Q: Why was my seller was not aware they had to pay off their PACE loan when selling their property? There should be a law!
A: There is! Assembly Bill 2693 signed into legislation September 26, 2016 became effective January 1, 2017 and amongst other things provides for a clearer disclosure to the owner who finances through PACE helping the consumer know they may not be able to refinance or sell their property (if the buyer is financing the purchase with a traditional loan) unless they pay off their PACE loan.
PACE loans (and the related repayment) are assessed and collected through property taxes, which have a higher priority than the Deed of Trust (and related loan), on a property.
Currently most lenders will not agree to loan on a property and be in a subordinate position to the PACE obligation, which can be tens of thousands of dollars depending on the clean energy improvements funded with the loan. Therefore, in order for a seller to sell to a buyer who is getting a traditional loan they may find they have to pay off the PACE (mPower in Placer County) obligation.
Come to class or schedule one at your office to hear strategies on how escrows are getting closed despite the PACE loan debacle!
Visit AB 2693 bill for more information!
Visit this great Realtor.com article about Pace Loans for more information.
