What you must know about PACE 100% financing of energy related home improvements

Whether you are buying or selling a property that participated in the PACE (Property Assessed Clean Energy) program you must be aware of a few things that may impact the purchase and possibly the closing.

First , lets go over the program's basics.

Miami-Dade County homeowners, businesses and industries in unincorporated Miami-Dade County and some other communities in the called "Clean Energy Corridor"* interested in solar panels, hurricane windows and other energy saving upgrades now have another financing option through the property assessed clean energy (PACE) program.

PACE allows property owners to receive upfront financing for a variety of energy-related home improvements, then repay the debt through voluntary assessments on their property tax bills. Approved third-party administrators will provide funding, and the assessment can be amortized over a period of five to up to 20 years, which allows for the cost savings resulting from the improvements to be used to pay back the annual amount owed.

Repayment appears as a line item on the owner’s annual property tax bill. The number of years for repayment is determined when application is made and approved.

As published by Florida Realtor and authored by Meredith Caruso, Manager of Member Legal Communications for Florida Realtors®. © 2017 Florida Realtors®

"How does this affect the sale of a property subject to the PACE program?

Property taxes stay with a home when it's sold, and the PACE assessment does too. Therefore, when selling a property subject to a PACE assessment, the seller is required by law to disclose the assessment prior to sale. Failing to do so could jeopardize the deal..

If you're working with the buyer of a home in the PACE program, there are several issues to consider:

• The assessment could vary widely. The amount depends on whether the seller invested in a lower cost improvement, such as an energy-efficient air conditioning unit, or a major upgrade, such as rooftop solar panels and a wind turbine. It's important for your buyer to contact the county or city collecting the special assessment to determine the exact amount and length of time it will be collected, and they should take that into consideration along with other housing costs.
• The PACE assessment could affect a buyer's financing. For example, Freddie Mac and Fannie Mae won't underwrite homes with PACE assessments if the assessment takes priority over the mortgage loan.
• Failure to pay off the PACE assessment could result in foreclosure and possible property loss, regardless of the status of the mortgage lien.

As with other terms in a deal, the buyer has an option to make the offer contingent on the seller paying off the PACE assessment. If your buyers want consider this option, they should consult their attorney." as published by Florida Realtor and authored by Meredith Caruso is Manager of Member Legal Communications for Florida Realtors®. © 2017 Florida Realtors®

Florida Realtors has created a PACE Addendum (PACE-1) that can be used for this disclosure. You'll find it in the Form Simplicity library.

For more information on the PACE program – including a list of the counties and cities that participate – visit the Florida PACE Funding Agency website, www.floridapace.gov.

*Both residential and commercial property are eligible for applications within Miami Shores, Pinecrest, Cutler Bay, Palmetto Bay and South Miami. In the City of Miami, commercial and multi-family buildings are eligible for application, but in Coral Gables only commercial property is eligible.