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Legal Framework Flashcards

7 cards from real CPACE practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

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  1. Under PACE financing, the special assessment is attached to which entity?

    Answer: The real property itself

    PACE assessments run with the land as a lien on the real property, not as personal liability of the owner.

  2. Which federal law requires lenders to provide loan disclosures and has been debated in the context of PACE residential financing?

    Answer: Truth in Lending Act (TILA)

    TILA disclosure requirements have been a central regulatory debate for PACE programs, particularly regarding whether PACE constitutes 'credit' under the statute.

  3. A property owner defaults on a PACE assessment. In most jurisdictions, the PACE lien is treated with what priority relative to a first mortgage?

    Answer: Senior or superior to the first mortgage

    PACE liens typically hold super-priority status similar to property tax liens, placing them ahead of existing mortgage liens.

  4. Which California statute is considered the foundational enabling law for commercial C-PACE programs in that state?

    Answer: AB 811 and SB 77 (Improvement Act for Commercial Properties)

    California's AB 811 and its commercial extension SB 77 created the legal framework allowing local agencies to offer PACE financing.

  5. When a commercial property with a PACE assessment is sold, who is generally responsible for the outstanding PACE obligation?

    Answer: The new property owner assumes the obligation as part of the property

    Because PACE is a property-based assessment, the obligation transfers to the new owner at sale, similar to property taxes.

  6. Which government-sponsored enterprise (GSE) policy significantly affected PACE financing by restricting purchase of mortgages on PACE-encumbered properties?

    Answer: Fannie Mae and Freddie Mac conservatorship guidance

    Fannie Mae and Freddie Mac, under FHFA conservatorship, issued guidance restricting purchase of mortgages on properties with senior PACE liens.

  7. A PACE program operates through a 'contractual assessment district.' What governmental body must typically authorize this district?

    Answer: Local city or county government

    Local governments — cities or counties — must establish and authorize the contractual assessment district under state enabling legislation.