- A property owner may not participate in a PACE lien program without delivery of a detailed financial disclosure document received before contractual consummation.
- The disclosure document must contain a variety of notices and warnings including a notice that the property owner may not be able to refinance or sell without paying off the PACE obligation. The property owner also retains a 3-day rescission right detailed in a statutory form.
- Statements as to increased value of the property cannot be made unless based on a valuation as specified.
- Existing law requires home loans to be accompanied by the Truth in lending RESPA Integrated Disclosure (TRID), which is intended to allow an “apples to apples” comparison shopping of various loan products.
- PACE transactions are technically not loans and are not required to be accompanied by a TRID disclosure.
- Current law gives delinquent PACE assessments “super-priority” status, as part of the tax bill, over other recorded obligations; lenders require these “super liens” to be paid off before any new financing can be obtained.
- Requires a TRID-like disclosure be provided to a property owner participating in a PACE program, a 3 day right of rescission, and a notice that the property owner may not be able to refinance or sell without paying off the PACE obligation.
- Prohibits making monetary or percentage representations of increased value to a property owner regarding the effect the financed improvements will have on the market value of the property unless the estimate of market value is based upon either “an automated valuation model,” a broker price opinion or an appraisal by a licensed appraiser.
AB 2693 codified as Government Code § 53328.1 and Streets and Highways Code §§5898.15, 5898.16 and 5898.17.
By Harrison K. Long, real estate attorney at Orange County CA – Member of CA State Bar Association #69137. Real estate broker – CALBRE #01410855. Source of information is the California Association of Realtors and CA legislative and laws information. This is for information only and is not the providing of legal services.
“PACE Liens Financial Disclosure and 3-Day Rescission Right – New CA Law Effective Jan. 1, 2017”