Jeff Kaliel is a Washington, D.C.-based attorney and partner at Kaliel PLLC, where he has practiced class action litigation since 2017. An Iraq War veteran and graduate of Yale Law School, Jeff Kaliel has represented consumers in disputes against major financial institutions, including a case that returned $66 million to Bank of America customers after the bank improperly assessed overdraft fees and changed its fee policies as a result. He has also served as class counsel in matters involving Capital One, Arvest Bank, City National Bank, and other lenders, often working through data-intensive discovery and economic damages modeling. Mr. Kaliel was recognized as a Washington, D.C. Rising Star by Super Lawyers in 2015. His work frequently touches on how consumers are informed about the costs tied to financing arrangements, a question that now extends to emerging products such as Property Assessed Clean Energy financing, which is subject to new federal disclosure requirements.
PACE, short for Property Assessed Clean Energy, is a form of financing used for eligible home improvements. Instead of being repaid through a separate loan bill, residential PACE financing creates an assessment on the homeowner’s real property. That assessment is collected through the property-tax system.
It is financing rather than a federal grant, and the federal government does not pay for or insure it. The most immediate effect is that the homeowner’s property-tax payment increases while the PACE financing is being repaid. The additional assessment represents repayment of the home-improvement financing, including applicable interest and fees, and becomes part of the amount the homeowner must plan for when property taxes are due.
PACE works this way because the repayment mechanism is built into the property assessment. A homeowner voluntarily obtains financing for an eligible improvement, and the resulting obligation is attached to the property-tax payment process.
Under federal rules effective March 1, 2026, qualifying residential PACE transactions are treated as credit under the Truth in Lending Act and its implementing rule, Regulation Z.
The added assessment can remain in place for years. Repayment terms may last five, 10, or 20 years, depending on the financing arrangement. The length of the term, together with interest and fees, affects both how long the assessment continues and how large the payments are.
For homeowners with a mortgage escrow account, the effect may show up in the monthly mortgage payment. Escrow accounts collect part of the monthly mortgage payment to cover expenses such as property taxes. If the PACE assessment is added to the escrow requirement, the amount collected each month can rise.
Homeowners who pay property taxes directly face the same PACE obligation through a different payment route. Without an escrow account, they generally need to set aside enough money to cover the PACE assessment when the property-tax payment is due. The absence of escrow does not remove or reduce the assessment.
Falling behind on PACE payments can have consequences tied to the property-tax system. Because the PACE assessment is collected with property taxes, delinquency can ultimately put the home at risk of a tax sale under applicable law. That differs from an unsecured loan, which does not use property as collateral and may instead result in collection activity, negative credit reporting, or litigation if it is not repaid.
Federal rules now require more information before a homeowner enters a residential PACE transaction. Regulation Z applies disclosure requirements adapted for PACE financing and also requires a reasonable, good-faith determination of the consumer’s ability to repay.
The disclosure framework uses PACE-specific versions of two federal mortgage disclosure forms, the Loan Estimate and Closing Disclosure, so key financing and payment information appears before completion. The disclosures are designed to show how the financing terms translate into future costs. They include information such as the loan term, interest rate, PACE payment, and other financing costs, while also explaining that the PACE obligation will be paid through the property-tax system.
For consumers whose mortgage escrow includes property taxes, the disclosure directs them to their mortgage servicer for information about what they will owe and when.
The assessment can matter again if the homeowner later wants to refinance or obtain another mortgage. An outstanding PACE obligation can make those transactions more difficult. That makes the assessment worth evaluating not only as a current property-tax expense, but also as a financing obligation that may affect future decisions involving the home.
About Jeff Kaliel
Jeff Kaliel is an attorney in Washington, D.C., and a partner at Kaliel PLLC, where he has practiced class action litigation since 2017. A graduate of Yale Law School and a veteran of the United States Army who served in the Iraq War, he focuses on consumer financial services cases, including disputes involving overdraft fees and other lending practices. He was recognized as a Washington, D.C. Rising Star by Super Lawyers in 2015.
