Guide
The solar financing that isn't on the credit report
PACE and HERO don't behave like a lease and don't behave like a loan. They are repaid through the property tax bill, they attach to the property rather than the person, and they surface on the preliminary report rather than in the seller's solar paperwork.
PACE — Property Assessed Clean Energy, marketed in California under names including HERO — finances home improvements through a voluntary assessment on the property tax bill, typically repaid over ten to twenty-five years. Because it is a tax assessment rather than a personal debt, it does not follow the seller, and it does not simply transfer to the buyer either: in practice it is usually paid off at closing, because most mortgage lenders will not fund a purchase with a PACE assessment left in place ahead of their lien. It is found on the preliminary title report, not in the solar file — which is why it is so often found late.
A tax assessment, not a solar agreement
| Lease / PPA | Solar loan | PACE / HERO | |
|---|---|---|---|
| Who owns the system | The provider | The homeowner | The homeowner |
| How it is repaid | Monthly payment to the provider | Monthly payment to the lender | An assessment added to the property tax bill |
| Where it appears | The agreement and the seller's disclosure | The credit report and a payoff statement | The preliminary title report and the tax bill |
| What happens at sale | Buyer applies to assume, or the seller buys it out | Normally paid off at closing from proceeds | Normally paid off at closing — most lenders require it |
| Does the buyer need to qualify | Yes — a credit application to the provider | No | No |
| Lien position | A UCC-1 fixture filing on the equipment | Usually a UCC-1 fixture filing | A property tax lien, senior to the mortgage |
How it actually goes wrong
Almost always the same way: nobody looks for it, because it isn't where anybody is looking.
It is not in the solar paperwork
The seller has an installation contract and maybe a warranty. There is no monthly solar bill to find, because the payment is inside a property tax instalment paid twice a year, often through an impound account. Plenty of sellers genuinely do not think of it as solar financing at all.
It shows up on the prelim
Which is exactly why the preliminary title report should be read for this specifically, early, rather than skimmed. This is the single highest-value habit on the page.
The lender says no
Frequently after the appraisal, and frequently to a buyer who has already paid for one. At that point the deal needs a payoff — and a payoff amount that nobody has requested yet.
The payoff is bigger than expected
It is a long-dated assessment with interest and administration built in, so what is owed can be well above what the improvement seems worth. Get the figure in writing from the program administrator early, not from an estimate.
The equipment question is still unanswered
Paying off the assessment settles the money. It says nothing at all about whether the system works — and PACE-financed systems were sold door to door in volume, by installers who are not all still trading.
PACE is now regulated as consumer credit
The Consumer Financial Protection Bureau's residential PACE rule took effect on 1 March 2026. It brings residential PACE financing inside the Truth in Lending Act and Regulation Z — treating it as credit, applying ability-to-repay requirements, and requiring TILA-style disclosures.
For a transaction today the practical consequence is a split: assessments originated from March 2026 onwards come with a documented disclosure and underwriting trail, while the large existing book of older assessments — which is what you will meet on most resale properties — does not. If a seller is unclear about what they signed and when, the origination date is the first thing to establish.
None of that changes the mechanics at closing. The assessment is still on the tax bill, still senior to the mortgage, and still normally has to be dealt with before a purchase funds.
Common questions
Can the buyer just assume the PACE assessment?
In principle the assessment stays with the property, so in principle it continues with the new owner. In practice most purchase financing won't permit it, so it is usually paid off at closing. Treat assumption as the exception that has to be confirmed with the specific lender rather than the default.
Is a PACE lien the same as a UCC-1?
No, and this is the confusion worth clearing up. A UCC-1 fixture filing attaches to the solar equipment and is what leased and financed systems typically carry. A PACE assessment is a lien on the real property collected with property taxes, and it sits ahead of the mortgage. Different instrument, different problem, different fix.
How do I find out if a property has one?
The preliminary title report, and the property tax bill. Ask for both early. A seller who says "the solar is paid for" may be completely sincere and still have a live assessment — it was paid for, by an assessment they are still repaying through their tax bill.
Does an inspection tell me whether there's PACE financing on the house?
Not directly — that is a title and disclosure question, not a physical one. What an inspection does is establish what the equipment is, what condition it is in and who originally installed it, which is often what tells you which financing story to go looking for.
Who should we ask about the payoff figure?
The program administrator named on the assessment, through escrow. Get it in writing and get it early: it is time-sensitive, it is frequently larger than people expect, and it is not something the solar company can tell you.
Working a weekend transaction? So are we
The office is open Monday–Friday 9am–6pm, but inspections run on weekends and requests are open around the clock. We'll call to confirm the date and time.
Requesting an inspection isn't a confirmed appointment — we'll contact you to confirm timing.