TILA Rescission for Solar Loans — The 3-Year Undo Button (And When It Actually Applies)

If you have heard about TILA rescission as a way to cancel your solar loan, you have probably been told one of two stories. Either "everyone with a solar loan can rescind for 3 years" or "TILA does not apply to solar at all, ignore it." Both are wrong, and both lead to bad legal decisions.

The truth is more interesting. The Truth in Lending Act, 15 U.S.C. § 1635, does give certain solar borrowers a 3-year right to rescind their loans — but only when specific conditions are met. The Supreme Court has clarified the procedure (you need to send written notice, not file a lawsuit). The 11th Circuit has narrowed when it applies (a UCC-1 fixture filing alone is not enough). And several state laws extend rescission rights beyond what federal TILA provides.

If your solar loan documents include hidden dealer fees, a security interest in your home, or material disclosure defects — you may have rescission rights. If you do not have those features, you do not. Stick with me. I'll walk you through exactly when TILA rescission applies to solar loans, exactly what the procedure looks like, exactly what the Supreme Court and 11th Circuit have said, and exactly what to do if you think your loan qualifies.

What TILA Rescission Actually Is

The Truth in Lending Act is a federal consumer protection statute that requires lenders to disclose specific information — APR, finance charge, amount financed, payment schedule — to borrowers before they sign a credit contract. If those disclosures are accurate and complete, the borrower has 3 business days from signing to rescind the loan with no questions asked. If the disclosures are materially defective, the rescission window extends from 3 days to 3 years.

This 3-year extended window is what people typically mean by "TILA rescission." It is codified at 15 U.S.C. § 1635(f). The borrower can send the lender a written rescission notice up to three years after consummation, and rescission is effective when the notice is sent — the lender then has 20 days to respond.

Two important conditions must be met for the 3-year window to apply:

Condition 1: The loan must be secured by the borrower's principal dwelling. This is where most solar loans get stuck — and where the legal analysis matters more than most people realize.

Condition 2: A material disclosure defect must exist. The most common: wrong APR (typically more than $100 off, or more than $35 if the borrower is in foreclosure), wrong amount financed, wrong finance charge, missing Notice of Right to Cancel, or missing material disclosures at closing.

The Lankhorst Limit (Where Most Solar Exit Sites Get It Wrong)

Here is the legal nuance that most "cancel your solar loan with TILA!" content misses. In Lankhorst v. Independent Savings Plan Co., 787 F.3d 1100 (11th Cir. 2015), the Eleventh Circuit Court of Appeals held that a UCC-1 fixture filing on consumer goods does not automatically create a TILA-protected security interest in the borrower's home.

The Lankhorst case involved water treatment equipment installed in homes. The lender financed the equipment and recorded a UCC-1 fixture filing against the property — a common way of perfecting a security interest in the equipment itself. The borrowers argued that the fixture filing meant their homes secured the loan, triggering TILA's home-protection rules and the 3-year rescission window.

The Eleventh Circuit disagreed. The court reasoned that even if the equipment qualified as a fixture under property law, the lender's actual remedy was limited to repossessing the equipment — the home itself was never at risk. TILA's enhanced disclosure requirements and rescission rights exist specifically because home loans put the borrower's home at risk. When the lender's recourse is limited to the equipment, the home is not at risk in the way TILA was designed to protect, and the enhanced rights do not apply.

This matters for solar because most residential solar loans take a UCC-1 fixture filing on the panels and equipment. Under Lankhorst, that filing alone may not be enough to trigger TILA's home-protection framework. Borrowers (and their attorneys) need to look at what the lender's actual security interest covers, not just what was recorded.

When TILA Rescission DOES Apply to Solar Loans

Lankhorst narrowed the rule but did not eliminate it. Several common solar loan structures still fall within TILA's home-protection framework:

1. The loan takes an actual deed lien or mortgage on the home

Some solar lenders go beyond UCC-1 filings and take a real deed lien against the property — particularly for larger systems, for borrowers with weaker credit, or in states where state law makes the deed lien more enforceable. Pull your loan documents and look for any "Deed of Trust," "Mortgage," or "Lien Against Real Property" language. If your loan took a real lien on your home, TILA rescission applies cleanly.

2. The loan was bundled with home improvement work

If your solar package included roof work, electrical panel upgrades, attic insulation, re-wiring, or other home improvements beyond just panel installation, the loan often takes a home improvement security interest. Home improvement loans are squarely within TILA's home-protection framework. The bundled work pulls the loan into TILA-protected territory regardless of how the panel-only portion would be analyzed.

3. State law extends rescission rights

Some states have their own home-improvement rescission statutes that go beyond federal TILA. Massachusetts is the most notable: 209 CMR 32.23 extends rescission rights more broadly than federal TILA. New Jersey, New York, and California have similar state-law extensions in specific contexts. If your federal TILA claim is borderline, check your state's home improvement and home solicitation rescission statutes.

4. The loan was a HELOC or refinance bundle

If your solar installation was financed through a Home Equity Line of Credit (HELOC) or was bundled into a cash-out refinance of your existing mortgage, the loan unambiguously takes a home security interest. TILA rescission applies cleanly to those structures.

What Counts as a "Material" Disclosure Defect

Even when the loan qualifies as TILA-protected, the 3-year rescission window only opens if the lender made a "material" disclosure defect. The most common defects in solar loans:

The APR is wrong because of hidden dealer fees

This is the most powerful TILA argument in solar lending right now. The CFPB documented in August 2024 that solar lenders frequently include "dealer fees" of 10 to 36 percent of the cash price, baked into the loan principal but not disclosed as a finance charge under 15 U.S.C. § 1605. (Read the complete dealer fee breakdown.)

If the dealer fee should have been disclosed as a finance charge — because it is a cost incurred as a condition of obtaining credit — then the disclosed APR is wrong. Sometimes dramatically wrong. A loan disclosed at 1.99 percent APR may have an effective APR of 12 percent or higher when the dealer fee is properly classified as a finance charge over the loan term. That is exactly the kind of material disclosure defect that triggers the 3-year rescission window.

The Minnesota Attorney General's lawsuit against GoodLeap, Mosaic, Sunlight, and Dividend (Hennepin County 27-CV-24-3558, March 2024) is built largely on this theory. The CFPB Issue Spotlight from August 2024 supports it. As individual TILA cases work through the courts in the next 18 months, the dealer fee classification question will likely become the most important TILA issue in residential solar.

The Notice of Right to Cancel was missing or defective

TILA requires the lender to provide a specific Notice of Right to Cancel form to each borrower at closing. The form must be in the right format, in the right language (matching the language of the transaction), and in the right number of copies. Defective Notice of Right to Cancel is a material defect that extends the rescission window.

Wrong amount financed

If the disclosed "Amount Financed" does not match what was actually advanced to or for the borrower, that is a material defect. This often comes up with dealer fees — the lender disclosed an amount financed that included the dealer fee as if it were paid to the installer for goods or services, when the fee was actually retained by the lender or paid to the lender for the credit relationship.

The Procedure: How Rescission Actually Works

The Supreme Court clarified the procedure in Jesinoski v. Countrywide Home Loans, Inc., 574 U.S. 259 (2015), unanimously holding that TILA rescission does NOT require the borrower to file a lawsuit. Written notice to the lender is sufficient.

From the Jesinoski opinion: TILA "does not say a borrower must sue to rescind. The Eighth Circuit's call to filter rescission claims through litigation cannot stand." A written rescission notice, sent within the applicable rescission window (3 days for non-defective disclosures, up to 3 years for material defects), is what triggers rescission.

The mechanics:

1. Send written rescission notice to the lender. The notice should identify the loan, state the basis for rescission (which material defect), and explicitly invoke the right to rescind under 15 U.S.C. § 1635. Send via certified mail, return receipt requested. Keep proof of delivery.
2. Lender has 20 days to respond. 15 U.S.C. § 1635(b) requires the lender to "return to the obligor any money or property given as earnest money, downpayment, or otherwise, and shall take any action necessary or appropriate to reflect the termination of any security interest created under the transaction" within 20 days of receiving the notice.
3. If the lender refuses or ignores the notice, the borrower can sue to enforce. The lawsuit is to enforce the rescission, not to effect it — the rescission was effected by the notice itself.
4. Tender obligations. Rescission unwinds the loan. The borrower must tender back the loan proceeds (typically through whatever value remains in the equipment plus a reduced refund). Tender is usually negotiated as part of settlement, not paid up front.

Critically, the rescission notice must be sent within the applicable window. If the disclosure was technically compliant (no material defect), the window is 3 business days from closing — almost always already expired. If a material defect exists, the window extends to 3 years from consummation. After 3 years, the right is extinguished entirely.

If you signed your solar loan more than 3 years ago and a material defect exists, TILA rescission is no longer available — you would need to use other tools (FTC Holder Rule, common-law fraud, state UDAP).

How to Stack TILA Rescission With Other Claims

TILA rescission is rarely the only claim in a solar case. The strongest TILA cases stack with three or four other theories:

• FTC Holder Rule — TILA rescission attacks the loan; the Holder Rule routes the installer's misconduct to the lender. Stacked, both claims attack the lender for different reasons. (Read the FTC Holder Rule breakdown.)
• Hidden dealer fee disclosure attack — the dealer fee is the substantive defect that often triggers TILA's material disclosure framework
• State UDAP statutes — Texas DTPA, California CLRA + UCL, NY GBL 349/350, MA 93A. State UDAP claims add fee shifting and treble damages that TILA alone may not provide
• Common-law fraudulent inducement — backup theory if the TILA technical analysis falls short

The dominant settlement framework for solar TILA cases right now: rescission notice sent under 15 U.S.C. § 1635, FTC Holder Rule claim filed simultaneously, state UDAP claim added. Lender settles by reducing the principal (effectively returning the dealer fee), reporting the loan as paid in full, and waiving fee claims.

What Rescission Actually Looks Like in Practice

"Rescission" sounds simple but has nuanced consequences. When TILA rescission is effected:

• The loan is unwound — both parties are returned, as much as possible, to their pre-loan positions
• Any security interest the lender took (UCC-1, deed lien, etc.) is voided
• The borrower must tender back the loan proceeds — typically through retention of the equipment plus a settlement number that accounts for amounts already paid
• The lender must return amounts paid by the borrower
• Credit reporting is corrected — the loan is reported as terminated, not as defaulted

In practice, solar TILA settlements rarely involve the borrower writing a check to "tender back" the loan proceeds. The settlement structure usually involves: equipment retained on the roof at no cost to the borrower, no further payments owed, and the loan reported as paid in full or rescinded. The economics work because the dealer fee was so large that returning the dealer fee alone often equals or exceeds the remaining loan balance.

Here Is What Actually Happens When We Take Your Case

We are not a referral mill. We review every case before we take it. If you meet the criteria — and most homeowners reading an article like this one do — here is what typically happens:

Outcome #1: Your contract gets completely canceled. You keep the system.

Read that again. That $30,000 loan, that $80,000 loan, that $150,000 loan — gone. Wiped. And the equipment on your roof? You keep it. It is yours. Hire a local electrician or solar tech to clean it up and tie it in properly, and you have got a functioning solar system for the cost of a service call.

Not a typo. That is the best-case outcome, and it is what we push for on every case we accept.

Outcome #2: Your loan gets massively reduced. Typically 40% to 60%.

Every case is different, but the pattern is consistent:

• A $150,000 loan knocked down to around $75,000
• A $70,000 loan cut to $35,000
• A $175,000 loan restructured to something you can actually live with

If we cannot completely kill the contract, we fight like hell to get the principal slashed — and we have a track record of doing it.

If we take your case and cannot deliver either outcome?

You get 40% of your fee back after we have exhausted every angle. That is our guarantee, in writing. Nobody else in this space puts that on paper. We do — because we only take cases we believe in.

The Bottom Line

TILA rescission is a real, powerful tool — but it is not universally applicable to solar loans, and applying it requires real legal analysis of your specific loan documents. A UCC-1 fixture filing alone may not be enough under Lankhorst. A material disclosure defect must exist. The rescission notice must be sent within the 3-year window, by written communication, identifying the specific defects.

For solar loans funded by GoodLeap, Mosaic, Sunlight Financial, Dividend, or Service Finance — most of which contain hidden dealer fees in the 10 to 36 percent range — the dealer fee classification question is increasingly the central TILA issue. The CFPB documented the practice. The Minnesota Attorney General is litigating it. The 18-month window in which the courts will start producing definitive holdings on dealer fee classification is open right now.

If you signed your solar loan in the last 3 years, and your loan has the features that TILA actually protects — home security interest, hidden dealer fees, missing or defective disclosures — TILA rescission stacked with the FTC Holder Rule and state UDAP statutes is the dominant settlement framework. The equipment stays on your roof. The loan goes away. The dealer fee gets returned.

That is what TILA was written for.

Related Reading

• 14 Legal Loopholes That Can Kill a Solar Contract
• The Hidden Dealer Fee — How Lenders Added 30% to Your Loan
• FTC Holder Rule Explained — The Federal Law That Makes Your Lender Pay
• Unlicensed Solar Contractor? California B&P 7031 Guide
• GoodLeap Solar Loan Complaints — Complete Guide
• How to Cancel a Freedom Forever Contract After Bankruptcy
• Momentum Solar Complaints 2026
• Solar Salesman Promised a Zero Electric Bill — Now What?