Ohio Subordinates Residential PACE Liens to First Mortgage Liens
The governor of Ohio recently signed a bill that codifies the lien priority of residential property assessed clean energy (PACE) loans, which are loans made to pay for the installment of cost effective energy improvements on a homeowner’s qualifying residential real property.
The bill provides that a residential PACE lien will be subordinate to a first mortgage on the property that is recorded before or after the PACE lien is recorded. A residential PACE lien will also be subordinate to all other liens on the property that are properly recorded prior to the recording of the residential PACE lien. However, notwithstanding liens for first mortgages, a residential PACE lien will be superior to any other lien recorded after the PACE lien is recorded. The bill states that in the event of a foreclosure sale, the holders of mortgages or other liens, including residential PACE liens, will receive proceeds in accordance with these priorities, notwithstanding any other law to the contrary.