Texas SB 1036: What Solar Retailers and Salespersons Need to Know (and Do) Now

The enforcement environment for Texas residential solar has changed.

On April 3, 2026, the Texas Attorney General issued Civil Investigative Demands to four residential solar companies – Freedom Forever, Sunrun, Lone Star Solar Services, and CAM Solar – citing more than 100 consumer complaints and announcing that the office’s initiative against alleged fraud in the residential solar industry is only beginning. The investigations target alleged violations of the Texas Deceptive Trade Practices.

This announcement comes roughly five months before the impending effective date of the registration and enforcement provisions of the Residential Solar Retailer Regulatory Act, a law enacted in the spring of 2025 with the passage of Texas Senate Bill 1036. Solar retailers and salespersons who have not yet begun preparing for this new law are running short on time.

This article explains what the Texas Residential Solar Retailer Regulatory Act requires, where it stands today, and what Texas solar businesses should be doing now.

What Is the Texas Residential Solar Retailer Regulatory Act (SB 1036)?

Texas Senate Bill (SB) 1036, which created the Residential Solar Retailer Regulatory Act, was authored by Senator Judith Zaffirini of Laredo and passed both chambers of the 89th Texas Legislature in the spring of 2025. The act became law on June 20, 2025, and is codified at Chapter 1806 of the Texas Occupations Code.

The new law establishes a regulatory framework for the residential solar industry in Texas intended to protect consumers from predatory practices while leveling the playing field for ethical solar businesses that have been undercut by competitors making false promises.

Key elements of the Residential Solar Retailer Regulatory Act include:

• Registration requirements for solar retailers and solar salespeople
• Consumer protections, including a five-day cancellation period, required contract provisions, and disclosure requirements
• Prohibited conduct that establishes boundaries for lawful solar sales
• Supervision requirements – retailers must supervise all salespeople and can be held liable for their violations
• Regulatory penalties and enforcement tools for violations

Why The Law Was Needed: Gaps in Accountability, Supervision

The Texas legislature was driven to act by documented increases in solar-related consumer complaints.

A 2024 Texas Appleseed report, Dimming the Benefits of Residential Solar in Texas, revealed that solar-related complaints filed with the Texas Attorney General’s office increased 818% from 2018 to 2023, and complaints filed with the Texas Department of Licensing and Regulation increased 576% over the same period.

Before SB 1036, no Texas statute specifically regulated residential solar sales. Texas law, including the Texas Deceptive Trade Practices Act (DTPA), provided general consumer protection and imposed written-disclosure requirements on sellers and lessors of distributed renewable generation resources. Neither, however, created a registration regime, profession-specific supervision standards, or a code of conduct for the industry.

SB 1036 fills those gaps.

Texas Registration Requirements for Solar Retailers and Salespersons

The Residential Solar Retailer Regulatory Act creates two registrations administered by Texas Department of Licensing and Regulation (TDLR):

1. Solar retailers; and
2. Solar salespersons.

Beginning September 1, 2026, both must be registered with TDLR to lawfully engage in residential solar retail.

Solar Retailers

A solar retailer is defined as a person – typically a company – that employs or otherwise contracts for the services of an individual to engage in residential solar retail (defined as the sale or lease – or an offer to sell or lease – of a “residential solar energy system” intended or designed primarily for family, personal, or household use).

A solar retailer applicant must:

1. Submit an application listing each “controlling person” of the entity. “Controlling person” includes any individual who has 25% or more direct or indirect control of voting securities, has policy-setting and management authority, is the president, the secretary, or a director of the entity, or serves as a general partner.
2. Provide the name and registration number of each authorized solar salesperson
3. Furnish evidence of insurance meeting requirements to be set by TDLR rule.

Solar Salespersons

A solar salesperson is an individual who engages in residential solar retail for compensation on behalf of a registered solar retailer.

Each salesperson must register with TLDR individually and may engage in residential solar retail only on behalf of a registered solar retailer. Solar salespersons are also subject to continuing education requirements.

The Electrical Contractor Exemption, and Its Limits

Texas-licensed electrical contractors and their employees receive a partial exemption from the registration and insurance requirements applicable to solar retailers, and the employed individual is exempt from the salesperson registration requirement.

Two important limits apply.

1. An exempt electrical contractor that sells or leases a residential solar energy system is still subject to the contract requirements established by the law, including the five-day cancellation period and required contract provisions.
2. The exemption only applies if the electrical contractor directly employs the salesperson as an employee. If the electrical contractor hires salespeople as independent contractors instead, the exemption doesn't apply.

Many residential solar businesses operate through an electrical-contractor entity that contracts with separate sales companies. Those arrangements need careful structuring to claim the exemption properly.

Consumer Protections for Solar Sales

In addition to the registration requirement, SB 1036 also established several significant consumer protections. These requirements are already in effect (as of September 1, 2025).

Identification of the Installing Electrical Contractor

When the sale or lease involves installation at the customer’s residence, the agreement must provide that installation will be performed by a licensed electrical contractor and must conspicuously state the contractor’s name and Texas electrical contractor license number. A list of acceptable contractors from which the customer must select will satisfy the identification requirement.

Permits and Interconnection

The agreement must allocate responsibility – to the solar retailer or to the electrical contractor – for obtaining any governmental permit required for the installation; the interconnection approval required by the electric utility, electric cooperative, or municipally owned utility serving the residence; and any additional approvals required by the Texas Utilities Code.

Linked Third-Party Financing

If the transaction involves a third-party lender that is affiliated with or referred by the solar retailer, the agreement must include a provision requiring that lender to cancel any accompanying loan if the buyer or lessee timely cancels the underlying solar agreement. This provision addresses a recurring complaint pattern: customers timely cancel the solar contract but remain obligated on a loan funded at closing.

Registration Information in the Contract

The solar retailer must ensure that each agreement includes the name and registration number of the retailer and of the solar salesperson involved in the transaction. Both retailers and salespersons must also disclose registration information on request to TDLR or to a customer or prospective customer. (This contract-content requirement will be enforceable in practice once registration numbers exist, beginning September 1, 2026.)

The Five-Business-Day Right to Cancel

The new law gives every residential solar buyer or lessee an unconditional right to cancel the agreement, without penalty or further obligation, by providing written notice on or before the fifth business day after the date the agreement was executed by the buyer or lessee. “Business day” excludes Saturday, Sunday, and legal holidays.

The contract must state the last calendar date of the cancellation period and the mailing or email address for cancellation notice. If the contract does not include the cancellation address, the buyer or lessee may cancel by any reasonable method. A retailer whose contract lacks the required cancellation address has effectively lost control of the procedure – a phone message, text, or hand-delivered note may suffice, and disputes over receipt will favor the customer.

Prohibited Practices for Texas Solar Sales

SB 1036 establishes clear prohibitions that define the boundaries of lawful solar sales:

• False, misleading, or deceptive statements: Making any intentional, knowing, or reckless misrepresentation to consumers during residential solar retail
• Falsely implying affiliation: Falsely stating or implying an affiliation with a public utility or government agency
• Failing to provide disclosures: Not providing required disclosure statements or educational materials mandated by the law, Chapter 115, or TDLR rules
• Violating no-solicitation signage: Engaging in residential solar retail at a residence that has posted signage prohibiting solicitation (unless directed by an occupant)
• Using unlicensed installers: Allowing installation of a residential solar energy system by anyone other than a licensed electrical contractor
• Material misrepresentations to TDLR: Making false statements in applications or documents submitted to the department
• Any violation of the act or TDLR rules: This catch-all provision makes any violation of the regulatory framework a prohibited practice

Supervision Requirements and Liability for Solar Retailers

The residential solar law imposes significant supervision obligations on solar retailers:

• Retailers must provide reasonable supervision to each solar salesperson authorized to work on their behalf. This includes making reasonable efforts to correct any violations of the law or TDLR rules that the retailer is aware of or should be aware of.
• Solar retailers are explicitly responsible for violations committed by salespersons authorized to work on their behalf.

For Texas solar businesses, this ends the practice of treating salespersons as fully independent and walking away from their misconduct. A retailer should adopt documented supervision procedures, monitor sales presentations and contract claims, investigate complaints, and intervene when patterns indicate noncompliance.

Retailers also must promptly notify TDLR of each authorized salesperson and any change in authorization.

Disclosure Requirements for Texas Solar Retailers

The Residential Solar Retailer Regulatory Act builds on Texas's existing consumer protection framework, including Chapter 115 of the Texas Business & Commerce Code (which already requires certain disclosures for distributed renewable generation resources) and the Texas Deceptive Trade Practices Act (DTPA).

Combined, a Texas residential solar retailer must comply with several parallel disclosure and conduct requirements.

Disclosures Required by Chapter 115 of the Texas Business and Commerce Code

Sellers and lessors of distributed renewable generation resources must provide written disclosures, including:

• Contact information for the salesperson and installer;
• A description of all equipment to be installed;
• The cost of all equipment to be installed;
• A detailed accounting of fees associated with installation or operation;
• Representations regarding expected operational and financial performance; and
• All applicable warranties.

Additional disclosures apply to lease agreements and power purchase agreements. These disclosure requirements have been in place since September 1, 2021. The new solar law cross-references these disclosure requirements in its regulatory framework, requiring solar retailers and salespersons to comply with Chapter 115 as if each were a “seller or lessor” under that chapter.

Federal Truth in Lending Act (TILA)

Most solar financing deals are covered by federal Truth in Lending Act (TILA) rules that require specific disclosures about loans and financing terms. SB 1036 makes it clear that solar retailers must follow these federal rules as part of Texas law. When creating state regulations, TDLR must work with the state's consumer credit office to make sure the rules don't conflict with federal and state lending laws.

The Texas DTPA

Solar retailers and salespersons must also comply with the Texas Deceptive Trade Practice Act (DTPA), Texas's main consumer protection law – both because it generally applies to all businesses and because SB 1036 specifically requires it.

Unlike SB 1036 which only allows state regulators to take action, the DTPA lets individual consumers sue directly and potentially recover triple damages if the violation was intentional attorney's fees. The Texas Attorney General can also bring enforcement actions under the DTPA.

Forthcoming TDLR rules

Beyond the requirements of the law, TDLR will require additional disclosures, educational materials, and a code of conduct to be specified by rule. Those rules will dictate practical compliance details – including contract form and format and the content of any TDLR-issued consumer disclosure sheet.

Where TDLR’s Rulemaking Stands Today

TDLR appointed a Residential Solar Retailers Stakeholder Work Group in late 2025 to advise on program rules. The work group includes residential and commercial sales retailers, an electrical contractor, three consumer representatives, and ex-officio members from the Public Utility Commission of Texas, the Office of Public Utility Counsel, the Office of the Attorney General, and the Office of Consumer Credit Commissioner.

On March 5, 2026, TDLR proposed new rules to address, among other things, the registration process, the types of solar contracts the department regulates, a code of conduct for retailers and salespersons, mandatory educational materials, a department-issued disclosure sheet, plain-language contract requirements, retailer-supervision procedures, and prohibited deceptive practices.

The proposed rules were published in the Texas Register on March 13, 2026, with the public comment period closing April 13, 2026. By law, TDLR must adopt final rules no later than June 1, 2026.

Solar retailers and salespersons should monitor the rules process closely; the final rules will govern many of the practical details – contract format, prohibited representations, supervision documentation – that the statute leaves to TDLR.

Enforcement and Penalties for Texas Solar Retailers, Sellers

The law creates several enforcement tools.

• Warning letters: Before imposing administrative penalties, TDLR may issue warning letters directing a person to take corrective action. The executive director can consider the person's history of violations and efforts to correct and prevent future violations when deciding whether to issue a warning letter. A determination to issue a warning letter cannot be contested under Texas law.
• Cease-and-desist orders: The executive director can issue cease-and-desist orders to protect public health and safety.
• Administrative penalties: TDLR may impose an administrative penalty up to $5,000 per day per violation. Each day a violation continues or occurs is treated as a separate violation. The penalty amount depends on the seriousness of the violation, the respondent’s history, the amount necessary to deter, the respondent’s corrective efforts, and other factors, such as whether the harmed consumer was over the age of 65.
• Civil penalties: A separate enforcement track – civil penalties up to $2,500 per violation (with a $50,000 aggregate cap for all similar violations) can be brought as an injunctive-relief action by the Texas Attorney General or the TLDR’s executive director. If a court finds that an individual over the age of 65 was harmed by the violation, penalties get more serious: up to $10,000 per violation, with a $100,000 aggregate cap for all similar violations.
• Contract cancellation and refunds: If TDLR finds a violation of the solar law after a hearing, it can cancel the contract and order the solar company to refund all money the customer paid. This refund remedy can be combined with fines and penalties, and customers can still sue for additional damages beyond the refund amount under other consumer protection laws, like the DTPA.
• Registration denial and non-renewal: TDLR can deny or refuse to renew a solar retailer or salesperson registration if the applicant (or any controlling person of the company) has violated the solar law or has had a professional license suspended, revoked, or disciplined by any licensing authority in Texas or another state.

Electrical contractors are not insulated. Even though electrical contractors are exempt from registration requirements, they can still be penalized if they violate the solar law – for example, if they install a system under a contract that doesn't meet the law's requirements. They face potential penalties under both their electrical contractor licensing law and the new solar law.

Exemptions to the Residential Solar Retailer Regulatory Act

The Residential Solar Retailer Regulatory Act does not apply to several categories of solar transactions, including:

• Solar energy systems sold or leased before September 1, 2025;
• Systems sold or leased for commercial purposes, including those installed on non-residential property;
• Systems sold or leased for use at a multifamily dwelling exceeding four dwelling units or stories;
• Systems sold or leased in connection with new residential construction;
• Systems designed to produce a peak output of less than one kilowatt, or that, in combination with other power-producing systems, produce a total peak output of less than one kilowatt; and
• Systems intended for temporary or emergency use, or to power a single appliance.

In addition, the law generally doesn't apply if you sign a contract in Texas for a solar system for property located outside Texas. However, if any part of the residential solar retail activity in connection with such an agreement happens in Texas (like sales meetings or presentations), then the law still applies.

What Texas Solar Businesses Should Do Now

With the September 1, 2026, registration deadline approaching and the Texas Attorney General actively investigating solar companies under existing law, “wait and see” is not a viable compliance posture. A focused compliance project undertaken in the next several months will cost far less than reacting to a Civil Investigative Demand, a refund order, or a registration denial later.

• Audit your sales operation. Identify every individual who engages in residential solar retail on your behalf – including independent contractors, third-party sales companies, and door-to-door teams. Determine which individuals will require salesperson registration. Evaluate whether the electrical-contractor exemption fits your operating model and structure (or restructure) accordingly.
• Update your contracts. Sale and lease agreements should already include the licensed electrical contractor’s name and license number (or a selection list), the permit and interconnection allocation, the five-business-day cancellation provision with the last calendar date and a working cancellation address, the linked third-party-loan cancellation provision where applicable, and (effective September 1, 2026) the registration numbers of the retailer and salesperson. Confirm that Chapter 115 disclosures are integrated cleanly.
• Build supervision infrastructure. Implement documented procedures for vetting, training, monitoring, and disciplining salespersons. Recorded sales presentations, written claim substantiation, periodic call review, and a clear escalation path protect against vicarious-liability exposure.
• Scrutinize sales claims and marketing materials. The recurring fact pattern in current Attorney General and TDLR complaints is consistent: overstated savings, false promises of government coverage of system cost, false implications of utility affiliation, and high-pressure door-to-door sales tactics. The conservative course is to require every quantitative claim – savings, payback, net cost after tax credits, system output – to be tied to documented assumptions and reproducible from the customer’s actual utility data.
• Coordinate with insurance. Insurance requirements remain to be finalized by TDLR rule. In the meantime, evaluate existing errors-and-omissions, professional liability, and commercial general liability coverage for adequacy under the supervision and vicarious-liability framework.
• Monitor rulemaking. Final TDLR rules are expected by June 1, 2026. The rules will set practical compliance guidelines, including contract format, the department-issued disclosure sheet, and code-of-conduct specifics. Sign up for TDLR email updates and review the final adoption notice when published in the Texas Register.
• Get counsel involved early. Texas residential solar is moving from minimal regulation to active enforcement in approximately one year. The cost of an early compliance review is small compared with the cost of an Attorney General investigation, a TDLR registration denial, or a private DTPA action.

Hendershot Cowart Attorneys Represent Texas Solar Businesses

Hendershot Cowart P.C. defends credit unions, lenders, and solar companies in solar contract-cancellation claims, regulatory investigations, and litigation across the Texas residential solar industry. We work with companies that want to do business the right way – and we defend those facing frivolous claims and predatory plaintiff-firm campaigns.

If your business is preparing for the September 2026 registration deadline, or is facing pre-suit demands or regulatory inquiries today, please call our office at (713) 783-3110 or contact us to schedule a consultation.