I am a Real Estate Lawyer
As an Ontario lawyer, you have the expertise and knowledge to guide your clients through real estate transactions and help them understand the factors they need to consider before making a sale or purchase of real estate in Ontario. One of the factors that may have to be considered is the existence of a microFIT Contract associated with the property. It is important to understand that the assignment of the microFIT Contract is separate from the purchase and sale of the property and microFIT Facility, and the IESO does not unilaterally assign microFIT Contracts or compel Contract holders to assign their existing microFIT Contracts.
If you are assisting your client with the purchase or sale of a property associated with a microFIT Contract and the parties to the transaction wish to have the Contract assigned, you may choose to assist your client in the Contract Assignment process within Beacon. However, it is the expectation of the IESO that your client or your client’s duly authorized representative is personally navigating Beacon as there are declarations, representations and warranties that your client will need to provide.
This resource is not designed to address every scenario involving property transfers with microFIT Facilities, however it contains answers to many of the questions that will help you provide the advice your clients count on to make informed decisions. This resource does not contain legal advice and is provided for informational purposes only.
Some Important Questions to Ask as a Lawyer
Is the solar photovoltaic (PV) generating Facility subject to a microFIT Contract?
Solar PV Facilities may be constructed and operated without an IESO microFIT Contract so it is necessary to check whether there is a microFIT Contract for the Facility. If there is no microFIT Contract, much of the information on this site will be inapplicable, but you will likely still want to discuss any details regarding the Facility with the property owner.
Does the property owner have an agreement with a third party regarding the microFIT Facility?
In cases where the property owner is the Supplier and has entered into a design, construction, financing, maintenance or other type of third-party agreement, the terms of this third-party agreement should be discussed with the property owner in order to ensure its implications for a property sale transaction are fully understood (e.g. Who owns the equipment? Is there a lien on the property related to the Facility? Who is responsible for maintaining the Facility? Is the third party entitled to receive ongoing compensation of any kind? Would a buyer of the property be free to dismantle the Facility and terminate the microFIT Contract, or would this be a breach of a third party agreement?).
If you have the opportunity, you should ask about and help your client understand the implications of a microFIT Facility on the property before any agreement is entered. This is especially important in instances where the buyer of the property may become responsible for the obligations of the current property owner to a third party.
Please note: The IESO is not associated or affiliated with any contractor, vendor, installer, financing entity or other third-party service provider; any such agreements or arrangements are strictly between the property owner and the third party and outside the knowledge or responsibility of the IESO. The IESO is not able to answer questions about or otherwise assist Suppliers or others with third-party programs, Contracts or other arrangements.
Is there a lien on the property relating to the microFIT Facility?
The existence of third-party agreements of any kind in relation to the Facility – including the types of agreements mentioned in Q.2 above, but also including a microFIT Contract whose holder is not the owner of the property (as permitted under v.1.3 and 1.4 Contracts) – may result in a lien registered against the property.
Can a seller terminate a microFIT Contract prior to the sale of the property?
(a) If the seller is IESO’s counterparty under the microFIT Contract for the Facility, the seller may voluntarily terminate the microFIT Contract at any time by submitting a Change Request via Beacon.
Please note: A microFIT Contract should not be terminated without careful consideration because of the potentially significant implications of doing so, including, for example, the impact of termination on:
- Agreements with third parties (e.g. termination of the Contract may put the seller in breach of an agreement with a third party)
- Any purchase and sale agreement for the property that may have already been entered, but for which the sale has not yet closed (e.g. the buyer of the property may be expecting to keep the microFIT Facility operating and receive the Generation Payments for the remainder of the term of the Contract).
(b) If the seller is not the IESO’s counterparty under the microFIT Contract (which can be the case for v.1.3 and 1.4 Contracts), then the seller will not have the direct legal right to terminate the microFIT Contract as they are not party to the microFIT Contract.
Are all buyers of properties with a microFIT Facility eligible to become Suppliers?
a) Version 1.3 and 1.4 Contracts do not contain eligibility requirements regarding property ownership, so these Contract versions may be assigned to any legal person, including entities that are not natural persons (e.g. a corporation).
(b) For version 1.5, 1.6, 2.x, 3.x and 4.x Contracts, a Supplier can only assign the Contract to another “Eligible Participant”, which in all cases must be the owner of the property and is subject to further restrictions as to the types of entities that are eligible, as set out in the applicable Eligible Participant Schedule: Version 1, Version 2, Version 3, Version 4.
What effect does assigning a microFIT Contract have on the Generation Payments?
Generation Payments will continue to be made to the microFIT Supplier unless the microFIT Contract is assigned or terminated. Once the microFIT Contract is assigned, Generation Payments will be made to the new Supplier (Assignee).
Is it possible to relocate a microFIT Facility to a new property?
A microFIT Facility may not be relocated to a different property under any circumstances.
Who else does the buyer of a property need to notify in connection with becoming the Supplier?
If the Contract is assigned to the buyer of the property, it will be necessary for the buyer to notify the Local Distribution Company (LDC) of changes to the microFIT Contract. The LDC is responsible for paying the Supplier (on behalf of the IESO) for the electricity supplied to the grid, and helping the buyer in opening a new generation account with them.
Please see I am an Assignee for full instructions.
What happens if a microFIT Contract is not assigned to the buyer when a property is sold?
Where the Eligible Participant Schedule applies (≥ v1.5), if the microFIT Contract is not assigned to the buyer following a reasonable timeframe after the sale of the property, the Supplier will be in breach of their obligations under the Contract. If following the provision of a Notice of Breach by the IESO, the Contract is not assigned to an Eligible Participant within the time allowed, the IESO may terminate the microFIT Contract.
For versions 1.3 and 1.4, where the Eligible Participant Schedule does not apply, it will be necessary for the buyer to determine specifically for its own property and on an individual basis what the implications may be if the microFIT Contract is not assigned to the buyer.
Where can I find the microFIT Contract documents and other program documents?
All standard offer microFIT Contracts and other relevant documents can be found on our Program Documents web page.
What is the Contract Price for the microFIT Contract?
The Contract Price for any given microFIT Contract can be found in Section 4.1 for 1.X and Section A(7) for 2.0+ microFIT Contracts. The Contract Price is set and is non-negotiable.
How much time is left in the term of the Contract?
All microFIT Contracts have a 20-year term for Facilities generating electricity by solar PV or Wind technology. The microFIT Contract term end date can be found in Section 3 for 1.X microFIT Contracts and Section A(4) for 2.0+ microFIT Contracts.
How much electricity does the microFIT Facility generate and what are the Generation Payments?
The size, type, location, and equipment used for a microFIT Facility all affect how much electricity it will generate which, in turn, determines the Generation Payments paid to the Supplier. Current Suppliers can consult their generation account statements or the Local Distribution Company to confirm the amount of electricity generated and the value of Generation Payments, and to locate other historical generation information that may be helpful.
Note: for properties where there is a version 1.3 or 1.4 Contract in place, and the Supplier is a third party, only the third party Supplier will have this information and it may or may not be willing/required to provide it.
What costs associated with microFIT Facilities should be taken into account when buying a property?
It is important to ask questions to understand the microFIT Facility and how it currently operates. For example: Is there a maintenance schedule and what maintenance payments are required (if any)? What happens if I need to remove the microFIT Facility temporarily to repair or replace the roof underneath it, and who pays the cost for its temporary removal? Will my insurance premiums be affected by the presence of a Facility on the property? Is there a list of contacts in case there is an issue with the Facility (i.e. roofer, licensed electrical contractor)? Are there any tax implications to receiving Generation Payments for electricity supplied to the grid (i.e. income tax or HST)? And for v.1.3 and 1.4 Contracts, where a third party is the Supplier, any cost implications under the arrangements between the property owner and the third party should be determined.
The following are a few questions that you may wish to consider asking initially if your client is considering purchasing a property with a solar Facility on it. These questions do not constitute an exhaustive checklist, but are instead intended to help start a conversation with the goal of understanding the various implications of the Facility being on the property.
- Does the property owner have an agreement with a third party regarding the microFIT Facility?
- What version is the microFIT Contract?
- What is the Contract Price for the microFIT Contract?
- What is the Contract Commencement Date?
- Is my client eligible to become a microFIT Supplier?
- Are there interests or liens that have been placed on the title?
- Does the agreement of purchase and sale address Generation Payments made to the seller during the assignment process?