Legal Framework Flashcards

Which type of legal opinion is typically required at closing of a C-PACE transaction to confirm the program's validity?

Answer: Enforceability and legality opinion from qualified legal counsel

Legal counsel's enforceability opinion confirms that the assessment is legally authorized, binding, and enforceable under applicable state law.

A C-PACE project involves a historic building. Which additional regulatory framework must typically be satisfied alongside PACE requirements?

Answer: National Historic Preservation Act (NHPA) Section 106 review

Improvements to historic buildings often require Section 106 review to ensure the project does not adversely affect historic properties.

In the event of bankruptcy, how are PACE assessments generally treated under the U.S. Bankruptcy Code?

Answer: As secured claims with potential super-priority similar to tax liens, often survives bankruptcy

Courts have generally treated PACE assessments similarly to property tax obligations, which hold priority status and survive bankruptcy discharge.

Which contractual provision in a C-PACE agreement protects the capital provider if the property is destroyed and insurance proceeds are collected?

Answer: Insurance proceeds assignment or collateral assignment of insurance

An assignment of insurance proceeds ensures that if casualty insurance pays out, the capital provider has a legal claim to those funds to satisfy the outstanding assessment.

Under most state C-PACE enabling statutes, which body is responsible for annually levying and billing the PACE assessment to the property owner?

Answer: The county tax assessor or tax collector

PACE assessments are placed on the property tax bill and collected by the county tax authority, which then remits funds to the program administrator.

A C-PACE program administrator knowingly finances a project on a property with an undisclosed federal tax lien. What is the likely legal consequence?

Answer: The federal tax lien may prime the PACE lien because federal law generally takes precedence

Federal tax liens are governed by the Federal Tax Lien Act, and federal law can override state-created lien priorities, potentially subordinating the PACE lien.

Which disclosure document must C-PACE program administrators provide to property owners to ensure informed consent under most state program rules?

Answer: Program disclosure or assessment contract summary outlining terms, total cost, and lien consequences

State C-PACE rules require a clear written disclosure summarizing financing terms, total repayment cost, and the lien's effect on the property before the owner signs.