About a year ago, California passed legislation altering the California PACE Program which makes solar panelling more affordable. That bit of legislation added consumer protections to the program – it required that property owners be provided with a printed financial estimate, capped payments, and established a grace period for cancellation fees (for an in depth look, here’s our article from last year).

To quote True Detective: “Time is a flat circle.” Two bills to further regulate the California PACE program were just passed.

Get lien stories and legal alerts
delivered to your inbox

The California PACE Program

The purpose of the PACE (Property Assessed Clean Energy) program is to make solar energy more accessible. Solar equipment and installation are costly, and by using the PACE program, a property owner can have solar paneling installed without the upfront costs. Instead, the costs are assessed to the owner’s tax bill incrementally.

The idea behind the program, making energy efficiency accessible and affordable, is one that many of us can get behind. However, there have been serious issues with the California PACE program. The program has been called predatory, which is why last year’s  regulations were necessary – for consumer protection and education. Further, the program acts an awful lot like a mortgage, yet it is not bound by the same rules. Finally, since the costs of the program may be assessed through an owner’s tax bill, the priority of the PACE lien cuts in front of mechanics liens and mortgages.

Mechanics Lien Form Download

Get Free Mechanics Lien Form

We’re the Mechanics Lien experts. Forms made by attorneys, and trusted by thousands.

Download Free

Here’s a great article from MarketWatch on problems with PACE.

Changes

Two bills, AB 1284 and SB 242, passed the California legislature and await approval from California Governor Jerry Brown. If approved, the bills will standardize current underwriting standards for the California PACE program, establish licensing requirements for PACE lenders, and require that PACE lenders place phone calls to borrowers, explaining the terms of the loan before closing.

For a more in depth look, Scotsman Guide and DWM Magazine are good resources.

Takeaway

Lending for solar panels doesn’t quite seem up our alley, but the California PACE program affects California property owners, contractors installing these solar panels (they often also serve as salesmen), and mechanics lien holders across California. For property owners, embracing affordable green building sounds like a great deal, but the risks of a PACE lien are even more dangerous than a mechanics lien. Since PACE is often paid through tax bills, a PACE lien may also rope in governmental action. For contractors, understanding these new requirements should be high priority. Finally, California mechanics lien holders should be wary – a PACE lien will likely take priority over a mechanics lien regardless of when it’s filed.

For more on California’s construction payment laws, check out our California Resources. Not in California? Select your state.

Summary
More Changes to the California PACE Program
Article Name
More Changes to the California PACE Program
Description
The California PACE Program has been hit with greater regulation in each of the past two years due to the program's questionable history. AB 1284 and SB 242 await Governor Brown's approval.
Author
Publisher Name
Lien Law News
Publisher Logo