A PACE Assessment Almost Killed This Fort Lauderdale Closing
A seller in Fort Lauderdale’s Rio Vista neighborhood accepted a full-price offer on a canal-front home. The buyer’s mortgage lender ordered title work, and three weeks before the scheduled closing, the title company flagged a lien nobody had mentioned at signing: a $38,000 non-ad valorem assessment tied to a hurricane-hardening project the previous owner financed years earlier, new impact windows, a standing-seam metal roof, and a whole-house generator. The lender said its investor guidelines would not fund the purchase until that balance was resolved. The closing held only because the seller’s agent already knew what the lien was and how to negotiate a payoff.
That lien is a PACE assessment, short for Property Assessed Clean Energy, and it shows up more often in South Florida than most buyers expect. Homeowners across Miami-Dade, Broward, and Palm Beach counties have used PACE financing for over a decade to pay for the exact upgrades hurricane season demands: impact windows and doors, new roofs, HVAC replacements, solar systems, and flood mitigation work. The financing is convenient for the person who installs it. It becomes the new owner’s problem, or at minimum the new owner’s lender’s problem, the moment the property changes hands.
Luxury properties are not exempt. A $2.5 million estate can carry a $50,000 PACE assessment just as easily as a starter home carries a $12,000 one, and the size of the property does not change how the lien behaves at the closing table. Understanding how PACE works, who has to disclose it, and how it affects financing is now a standard part of due diligence on a Florida purchase, whether the buyer is paying cash or borrowing eight figures.
What a Florida PACE Loan Actually Is
PACE financing lets a property owner pay for qualifying improvements, primarily energy efficiency, renewable energy, and wind resistance upgrades, without taking out a conventional loan. Florida authorizes local governments to levy the cost of that work as a non-ad valorem assessment under Section 163.08 of the Florida Statutes, and the assessment gets added directly to the property’s annual tax bill. County and regional programs, including PACE Broward, the Florida PACE Funding Agency, and programs operating in Palm Beach and Miami-Dade counties, administer the financing and set the assessment.
Qualifying improvements read like a hurricane prep checklist: impact-rated windows and doors, hurricane shutters, reinforced garage doors, new roofing, HVAC systems, water heaters, solar panels, and flood mitigation. The appeal is real. PACE financing typically requires no money down, approval is based on the property and its equity rather than the owner’s credit score, and the repayment term can stretch fifteen to twenty years, spread across the tax bill in manageable annual installments.
The tradeoff is what happens to that repayment obligation when the property sells. Because the assessment is a lien against the property itself rather than a personal debt of the owner, it does not disappear at closing and it does not automatically get paid off the way a mortgage does. It stays with the land unless someone pays it off, which means a buyer can inherit years of remaining PACE payments along with the house, the pool, and the dock.
Why PACE Liens Sit Ahead of the Mortgage
The detail that catches lenders’ attention is lien priority. Florida treats a PACE assessment the same way it treats an unpaid property tax bill, which under state law takes first priority over essentially every other claim on the property, including a first mortgage recorded years earlier. If a property were ever foreclosed, the PACE balance would get paid before the mortgage holder saw a dollar.
That priority position is exactly why Fannie Mae, Freddie Mac, the Federal Housing Administration, and the Department of Veterans Affairs restrict financing on properties with an active PACE lien. Fannie Mae’s Selling Guide will not purchase a loan secured by a property with an outstanding PACE obligation unless the program’s terms subordinate the assessment to the mortgage, which most Florida programs do not do. In practice, a buyer using a conventional, FHA, or VA loan usually cannot close until the PACE balance is paid off, whether by the seller, the buyer, or a negotiated split at the closing table.
The Consumer Financial Protection Bureau has also been tightening oversight of PACE lending. A federal rule finalized in late 2024 extends Truth in Lending Act protections, including Loan Estimate and Closing Disclosure style paperwork, to PACE transactions, with compliance required starting March 2026. The change targets consumers taking out new PACE financing, but it signals how seriously federal regulators now treat these assessments as a mortgage-adjacent product rather than a minor tax line item.
The Seller’s Disclosure Requirement Under Florida Law
Florida law does not leave PACE disclosure to chance. Under Section 163.08, a seller must give a prospective buyer a written disclosure statement before the buyer signs a purchase contract, if the property carries an unpaid PACE assessment. The statute specifies the language: informing the buyer that the property sits within a jurisdiction that has levied a non-ad valorem assessment for a qualifying improvement, that the amount is not based on the value of the property, and encouraging the buyer to contact the county property appraiser’s office for details.
Skipping that disclosure is not a minor paperwork lapse. A buyer who learns about a PACE lien after signing has grounds to challenge the contract, and an agent who fails to catch it during listing preparation has exposed the seller to a dispute that could unwind a closing at the worst possible moment. The disclosure has to happen before the contract is executed, not during the title search, and definitely not the week of closing.
For a luxury seller, the practical fix is simple: pull a payoff quote from the property appraiser’s or tax collector’s office as part of listing preparation, the same way an agent would confirm a mortgage balance. Knowing the number before a buyer’s lender finds it protects the timeline and the seller’s negotiating position.
What Buyers, Sellers, and Lenders Each Need to Verify
A PACE assessment rarely derails a transaction when it surfaces early. It becomes a problem only when it surfaces late, usually during underwriting, after a buyer has already given notice on an apartment or a contractor has already scheduled a move.
For Buyers and Their Agents
- Order a title search early, and ask specifically whether it captured non-ad valorem assessments, not just mortgages and judgment liens. Some abstractors miss PACE liens because they run through the tax roll rather than the county’s official records.
- Call the county tax collector’s office directly and ask for a PACE payoff estimate on the parcel. Every South Florida county publishes a process for this. Palm Beach County’s Constitutional Tax Collector, for example, maintains a public PACE lookup and payoff request process for exactly this reason.
- Confirm with the lender before assuming financing will proceed as planned. Ask directly whether the loan program allows an active PACE lien to remain, or whether payoff is a condition of closing.
A cash buyer has more flexibility than a financed one. Because cash purchases do not go through a lender’s underwriting, a cash buyer can choose to take the property subject to the PACE assessment and simply keep paying the annual installment on the tax bill. That is a legitimate option and sometimes the right one, but it should be a decision the buyer makes with full information, not something discovered after the deed records.
For Sellers Preparing to List
- Request a current PACE balance and confirm whether it can be paid off in full or must run its term.
- Decide before listing whether the payoff will come out of sale proceeds, get credited to the buyer, or get built into the asking price. Buyers negotiate harder when they discover a lien mid-contract than when it is disclosed upfront.
- Provide the statutory disclosure statement before the buyer signs, not after.
Handled this way, a PACE assessment becomes a line item to negotiate rather than a reason for a buyer to walk. Most buyers understand hurricane-hardening improvements add real value; they just need the number in writing before they commit to financing.
Why This Shows Up More Often in South Florida’s Luxury Market
PACE financing is not unique to Florida, but the state has more of it outstanding than almost anywhere else in the country, and South Florida’s hurricane exposure is the reason. Miami-Dade, Broward, and Palm Beach counties have pushed wind mitigation and roof replacement for two decades, and PACE gave homeowners a way to fund six-figure hurricane hardening projects without touching a mortgage or a home equity line. A waterfront estate that added impact glass across forty openings, a new tile roof rated for high wind speeds, and a backup generator system can easily carry a PACE balance in the $75,000 to $150,000 range.
Those upgrades also do real work for a luxury property. Impact windows and a wind-rated roof can lower a homeowner’s insurance premium meaningfully under Florida’s wind mitigation credit system, and buyers should weigh that ongoing savings against the remaining PACE balance rather than treating the lien as pure cost. A property with $90,000 left on a PACE assessment but a fully hardened building envelope may still be the stronger financial position than a comparable home with no lien and no hurricane protection, especially with insurance premiums where they are across coastal Florida right now.
The math has to happen at the negotiating table, not after the fact, which is why an agent who understands PACE financing brings real value to a luxury transaction on either side of it.
Protecting the Transaction Once a PACE Lien Is Found
Finding a PACE assessment mid-contract is not a reason to walk away from an otherwise sound property. It is a reason to renegotiate with clear numbers.
The most common resolution is a seller payoff at closing, funded out of sale proceeds the same way a mortgage balance gets satisfied. Title companies handle this routinely once the payoff figure is confirmed with the county, and the closing disclosure simply reflects the payoff as a line item, similar to how it would show a mortgage satisfaction. A second option is a price adjustment, where the buyer accepts the property subject to the lien in exchange for a purchase price reduced by the outstanding balance, effectively transferring the obligation along with a discount. A third option, mainly relevant to cash buyers, is assuming the remaining PACE payments as part of the annual tax bill going forward.
Whichever route the parties choose, it belongs in the purchase contract in writing, not as a verbal understanding at the closing table. A financed buyer’s lender will want documentation regardless of which resolution the parties pick, and an ambiguous side agreement is the fastest way to reopen a negotiation three days before closing.
Catching It Before It Becomes a Problem
Most PACE surprises are preventable. They happen when a listing agent has not pulled a payoff quote, when a buyer’s agent has not asked the title company the right question, or when nobody checks the county’s non-ad valorem assessment roll until underwriting forces the issue. On a luxury transaction, where a delayed closing can mean a lost rate lock or a broken chain on a simultaneous purchase, that kind of surprise is expensive in ways that go beyond the PACE balance itself.
At MJI Realty Group, we run a PACE and non-ad valorem lien check as a standard part of preparing a South Florida listing, and we confirm financing eligibility with a buyer’s lender before a contract goes to closing rather than after. That is what a boutique brokerage is supposed to do: catch the detail that a high-volume shop moves past because there are twenty other files on the desk that day. We work directly with the title companies and county offices that handle these payoffs across Miami-Dade, Broward, and Palm Beach counties, and we would rather have that conversation with a client in the first week of a listing than in the last week before closing.
Real estate decisions depend on individual circumstances, including the specific PACE program, county, and lender involved in a given transaction; this is general information, not legal, tax, or financing advice for your specific situation. If you are buying or selling a Florida property and want to know what liens are actually attached to it before you sign anything, MJI Realty Group works with both sides of these transactions and can help you get real numbers early.
