solar panels and the original solar company is in bankruptcy? – North Carolina

Short Answer

In North Carolina, a recorded UCC financing statement tied to solar panels can block or delay a closing because it is a “cloud” on title that most buyers and lenders will not accept. The fastest path is usually to identify who now has authority over the lien (often a successor, servicer, assignee, or a bankruptcy trustee) and obtain a proper termination or release that can be recorded. If that cannot be done in time, a closing may require an alternate resolution such as a court order or a title-company-approved workaround, but the acceptable option depends on how and where the lien was filed and what it covers.

Understanding the Problem

In North Carolina, after a parent’s death, two siblings can receive a home through a Lady Bird deed and then plan to sell the property. A problem arises when a UCC lien related to solar panels appears in the title work and the original solar company is in bankruptcy. The core question is what steps can be taken to clear or neutralize that UCC lien so the sale can close on time.

Apply the Law

North Carolina uses Article 9 of the Uniform Commercial Code for most security interests in personal property and fixtures. Solar panel deals are often structured as (1) a loan secured by the equipment, (2) a lease where the panels remain owned by the solar company, or (3) a “fixture filing” intended to follow the panels as part of the real property. A recorded UCC filing usually stays in place until the secured party (or someone authorized in its place) files a termination or release, or a court determines the filing is ineffective or should not remain as a claim against the property.

Key Requirements

  • Identify the filing and what it covers: A closing strategy depends on whether the filing is a standard UCC financing statement, a fixture filing against the real property, or something else, and whether it claims the panels, related equipment, or broader rights.
  • Identify who has authority to release: If the original solar company is bankrupt, authority may have shifted to a trustee, a purchaser of the loan/lease portfolio, or another successor. The right person must sign or authorize a termination or release.
  • Put the release into the correct public record: If the filing was made with the North Carolina Secretary of State, the resolution typically needs to be filed there. If it was a fixture filing, it may need to be released in the county Register of Deeds where the property is located.

What the Statutes Say

Analysis

Apply the Rule to the Facts: Here, two siblings received title by Lady Bird deed and have a pending sale. The title work shows a UCC lien tied to solar panels, and guidance has been to file a UCC-3 termination, but filing attempts have not succeeded. Under North Carolina practice, that usually means the closing team must (1) confirm where the filing is indexed and what it claims, (2) locate the party now entitled to act for the bankrupt solar company or its successor, and (3) get a properly authorized termination or other recordable release into the correct filing office before closing.

Process & Timing

  1. Who files: Typically the secured party of record or its successor (sometimes through a servicer), and in some cases the property owner’s attorney coordinates the filing. Where: Either the North Carolina Secretary of State (for most UCC filings) or the county Register of Deeds (for fixture filings tied to real property). What: A termination/release document that the correct filing office will accept; for real-property instruments, this is usually a recorded release or satisfaction in the Register of Deeds. When: As early as possible after the lien is discovered, because rejections and re-filings are common.
  2. Confirm the bankruptcy “handoff”: If the original solar company is in bankruptcy, the closing strategy often starts with finding whether the solar obligation was sold/assigned and who now receives payments or services the account. That party may be able to provide the payoff and a release/termination. If no successor can be identified quickly, counsel may need to evaluate a court-based solution.
  3. Get closing approval: Even after a release is signed, the buyer’s lender and the title insurer may require proof that the release was recorded (or at least accepted for recording) before they will fund and close.

Exceptions & Pitfalls

  • UCC filing vs. fixture filing confusion: Solar filings can appear in different places. Clearing the wrong record (or filing in the wrong office) may not satisfy a buyer, lender, or title insurer.
  • Wrong party signs: If the original company is bankrupt, a former employee or dissolved entity may not have authority. A release signed by someone without authority can be rejected or challenged later.
  • Lease vs. loan mismatch: If the panels are leased, there may be no “payoff and release” in the usual sense; the deal may require an assumption, buyout, or removal agreement in addition to any recorded termination.
  • Do not file false documents: Recording documents that are materially false can create serious legal consequences. Any termination or release should be supported by proper authority and documentation.
  • Automatic release rules are narrow: North Carolina has an “automatic release” concept for certain ancillary security instruments tied to the same obligation as a real-property security instrument, but it does not apply in every solar/UCC scenario and often requires careful matching of the obligation and instruments.

Conclusion

In North Carolina, a UCC filing tied to solar panels can prevent an inherited home sale until the record is cleared or otherwise resolved. The practical path is to identify whether the filing is a standard UCC filing or a fixture filing, identify the party with authority to release it (often a successor or bankruptcy trustee), and record a proper termination or release in the correct office. If that cannot be done in time, the next step is usually to file an action in Superior Court to determine adverse claims and obtain a court order that can be recorded.

Talk to a Real Estate Attorney

If a home sale is on hold because a solar-panel UCC lien is showing up in the title work and the original company is in bankruptcy, our firm has experienced attorneys who can help you understand your options and timelines. Call us today at (919) 341-7055.

Disclaimer: This article provides general information about North Carolina law based on the single question stated above. It is not legal advice for your specific situation and does not create an attorney-client relationship. Laws, procedures, and local practice can change and may vary by county. If you have a deadline, act promptly and speak with a licensed North Carolina attorney.

Category: Real Estate Q&A Series

Author: jpierce

Attorney Jared Pierce is the founder of Pierce Law Group in Raleigh, North Carolina, a firm he established with a dedicated focus on probate administration and estate planning across North Carolina. Born and raised in the Republic of South Africa, Jared moved to Durham with his family in 2001, bringing with him a rich cultural background and a distinctive accent that often serves as a conversation starter.