PACE assessment: what it is and why you inherit it when you buy a home in Florida

Solar panels or a new roof look great in a listing. What you cannot see is how they were paid for, and that decides what lands on your first bill.

PACE stands for Property Assessed Clean Energy. It is a system Florida law allows (§163.08 and §163.081): the owner makes an improvement and pays for it little by little, year after year, inside the same bill where they pay property tax.

The law lists the improvements that can be paid this way on a home: a roof (repairing or reinforcing it, including the straps that tie the roof to the walls), windows and doors (garage doors and shutters too), energy-efficient cooling and ventilation, insulation, energy-efficient water heaters, solar panels and other renewable energy, flood and water-damage protection, central sewer (or switching from a septic tank to sewer) and a permanent generator.

It differs from a regular loan in three ways:

• It does not depend on anyone's credit or name. The charge is calculated on the property and shows up on its bill as a charge that is not based on the home's value (the law calls it a non-ad valorem assessment).
• It is paid with the taxes. The state energy program explains it is paid over a long term, for example 10 to 20 years, as one more line on that bill (My Florida Home Energy). If your taxes are inside your mortgage payment, the lender can raise your monthly deposit (the escrow) to cover it.
• It lives on the property, not the person. The law says the charge ranks equal to county taxes and is collected through the tax bill (§163.081, subsection 7). If the owner sells before finishing the payments, the remaining ones stay on the home's bill.

Nothing gets transferred, because the charge never left the home. That is why the law says the seller must hand you a written notice no later than when you sign the contract (§163.081, subsection 8). In essence it says the property carries a charge of this kind, that it is not based on the home's value, and that you should call the Property Appraiser (the county office that values properties) to learn more.

Being told does not make the balance disappear. You have the options of any negotiation:

• The seller pays it off in full before closing (the day you sign the purchase).
• The price of the home reflects it.
• You take it over, knowing how much it is and how many years are left.

It is also not a debt of the seller that stays with them, and it does not vanish because you "never signed it." What changes hands is the property, and the charge goes with it.

An active PACE leaves a mark every year on the property's tax bill and on its annual notice (the TRIM, which the county sends with the proposed taxes), among the non-ad valorem charges, and in the Property Appraiser's public records.

That mark tells you it exists. To learn how much is left, you need to ask for the financing document and the balance from the administrator of that property's PACE program. The term, the rate and the conditions depend on what was signed at the time: no general rule can guess them.

The law also sets brakes. Without the consent of the bank holding the mortgage, a property's total PACE cannot exceed 20% of the just value (the market value) the Property Appraiser assigns (§163.081, subsection 3). Two more limits: the term cannot exceed 20 years, and the yearly payments cannot exceed 10% of the household's annual income. The owner must notify their lender in writing at least 5 business days before signing the PACE, and the lender cannot demand the whole mortgage back just because the owner entered PACE, although it can raise the escrow (subsection 5).

Having PACE does not make a home bad. It means an improvement is being paid for this way. What matters is the balance, the years left and whether the purchase price accounts for it. And note: the tax exemption for people who live in their home does not cover this charge; the homestead guide explains it.