PACE in Florida explained: paid through your property tax, and it complicates selling

PACE (Property Assessed Clean Energy) is financing for home improvements, solar included, that is not repaid as a monthly bank payment but as an assessment added to your property tax bill for 10 to 30 years. It approves on the property’s equity, not your credit score. The trade-off: it sits as a lien on the house and complicates selling or refinancing.

What is PACE and how is it repaid?

Florida Statute 163.081 allows a program administrator (a private company operating under a district or county) to finance qualifying improvements and collect them through a “non-ad valorem assessment”: an extra line on your tax bill, collected together with property taxes. The statute says that assessment constitutes a lien “of equal dignity to county taxes”.

In practice that means three things:

1. The payment is not monthly: it goes with your property tax, annually or through your mortgage escrow.
2. If you stop paying, it is treated as unpaid tax, with the consequences that carries.
3. The lien is on the house, not in your name. It stays with the property when you sell.

Short definition in the glossary: PACE and the glossary: lien.

Heads up: “it’s a government program” is the line PACE is most often sold with in Florida, and it is false. The local government lends the collection mechanism; the money, the rate and the fees come from a private company. Nobody at the county checked whether the solar system being sold to you makes sense.

Who qualifies for PACE?

Florida’s statute sets the minimum requirements for residential property:

No FICO. That is why PACE always shows up on the list of options for homeowners with low credit. EnergySage mentions it alongside leases with lower credit requirements and credit-union loans. Our full read on that scenario is in solar with bad credit.

Why does it complicate selling or refinancing?

Because the PACE lien takes priority over the mortgage. FHFA, the regulator of Fannie Mae and Freddie Mac, states explicitly that their policies prohibit purchasing a mortgage where the property has a first-lien PACE loan attached. Consequences FHFA itself lists: you cannot refinance with Fannie or Freddie, and a buyer cannot use a Fannie or Freddie loan to purchase your home with the PACE on it. FHFA adds that this may reduce the home’s marketability or require you to repay the PACE before selling.

HUD did the same with FHA in 2017: it stopped insuring mortgages on homes with PACE assessments, and the PACE must be paid off at closing of a sale or refinance when an FHA loan is involved.

Translated: in Florida, where a huge share of buyers use conventional or FHA mortgages, selling with PACE almost always ends in “pay it off at closing”. If the solar system still has 15 years of assessment left, that balance comes out of your sale proceeds. Read selling a home with solar.

When does PACE make sense?

• When your credit does not qualify for a loan or lease, you have equity, you do not plan to sell or refinance for many years, and you have already compared it with the solar subscription, which also requires no FICO and leaves no lien.
• When the improvement genuinely raises the home’s value and protects it (roof, hurricane impact) and the assessment term is similar to the improvement’s life.
• When you understand the payment rides on your property tax and you have adjusted your escrow so the mortgage does not bounce.

When PACE does NOT make sense

• When you plan to sell or refinance within 5-7 years. You will pay off the full balance at closing.
• When your mortgage has escrow and you did not tell the servicer: the annual tax payment rises and so does your monthly payment, sometimes all at once.
• When the salesperson did not show you the rate, the fees and the total over the full term. The statute requires notice to the lender and the 20% cap; the price of the system is regulated by nobody.
• When a no-lien alternative exists: the 3-or-5-year subscription in Central Florida covers the same profile (no FICO) without touching the property. Compare in ways to get solar compared.

What to check before you decide

• The total paid over the full term, with rate and fees, not just the annual assessment.
• Whether your mortgage is with Fannie Mae, Freddie Mac or FHA, and what your servicer says about PACE.
• How many years you plan to stay in the house. Under 7, no.
• The cash price of the same system from another installer: PACE does not control what you are charged for the panels.
• That the assessment does not exceed 20% of the property’s value and that you gave your lender written notice, as the statute requires.