PACE Assessments on Florida Property: What Buyers, Sellers, and Investors Should Know in 2026

Last updated: August 2026

A PACE assessment is not a loan against a person. It is a non-ad valorem assessment against the land, authorized in Florida under sections 163.08 through 163.085, Florida Statutes, and billed on the county property tax bill. It funds qualifying improvements such as impact windows, roofs, HVAC, generators, seawalls, and solar. The recorded financing agreement creates a lien of equal dignity to county taxes and assessments from the date of recordation [1], so it sits ahead of a previously recorded first mortgage rather than behind it.

That one fact drives everything else. Because the assessment outranks the mortgage, the two largest sources of residential mortgage liquidity will not buy a loan secured by a property carrying a senior PACE lien, and FHA has held the same line since 2017. So a seller with an open balance who takes a financed buyer almost always pays it off at closing out of proceeds. The obligation does stay with the house, exactly as the pitch said. It also blocks most buyers from financing that house until it is gone.

How a Florida PACE assessment is structured

Chapter 2024-273, Laws of Florida, effective July 1, 2024, split the old statute into definitions plus separate programs: section 163.081 for residential, section 163.082 for commercial [1][2]. The mechanics that matter to an underwriter:

Local authorization. An administrator may offer PACE only where the county or municipality has authorized it by ordinance or resolution [1][2].
Collection through the tax roll, under the uniform method in section 197.3632, with the tax collector compensated up to 2 percent of amounts collected [1].
Residential guardrails. Minimum financing of $2,500. Term capped at the weighted average useful life of the improvements and never more than 20 years. Total assessment capped at 20 percent of just value absent written consent of the mortgage holders. Annual payment capped at 10 percent of the owner's annual household income [1].
Owner eligibility. Current on taxes and mortgage payments, no outstanding code violations or involuntary liens, generally no bankruptcy in the prior five years unless discharged at least two years earlier [1].
Mortgage holders. Residential PACE requires written notice at least five business days before execution; commercial PACE requires written consent [1][2]. On commercial the lender says yes, on residential it is only told.
No acceleration. A clause letting a lender accelerate solely because the owner entered a PACE agreement is unenforceable [1].

How it appears on a Miami-Dade tax bill

The combined bill has a value-based ad valorem half and a non-ad valorem half: flat or formula-driven charges levied by other bodies. The Property Appraiser lists PACE Districts alongside Community Development Districts and Special Assessment Districts as the three categories producing those lines, notes the financings commonly run 30-year terms and are recorded with the Clerk of the Court and Comptroller, and states that the obligation typically transfers to the new owner after a sale while the sales price typically does not include it [3]. It cannot remove that line, having never levied it. Questions go to the program administrator.

Why the lien position collides with conventional financing

Fannie Mae. Selling Guide B5-3.4-01 states that Fannie Mae will not purchase mortgage loans secured by properties with an outstanding PACE loan unless the program's terms do not provide for lien priority over first mortgage liens. A narrow legacy waiver covers PACE originated before July 6, 2010. Last updated October 8, 2025 [4].

Freddie Mac. A mortgage sold to Freddie Mac must be in first lien position for the life of the loan, so a property subject to a lien that has or may take priority is not eligible for sale [5].

FHA. HUD announced in Mortgagee Letter 2017-18, dated December 7, 2017, that FHA would stop insuring mortgages on properties encumbered by a PACE obligation, citing priority lien status and exposure to the Mutual Mortgage Insurance Fund [6]. I could not locate a HUD letter rescinding that as of August 2026, so treat the 2017 posture as the working assumption and verify rather than assert it: check the current Handbook 4000.1 and the mortgagee letters on HUDCLIPS, then get the lender's written confirmation on the file. Cite the guide section and its update date, not a remembered rule.

What happens when a seller with PACE goes to market

The usual outcome is payoff at closing from seller proceeds. Order the payoff early, since the figure moves with the tax year and any amount already billed, and carry it on the net sheet as a lien, not a discount. If the payoff exceeds equity, this is a proceeds problem before it is a marketing problem. The alternative is a cash buyer or portfolio lender who takes the property subject to the assessment and prices the remaining stream, generally not in the seller's favor. When a non-ad valorem line looks unusual, that payoff is the first item I reconcile in a seller net analysis.

How a buyer or investor detects PACE in diligence

The tax bill, non-ad valorem section. Do not stop at the ad valorem total. Read the itemized lines and identify each levying authority [3].
The title commitment. A recorded financing agreement should appear in Schedule B-II. Ask the title agent whether any assessment of equal dignity to taxes encumbers the parcel.
Seller disclosure. Florida law requires a written disclosure to a prospective purchaser when the property carries a levied qualifying-improvement assessment with an unpaid balance [1]. A missing one is itself a signal.
Official records and the TRIM notice. The agreement is recorded, and the assessment appears on the Notice of Proposed Property Taxes [3].

Then request the payoff figure and amortization schedule: you are underwriting a stream with a senior claim on the asset. Older coastal housing stock, including much of Miami Beach, shows PACE more often, since that is where roof and window work concentrates.

The consumer-protection record

In October 2022 the Federal Trade Commission and the California Attorney General sued Ygrene Energy Fund, which operated in Florida, alleging its door-to-door contractor network told homeowners the financing would not interfere with selling or refinancing and caused liens to be recorded without informed consent. The settlement required $3 million in relief [7], and in July 2025 the FTC reported sending over $2.9 million to consumers [8].

Florida's 2024 rewrite responded with local authorization, contractor registration under section 163.083, advertising rules under section 163.085, itemized disclosures, a three-business-day right to cancel, and a ban on negative amortization, balloon payments, and prepayment penalties beyond nominal administrative cost [1]. Federally, the CFPB issued a final rule on December 17, 2024 treating residential PACE as credit under the Truth in Lending Act, with ability-to-repay standards and TRID-style disclosures, effective March 1, 2026 [9]. An industry group challenged it, the Middle District of Florida upheld the rule on February 12, 2026, and the matter has been on appeal [10], so confirm current status. The implication is narrow: paper originated after March 2026 should document ability to repay like a mortgage, while older paper on Florida tax rolls does not.

The underwriting read

PACE solves one narrow problem: it turns a large, unavoidable capital expenditure into a long-dated obligation for an owner who cannot or will not access conventional secured credit. In Florida, where roof age and window rating drive insurability and premium, that is real. Cost generally runs above conventional secured home-equity credit for the same owner, plus program fees, so get total cost in writing over the full term and compare it against a home equity line, a cash-out refinance, or cash.

Three questions decide it. What is the hold period, since a sale or refinance inside five years turns the senior lien into a payoff event at the worst moment. Is the mortgage holder on board, remembering that notice is not consent. And is there a cheaper source of the same money. For a buyer, PACE is negotiable rather than fatal: price it, get the payoff, put the payoff obligation in the contract. Review the agreement with your lender and a Florida real estate attorney before signing. My buyer consultation covers what to pull and what to ask.

Frequently asked questions

Does a PACE assessment transfer to a new owner at sale?

Legally yes. It runs with the land and continues on the tax bill after a sale [3]. Practically it rarely survives a financed sale, because the buyer's lender requires the senior lien to be satisfied, producing a seller-funded payoff.

Can I sell a Miami-Dade property that still has PACE on it?

Yes. The paths are payoff at closing from proceeds, a cash or portfolio-lender buyer who takes it subject to the assessment at a negotiated price, or payoff before listing. Get the figure first, then build the net sheet around it.

Is there a penalty for paying PACE off early?

Under current Florida law a residential financing agreement may not carry prepayment fees or fines other than nominal administrative costs [1]. Confirm against the specific agreement, since older ones were written under prior law.

Is PACE the same as a home equity loan?

No. A home equity loan is consensual debt secured by a mortgage sitting behind the first lien. PACE is a non-ad valorem assessment carrying a lien of equal dignity to county taxes, which is why it behaves differently in a sale [1].

Gabriel

Sources

---

Gabriel A. Moyers, PA. eXp Realty. Florida License #3407280. Equal Housing Opportunity. This article is general information as of August 2026 and is not legal, tax, or financial advice. Verify current figures against authoritative sources before acting.