Today's Law As Amended


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SB-476 California Financing Law: program administrators.(2021-2022)



As Amends the Law Today


SECTION 1.

 Section 22684 of the Financial Code is amended to read:

22684.
 A program administrator shall not execute an assessment contract, and no  work shall not  commence under a home improvement contract that is financed by that assessment contract nor shall that  contract, and a  home improvement contract shall not  be executed unless all of  the following criteria are satisfied:
(a) All property taxes for the property that will be subject to the assessment contract are current. The program administrator shall ask a property owner whether there has been no more than one late payment of property taxes on the property for the previous three years or since the current owner acquired the property, whichever period is shorter.
(b) The property that will be subject to the assessment contract has no recorded and outstanding involuntary liens totaling  in excess of one thousand dollars ($1,000).
(c) The property that will be subject to the assessment contract has no notices of default currently recorded that have not been rescinded.
(d) The property owner has not been a party to any bankruptcy proceedings within the last four years, except that the property owner may have been party to a bankruptcy proceeding that was discharged or dismissed between two and four years before the application date and the property owner has had no payments more than 30 days past due on any mortgage debt or nonmortgage debt, excluding medical debt, during the 12 months immediately preceding the application date.
(e) (1)  The property owner is current on all mortgage debt on the subject property and  and, except as provided in paragraph (2),  has no more than one late payment during the six months immediately preceding the application date and if the late payment did not exceed 30 days past due. application. 
(2) If a late payment referred to in paragraph (1) was late by more than 30 days, the property is not eligible for an assessment contract.
(f) The property that will be subject to the assessment contract is within the geographical boundaries of the applicable PACE program.
(g) The measures to be installed pursuant to the assessment contract are eligible under the terms of the applicable PACE program.
(h) The financing is for less than 15 percent of the value of the property, up to the first seven hundred thousand dollars ($700,000) inclusive of the existing assessments, and is for less than 10 percent of the remaining value of the property above seven hundred thousand dollars ($700,000).
(i) The total PACE assessments and the mortgage-related debt on the property subject to the PACE assessment will not exceed 97 percent of the market value of the property as established by the valuation required by Section 22685.
(j) The term of the assessment contract shall not exceed the estimated useful life of the measure to which the greatest portion of funds disbursed under the assessment contract is attributable. The program administrator shall determine useful life for purposes of this subdivision based upon credible third-party standards or certification criteria that have been established by appropriate government agencies or nationally recognized standards and testing organizations.
(k) The program administrator shall verify the existence of recorded PACE assessments and shall ask if the property owner has authorized additional PACE assessments on the same subject property that have not yet been recorded. The failure of a property owner to comply with this subdivision shall not invalidate an assessment contract or any obligations thereunder, notwithstanding if the combined amount of the PACE assessments exceed the criteria set forth in subdivision (h) or (i). The existence of a prior PACE assessment or a prior assessment contract shall not constitute evidence that the assessment contract under consideration is affordable or meets any other program requirements.
(l) The assessment contract does not contain a penalty for early repayment of an amount owed under the contract.
(m) The property that will be subject to the assessment contract is not subject to a reverse mortgage, as defined in Section 1923 of the Civil Code.
(n) The program administrator shall use commercially reasonable and available methods to verify the above.
(o) (1) The property that will be subject to the assessment contract has undergone an energy audit that may be focused on the suitability and cost effectiveness of the measures to be installed and PACE financed and is performed by any of the following:
(A) An auditor or rater certified by the Building Performance Institute.
(B) A rater who is accredited under the Mortgage Industry National Home Energy Rating Standards, as adopted by the Residential Energy Services Network, or certified by CalCERTS, CHEERS, or another comparable Home Energy Rating System provider approved by the Energy Commission.
(C) An independent energy assessor with credentials obtained through one or more of the organizations listed as eligible by the United States Department of Energy to provide a Home Energy Score Report.
(D) An independent and certified home energy consultant or auditor subject to standards comparable to those described in subparagraphs (B) and (C) that is permitted under a local or state home energy certification or audit program.
(2) The audit described in this subdivision shall, at a minimum, include all of the following in a written report provided to the property owner as a printed copy before execution of an assessment contract:
(A) An evaluation of the suitability of the measures to be installed and PACE financed, given the energy sources, uses, and inefficiencies in the specific property.
(B) A determination of whether the measures to be installed and PACE financed, if installed properly in the specific property, would reduce energy consumption or reduce the use of fossil fuel as energy.
(C) An estimate of energy cost savings for the specific property expected from the identified measures to be installed and PACE financed.
(3) The energy auditor performing the audit described in this subdivision shall not be an agent or affiliate, as defined in Section 90005, of a program administrator, PACE solicitor, or PACE solicitor agent.
(4) In the case of emergency or immediate necessity, the requirements of this subdivision may be waived with respect to the execution of a PACE assessment contract to finance a heating, ventilation, and air-conditioning system, boiler, or other system, the primary function of which is temperature regulation in residential real property, if all of the following requirements are met:
(A) The contract is executed in connection with the making of emergency or immediately necessary repairs to protect persons or real or personal property.
(B) The property owner initiated the contract for the emergency repair or immediately necessary repair.
(C) The property owner provided a separate statement that is handwritten in ink by a property owner, and dated and signed by each property owner, describing the situation that requires immediate remedy and expressly acknowledging both of the following:
(i) The contractor has informed the property owner of the right to cancel the sale.
(ii) The property owner waives the right to cancel the sale.
(D) The funding is limited to the emergency or immediate necessity improvement and any required improvements directly necessary to the installation and safe operation of the improvement.
(E) Any efficiency improvement funded is eligible for PACE financing.
(F) The amount of the assessment contract does not exceed fifteen thousand dollars ($15,000) or a monthly equivalent payment on the PACE assessment of one hundred twenty-five dollars ($125), as adjusted by any annual increase in the California Consumer Price Index determined pursuant to Section 2212 of the Revenue and Taxation Code, whichever is greater.
(5) This subdivision does not apply with respect to permanent installation of new or upgraded electrical circuits and related equipment to enable electrical vehicle charging or to improvements related to water efficiency, seismic strengthening, or wildfire safety.

SEC. 2.

 Section 22690.6 is added to the Financial Code, to read:

22690.6.
 A program administrator shall not disburse funds to a PACE solicitor or PACE solicitor agent pursuant to an assessment contract unless at least one of the following criteria is met:
(a) For assessment contracts financing improvements that require permitting or inspections under state or local law, the program administrator has obtained copies of all required permits and final inspection documentation.
(b) For assessment contracts financing improvements that require approval by a utility company for interconnection, the program administrator has obtained copies of that approval.
(c) (1) For assessment contracts in which the amount financed on the individual assessment contract or cumulatively with any past assessment contract with the property owner is not less than twenty-five thousand dollars ($25,000), the program administrator has obtained and reviewed a written inspection report, a paper copy of which is also provided to the property owner, verifying that all measures contained in the home improvement contract have been installed according to accepted trade standards for work quality.
(2) The written inspection report described in paragraph (1) shall be prepared by an inspector certified by the International Association of Certified Home Inspectors, the American Society of Home Inspectors, or an equivalent certifying entity.
(d) For assessment contracts in which the amount financed is less than twenty-five thousand dollars ($25,000), the program administrator has obtained time- and geo-tagged photographs verifying that all measures contained in the home improvement contract have been installed according to accepted trade standards for work quality.