CPACE Assessment Process 2 — Questions and Answers
Question 1: Which entity typically initiates the PACE assessment by filing a notice with the county or municipality?
- The property owner (Correct answer)
- The PACE program administrator
- The state energy office
- The federal government
Correct answer: The property owner
The property owner voluntarily initiates the C-PACE assessment by applying to the program and agreeing to the lien on their property.
Question 2: What happens to a C-PACE assessment lien when a commercial property is sold?
- It is extinguished at closing
- It transfers to the new property owner (Correct answer)
- The original owner must pay it off at closing
- The lender absorbs the remaining balance
Correct answer: It transfers to the new property owner
C-PACE assessments are attached to the property, not the borrower, so the obligation transfers to the new owner upon sale.
Question 3: Which professional typically conducts the energy audit required before a C-PACE assessment is approved?
- A licensed real estate appraiser
- A qualified energy auditor or engineer (Correct answer)
- A county tax assessor
- A mortgage underwriter
Correct answer: A qualified energy auditor or engineer
A qualified energy auditor or engineer assesses existing conditions and projects the savings from proposed improvements.
Question 4: The 'savings-to-investment ratio' (SIR) in C-PACE underwriting is used to verify that:
- The property tax base will increase
- Projected energy savings meet or exceed the financing cost (Correct answer)
- The contractor is licensed in the state
- The lender's return on investment is sufficient
Correct answer: Projected energy savings meet or exceed the financing cost
An SIR of 1.0 or greater confirms that projected savings are sufficient to cover the assessment payments, a key underwriting requirement.
Question 5: What is the purpose of the 'notice of assessment' recorded in land records during the C-PACE process?
- To notify tenants of rent increases
- To publicly disclose the lien and its terms on the property (Correct answer)
- To trigger automatic property tax reassessment
- To certify contractor completion of work
Correct answer: To publicly disclose the lien and its terms on the property
Recording the notice of assessment creates a public record of the lien, putting future purchasers and lenders on notice of the encumbrance.
Question 6: Under most C-PACE programs, how is the assessment payment typically structured for the property owner?
- A single lump-sum payment at project completion
- Semi-annual or annual payments added to the property tax bill (Correct answer)
- Monthly mortgage-style payments to the lender
- Quarterly payments to the PACE program administrator only
Correct answer: Semi-annual or annual payments added to the property tax bill
C-PACE assessments are typically repaid through semi-annual or annual installments billed alongside the property's regular tax obligations.
Question 7: Which scenario would most likely trigger a mandatory lender consent requirement before a C-PACE assessment is approved?
- The property is free and clear of any mortgage
- The property has an existing senior mortgage lien (Correct answer)
- The owner is a nonprofit organization
- The improvement is for water conservation only
Correct answer: The property has an existing senior mortgage lien
Because C-PACE assessments can hold super-priority or senior lien status in some states, existing mortgage lenders typically must consent to protect their collateral position.
CPACE Assessment Process 2
Which entity typically initiates the PACE assessment by filing a notice with the county or municipality?