Selling or refinancing a building that carries C-PACE

C-PACE is sold to owners partly on the promise that it does not have to be repaid when the building changes hands. That is true in the programme documents. It is also only half the picture, because the person who decides whether the assessment stays is often the buyer, or the buyer’s lender, not you.

This guide covers the two moments where an existing assessment matters most — a sale and a refinancing — and attributes every rule to the programme or provider that published it. All sources were checked on 9 October 2026. Whether C-PACE counts as debt, and what happens on default, is covered in Is C-PACE a loan?; this guide does not repeat it.

Why the assessment stays with the building

A C-PACE assessment is attached to the property through the property’s tax or assessment bill, not to the owner as a borrower. The programme and provider documents say so in their own words:

• Petros PACE Finance, a capital provider, calls a C-PACE assessment “a debt of property”, tied to the property via its tax bill rather than to the owner, “so the repayment obligation transfers with the property upon sale.”
• PACE Equity, another capital provider, says C-PACE assessments “run with the land” and “may be transferred to the new property owner without any re-underwriting, assumption fees, or penalties.”
• Montgomery County, Maryland. The Montgomery County Green Bank’s information packet for capital providers says the C-PACE surcharge “must be current upon the sale of a property and remain with a property upon sale.”
• Colorado. The Colorado C-PACE Program Guide (version 5.6, January 2023) says that if the property is sold before the end of the assessment period, “the new owner will assume the C-PACE assessment obligation, unless otherwise negotiated.”

Two documents available from Texas sources word it differently, so we quote each rather than pick one. A Mortgage Lender’s Guide to C-PACE hosted on the Texas PACE Authority’s website says C-PACE “is designed for automatic transferability upon sale, with no additional due diligence or payoff required during a transfer of title.” Lone Star PACE, a Texas programme administrator, says on the same FAQ page both that the assessment “may automatically transfer in the event of a sale if not paid off in full” and that it is “immediately transferrable in the event of a sale, similar to an assumable loan.” If you own in Texas, read your own assessment agreement for the operative wording.

Leave it in place or pay it off: who decides

“Transferable” means the assessment can go with the building. It does not oblige the buyer to take it. The CRE Finance Council’s C-PACE Primer puts it plainly: “Certain buyers are not willing to assume a C-PACE assessment upon purchase of a property; they would therefore consider the purchase as requiring a prepayment (sometimes with penalty) of the C-PACE assessment.” Colorado’s “unless otherwise negotiated” points the same way: it is a term of the sale.

In practice the choice has two costs, and they fall on different people.

If the buyer assumes it, the buyer takes on the remaining payments. The CREFC Primer says the new owner must bring any unpaid C-PACE assessments current but is not obligated to repay the outstanding principal balance. Montgomery County’s packet requires the surcharge to be current at sale. Expect the remaining balance to come up in price negotiations; a buyer will treat it as a cost of owning the building.

If you pay it off, you pay the outstanding balance plus whatever prepayment charge your financing documents set, out of your sale proceeds. That charge is the subject of the next section, and it is why the timing of a sale matters.

Colorado’s guide adds two conditions that carry over to a buyer. Authorised improvements financed through the programme “may not be removed from the property until the C-PACE assessment has been fully repaid,” and in connection with any sale, participants agree to make all legally required disclosures about the assessment lien.

Prepayment terms are set in your term sheet

The place to shape prepayment terms is before you sign. What the documents we read say:

• Lone Star PACE (Texas): “C-PACE financing typically has a five-year step-down prepayment penalty; however, this may be negotiated with the C-PACE capital provider before term sheet acceptance.”
• Petros PACE Finance: early payoff is allowed but “a prepayment fee may apply. These terms will be detailed in our term sheet and the Assessment Agreement.”
• PACE Equity, for its delayed-draw structure, says there is one prepayment schedule per project rather than a separate clock for each funding, and that a project prepaying in Year 1 must pay at least one year of interest on the total amount financed.
• CREFC Primer: prepayment is allowed “with call protection in early years.”
• Colorado: the programme guide says it expects capital providers to require owners to sign off on “yield maintenance, or prepayment fees,” and that any such arrangement is between the owner and the investor.

If there is any chance you will sell or refinance while a prepayment charge still applies, negotiate the schedule before you accept the term sheet — Lone Star PACE says that is when it can be negotiated — and model the payoff cost against your likely exit date. Our guide to what C-PACE actually costs covers the rest of the cost picture.

What a buyer and the buyer’s lender will ask for

The assessment will not be a surprise. Petros PACE Finance says C-PACE assessments “are always recorded, so they are easily identified in title reports,” and that because they have “a flat, predetermined amortization,” they “can be incorporated into your mortgage lender’s T&I escrow.”

A buyer will want, at a minimum, the recorded assessment documents, the remaining payment schedule, confirmation that every instalment is current, and the prepayment terms — the last because they set the cost of the buyer paying it off later. Have these ready before marketing the building; a payoff figure from the capital provider is worth requesting early too.

The buyer’s lender is where deals get harder. The CREFC Primer says that “in general, C-PACE is not permitted in CMBS,” that standard-form CMBS loan documents have historically prohibited it, and that a few recent CMBS transactions allow property owners to enter into C-PACE financing in the future, typically limited to a small dollar amount and requiring lender approval and rating agency confirmation. The same Primer says Fannie Mae and SBA 504 have not yet consented to C-PACE, and that all lenders incorporate C-PACE into their debt service coverage calculations. If your likely buyer will finance with a lender that will not sit behind an assessment, plan for a payoff. How C-PACE sits against senior debt is covered in the C-PACE capital stack.

Refinancing the senior loan around an existing assessment

The same constraint applies when you refinance your own mortgage. The assessment stays recorded, so a new lender is lending behind it. The CREFC Primer says the unpaid, not-yet-due portion of a C-PACE assessment “will not be extinguished by the foreclosure of any existing or future first mortgage.” A refinancing lender has to be willing to accept that. Ask before you apply, not after.

Colorado’s guide also sets out how the C-PACE assessment itself can be refinanced: with the existing capital provider on new terms, such as a lower rate or shorter term, or with a different qualified capital provider. Its conditions include updated underwriting; consent from the mortgage holders that originally consented and any new lien holders; a term no longer than the weighted average useful life of the improvements (up to 25 years) less the years already run; and new assessing resolutions. Refinancing cannot add improvements outside the original project scope. Where a new capital provider is used, the guide set the lien release processing fee at $750 for calendar year 2023 — check the current guide before relying on it.

How the lien comes off when it is paid

Paying the capital provider is not the last step. The release has to be documented and recorded, and the programme runs that process.

Colorado: the owner or capital provider must notify the programme administrator “as soon as possible” so the parties can agree the payoff amount. Because the current year’s assessment is still billed through the county, the payoff statement should reflect the payment of that year’s assessment to the county. Once everything is paid, the capital provider executes a Release of Assessment Lien, the District executes it and has it recorded in the county property records, and a one-time fee covering the District’s costs, including recording, must be paid before recording.

Montgomery County, Maryland: the packet says prepayment cannot be made through the tax bill; it must be arranged directly with the capital provider, which then follows close-out procedures. Prepayment penalties are paid directly to the capital provider. Surcharge payments continue until the Program Manager receives a paid-in-full statement, after which the county executes a Certificate of Satisfaction that is filed with the county land records to release the surcharge.

On a sale, build that sequence into the closing timeline so the title company has what it needs to clear the lien.

The honest answer

If you expect to sell or refinance within a few years, and your likely buyer or lender is one that will not lend behind an assessment, a C-PACE prepayment charge can cost more than the financing saved. That is a reason to negotiate the prepayment schedule hard — or to use something else. If you are weighing a sale or refinancing with an assessment already in place, or deciding whether to take one on with an exit in view, talk to us before you sign.