Amended in Senate June 6, 2016

Amended in Assembly May 10, 2016

Amended in Assembly April 28, 2016

Amended in Assembly April 11, 2016

Amended in Assembly March 17, 2016

California Legislature—2015–16 Regular Session

Assembly Bill No. 2693

Introduced by Assembly Member Dababneh

(Coauthors: Assembly Members Travis Allen, Hadley, and Linder)

February 19, 2016

An act to amend Section 53328.1 of the Government Code, and to amend Section 5898.15 of, begin delete and end delete to amend, renumber, and add Section 5898.16 of, begin insert and to add Section 5898.17 to, end insert the Streets and Highways Code, relating to property improvements.

LEGISLATIVE COUNSEL’S DIGEST

AB 2693, as amended, Dababneh. Financing requirements: property improvements.

(1) Existing law authorizes the legislative body of a public agency, as defined, to determine that it would be convenient, advantageous, and in the public interest to designate an area within which authorized public agency officials and property owners may enter into voluntary contractual assessments to finance certain improvements, including the installation of distributed generation renewable energy sources or energy or water efficiency improvements that are permanently fixed to real property, as specified.

Existing law prohibits a public agency from permitting a property owner to participate in any program established pursuant to these provisions if the owner’s participation would result in the total amount of any annual property taxes and assessments exceeding 5% of the property’s market value, as determined at the time of approval of the owner’s contractual assessment.

This bill would also prohibit a public agency from permitting a property owner begin delete who is a homeowner applicant end delete to participate in a program pursuant to these provisions unless the property owner has been provided with a completed financing estimate document or a substantially equivalent document and the property owner is given the right to cancel the contractual assessment at any time prior to midnight on the 3rd business day after the date of the transaction to enter into the agreement without penalty or begin delete obligation. The end delete begin insert obligation, consistent with certain requirements. The bill would provide that the failure of a public agency to comply with these prohibitions renders the contractual obligations of the property owner for the contractual assessment void. end insert

begin insert This end insert bill would also prohibit a public agency from permitting a property owner to participate in a program pursuant to these provisions if the total mortgage-related debt and contractual assessment-related debt on the underlying property would exceed the fair market value of the property at the time of the owner’s contractual assessment, if the mortgage-related debt on the property alone is equal to 90% or greater of the property’s fair market value at the time of the approval of the owner’s contractual assessment, or if the owner is unable to meet specified requirements.

begin delete

This bill would provide that the failure of a public agency to comply with these prohibitions renders the contractual obligations of the property owner for the contractual assessment void.

end delete begin insert

This bill would limit these provisions to a property owner who seeks to participate in a program pursuant to these provisions for a residential property with 4 or fewer units.

end insert

(2) The Mello-Roos Community Facilities Act of 1982 specifies the requirements for the establishment of a community facilities district, including, among other things, a petition, a hearing, the establishment of the boundaries of the community facilities district, and an election on the question. Existing law authorizes a community facilities district formed pursuant to an alternative procedure under which the district initially consists solely of territory proposed for annexation to the community facilities district in the future and territory is annexed and subjected to special taxes only upon unanimous approval of the owners, to finance and refinance the acquisition, installation, and improvement of energy efficiency, water conservation, and renewable energy improvements.

This bill would require a legislative body to comply with the requirements described above prior to the annexation of a parcel or parcels to a community facilities district formed pursuant to the alternative procedure.

Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The people of the State of California do enact as follows:

begin insert

begin insert SECTION 1. end insert   

end insert

begin insert (a) end insert begin insert   end insert begin insert The Legislature finds and declares all of the
following: end insert

begin insert

(1) The Property Assessed Clean Energy program has been
promoted in California widely as an innovative and alternative
form of financing for environmental improvements for the benefit
of the public and California’s environment.

end insert begin insert

(2) The promotion of the Property Assessed Clean Energy
financing is now a popular and widespread form of alternative
financing for consumers seeking solar energy, water conservation,
energy efficiency, and earthquake retrofitting improvements to the
benefit of all Californians.

end insert begin insert

(3) The consumer obligation to repay voluntary contractual
assessments created by the Property Assessed Clean Energy
program is sometimes misunderstood and may affect the
consumer’s ability to refinance their loan or sell their property.

end insert begin insert

(4) Making residential real estate secured loans to consumers
through Property Assessed Clean Energy financing for home
improvements has grown rapidly, raising questions as to whether
the Property Assessed Clean Energy program is adequately
supported by government regulation.

end insert begin insert

(5) The passage of this act is essential to promote standardized
disclosures and protections for consumers to ensure that the
Property Assessed Clean Energy program can continue to be
widely used to offset the adverse impacts of years of climate
change.

end insert begin insert

(b) This act shall be known, and may be cited, as the PACE
Preservation and Consumer Protections Act.

end insert

begin delete SECTION 1. end delete

begin insert SEC. 2. end insert   

Section 53328.1 of the Government Code is amended
to read:

53328.1.  

(a) As an alternate and independent procedure for
forming a community facilities district, the legislative body may
form a community facilities district that initially consists solely
of territory proposed for annexation to the community facilities
district in the future, with the condition that a parcel or parcels
within that territory may be annexed to the community facilities
district and subjected to the special tax only with the unanimous
approval of the owner or owners of the parcel or parcels at the
time that the parcel or parcels are annexed. In that case, the
legislative body shall follow the procedures set forth in this article
for the formation of a community facilities district, with the
following exceptions:

(1) The legislative body shall not be obligated to specify the
rate or rates of special tax in the resolution of intention or the
resolution of formation, provided that both of the following are
met:

(A) The resolution of intention and the resolution of formation
include a statement that the rate shall be established in an amount
required to finance or refinance the authorized improvements and
to pay the district’s administrative expenses.

(B) The maximum rate of special tax applicable to a parcel or
parcels shall be specified in the unanimous approval described in
this section relating to the parcel or parcels.

(2) The legislative body shall not be obligated to specify in the
resolution of intention the conditions under which the obligation
to pay the specified special tax may be prepaid and permanently
satisfied. Instead, a prepayment provision may be included in the
unanimous approval of the owner or owners of each parcel or
parcels at the time that the parcel or parcels are annexed to the
community facilities district.

(3) In lieu of approval pursuant to an election held in accordance
with the procedures set forth in Sections 53326, 53327, 53327.5,
and 53328, the appropriations limit for the community facilities
district, the applicable rate of the special tax and the method of
apportionment and manner of collection of that tax, and the
authorization to incur bonded indebtedness for the community
facilities district shall be specified and be approved by the
unanimous approval of the owner or owners of each parcel or
parcels at the time that the parcel or parcels are annexed to the
community facilities district. No additional hearings or procedures
are required, and the unanimous approval shall be deemed to
constitute a unanimous vote in favor of the appropriations limit
for the community facilities district, the authorization to levy the
special tax on the parcel or parcels, and the authorization to incur
bonded indebtedness for the community facilities district.

(4) Notwithstanding Section 53324, this paragraph establishes
the applicable protest provisions in the event a local agency forms
a community facilities district pursuant to the procedures set forth
in this section. If 50 percent or more of the registered voters, or
six registered voters, whichever is more, residing within the
territory proposed to be annexed to the community facilities district
in the future, or if the owners of one-half or more of the area of
land proposed to be annexed in the future and not exempt from
the special tax, file written protests against establishment of the
community facilities district, and protests are not withdrawn so as
to reduce the protests to less than a majority, no further proceedings
to form the community facilities district shall be undertaken for a
period of one year from the date of decision of the legislative body
on the issues discussed at the hearing. If the majority protests of
the registered voters or of the landowners are only against the
furnishing of a specified type or types of facilities or services
within the district, or against levying a specified special tax, those
types of facilities or services or the specified special tax shall be
eliminated from the resolution of formation.

(5) The legislative body shall not record a notice of special tax
lien against any parcel or parcels in the community facilities district
until the owner or owners of the parcel or parcels have given their
unanimous approval of the parcel’s or parcels’ annexation to the
community facilities district, at which time the notice of special
tax lien shall be recorded against the parcel or parcels as set forth
in Section 53328.3.

(b) Notwithstanding the provisions of Section 53340, after
adoption of the resolution of formation for a community facilities
district described in subdivision (a), the legislative body may, by
ordinance, provide for the levy of the special taxes on parcels that
will annex to the community facilities district at the rate or rates
to be approved unanimously by the owner or owners of each parcel
or parcels to be annexed to the community facilities district and
for apportionment and collection of the special taxes in the manner
specified in the resolution of formation. No further ordinance shall
be required even though no parcels may then have annexed to the
community facilities district.

(c) The local agency may bring an action to determine the
validity of any special taxes levied pursuant to this chapter and
authorized pursuant to the procedures set forth in this section
pursuant to Chapter 9 (commencing with Section 860) of Title 10
of Part 2 of the Code of Civil Procedure. Notwithstanding Section
53359, if an action is brought by an interested person pursuant to
Section 863 of the Code of Civil Procedure to determine the
validity of any special taxes levied against a parcel pursuant to
this chapter and authorized pursuant to the procedures set forth in
this section, the action shall be brought pursuant to Chapter 9
(commencing with Section 860) of Title 10 of Part 2 of the Code
of Civil Procedure, but shall, notwithstanding the time limits
specified in Section 860 of the Code of Civil Procedure, be
commenced within 15 days after the date on which the notice of
special tax lien is recorded against the parcel. Any appeal from a
judgment in any action or proceeding described in this subdivision
shall be commenced within 30 days after entry of judgment.

(d) A community facilities district formed pursuant to this
section may only finance facilities pursuant to subdivision (l) of
Section 53313.5.

(e) The legislative body shall comply with the requirements
specified in Sections begin delete 5898.15 and end delete 5898.16 begin insert and 5898.17 end insert of the
Streets and Highways Code prior to the annexation of a parcel or
parcels to a community facilities district formed pursuant to this
section.

(f) In connection with formation of a community facilities
district and annexation of a parcel or parcels to the community
facilities district pursuant to this section, and the conduct of an
election on the proposition to authorize bonded indebtedness
pursuant to the alternate procedures set forth in Section 53355.5,
the local agency may, without additional hearings or procedures,
designate a parcel or parcels as an improvement area within the
community facilities district. After the designation of a parcel or
parcels as an improvement area, all proceedings for approval of
the appropriations limit, the rate and method of apportionment and
manner of collection of special tax and the authorization to incur
bonded indebtedness for the parcel or parcels shall apply only to
the improvement area.

(g) In connection with a community facilities district formed
under this section, as an alternate and independent procedure for
making the changes described in Section 53330.7, the changes
may be made with the unanimous approval of the owner or owners
of the parcel or parcels that will be affected by the change and
with the written consent of the local agency. No additional hearings
or procedures are required, and the unanimous approval shall be
deemed to constitute a unanimous vote in favor of the proposed
changes. If the proceeds of a special tax are being used to retire
any debt incurred pursuant to this chapter and the unanimous
approval relates to the reduction of the special tax rate, the
unanimous approval shall recite that the reduction or termination
of the special tax will not interfere with the timely retirement of
that debt.

begin delete

SEC. 2.  

Section 5898.15 of the Streets and Highways Code is
amended to read:

5898.15.  

(a) A public agency shall not permit a property owner
to participate in any program established pursuant to this chapter
if any of the following apply:

(1) The owner’s participation would result in the total amount
of the annual property taxes and assessments exceeding 5 percent
of the property’s fair market value, as determined at the time of
approval of the owner’s contractual assessment.

(2) The total mortgage-related debt and contractual
assessment-related debt on the underlying property would exceed
the fair market value of the property, as determined at the time of
the owner’s contractual assessment.

(3) The total mortgage-related debt on the property alone is
equal to 90 percent or greater of the property’s fair market value,
as determined at the time of approval of the owner’s contractual
assessment.

(4) The property owner is unable to meet all of the following
criteria:

(A) The property owner shall certify that the property taxes for
the property are current and that there is no more than one late
payment during the previous three years or the period of time
during which the owner has owned the property, whichever is less.

(B) The property owner shall certify that he or she is not
currently in default on any debt secured by the property and that
there is no more than one late payment during the 12-month period
preceding the time of the owner’s contractual assessment and that
late payment, if any, was submitted no later than 30 days after the
due date.

(C) If the property owner is a homeowner applicant, the property
owner has not had any active bankruptcies within the last seven
years. This criterion can be met if a property owner’s bankruptcy
was discharged between two and seven years before the application
date and the property owner has not had any mortgage or
nonmortgage payments past due for more than 60 days in the most
recent 24 months.

(D) The property owner does not have an involuntary lien
recorded against the property in excess of one thousand dollars
($1,000).

(b) If a property owner is a homeowner applicant, a public
agency shall not permit the property owner to participate in any
program established pursuant to this chapter unless both of the
following requirements are met:

(1) The property owner has been provided with a completed
financing estimate document set forth in Section 5898.16, or a
substantially equivalent document that displays the same
information in a substantially similar format.

(2) The property owner is given the right to cancel the
contractual assessment at any time prior to midnight on the third
business day after the date of the transaction to enter into the
agreement without penalty or obligation. The property owner is
deemed to have given notice of cancellation at the moment that
the property owner sends the notice by mail or email or at the
moment that the property owner otherwise delivers the notice, as
applicable.

(c) Failure to comply with the requirements of either subdivision
(a) or (b) renders the contractual obligations of a property owner
for a contractual assessment entered into pursuant to this chapter
void.

(d) Except as provided in subdivisions (a) and (b), nothing in
this chapter shall be construed to void or otherwise release a
property owner from the contractual obligations incurred by a
contractual assessment on a property.

end delete

begin insert

begin insert SEC. 3. end insert   

end insert

begin insert Section 5898.15 of the end insert begin insert Streets and Highways Code end insert begin insert is
amended to read: end insert

5898.15.  

(a) A public agency shall not permit a property owner
to participate in any program established pursuant to this chapter
if the owner’s participation would result in the total amount of any
annual property taxes and assessments exceeding 5 percent of the
property’s market value, as determined at the time of approval of
the owner’s contractual assessment.

(b) Nothing in this chapter shall be construed to void or
otherwise release a property owner from the contractual obligations
incurred by a contractual assessment on a property, particularly in
the event that the total amount of annual property taxes and
assessments exceeds 5 percent of a property’s market value after
the property owner has entered into a contractual assessment
pursuant to this chapter.

begin insert

(c) This section applies to a property owner who seeks to
participate in a program established pursuant to this chapter for
types of property not subject to the requirements of Sections
5898.16 and 5898.17.

end insert

begin delete SEC. 3. end delete

begin insert SEC. 4. end insert   

Section 5898.16 of the Streets and Highways Code is
amended and renumbered to read:

begin delete 5898.17. end delete

begin insert 5898.18. end insert   

All references to financing in this chapter shall be
deemed to also refer to refinancing, except that with respect to
refinancing, the legislative body shall conclude that providing the
refinancing will result in an increased adoption of the
improvements authorized to be financed by this chapter. This
section does not constitute a change in, but is declaratory and a
clarification of existing law.

begin insert

begin insert SEC. 5. end insert   

end insert

begin insert Section 5898.16 is added to the end insert begin insert Streets and Highways
Code end insert begin insert , to read: end insert

begin insert

begin insert 5898.16. end insert   

(a) A public agency shall not permit a property owner
to participate in any program established pursuant to this chapter
if any of the following apply:

(1) The property owner’s participation would result in the total
amount of the annual property taxes and assessments exceeding
5 percent of the property’s fair market value, as determined at the
time of approval of the property owner’s contractual assessment.

(2) The total mortgage-related debt and contractual
assessment-related debt on the underlying property would exceed
the fair market value of the property, as determined at the time of
the property owner’s contractual assessment.

(3) The total mortgage-related debt on the property alone is
equal to 90 percent or greater of the property’s fair market value,
as determined at the time of approval of the property owner’s
contractual assessment.

(4) The property owner is unable to meet all of the following
criteria:

(A) The property owner shall certify that the property taxes for
the property are current and that there is no more than one late
payment during the previous three years or the period of time
during which the property owner has owned the property,
whichever is less.

(B) The property owner shall certify that he or she is not
currently in default on any debt secured by the property and that
there is no more than one late payment during the 12-month period
preceding the time of the property owner’s contractual assessment
and that late payment, if any, was submitted no later than 30 days
after the due date.

(C) The property owner has not had any active bankruptcies
within the last seven years. This criterion can be met if a property
owner’s bankruptcy was discharged between two and seven years
before the application date and the property owner has not had
any mortgage or nonmortgage payments past due for more than
60 days in the most recent 24 months.

(D) The property owner does not have an involuntary lien
recorded against the property in excess of one thousand dollars
($1,000).

(b) A public agency shall not permit the property owner to
participate in any program established pursuant to this chapter
unless both of the following requirements are met:

(1) The property owner has been provided with a completed
financing estimate document set forth in Section 5898.17, or a
substantially equivalent document that displays the same
information in a substantially similar format.

(2) The property owner is given the right to cancel the
contractual assessment at any time prior to midnight on the third
business day after the date of the transaction to enter into the
agreement without penalty or obligation, consistent with the
following:

(A) The property owner shall receive two copies of the right to
cancel document set forth below or a substantially similar
document that displays the same information in a substantially
similar format.

 

begin insert Right to Cancel end insert

begin insert   end insert

begin insert Property Owner:  [Owner Full Name], [Phone], [Email]  end insert

begin insert Property Address:  [Property Address]  end insert

begin insert Your Right to Cancel: end insert

begin insert You are entering into a contractual assessment with [Provider] for financing that will result in a lien on the property at [Property Address]. You may cancel this transaction, without cost, within three business days from the date on which you signed the contractual assessment. end insert

begin insert If you cancel the transaction: end insert

begin insert ● You will not be charged a cancellation fee; and end insert

begin insert ● You will be refunded any money you have given, excluding application and processing fees as applicable. end insert

begin insert   end insert

begin insert To cancel this transaction, you may submit this form to [Provider] in writing at: end insert

begin insert Provider: __________ end insert

begin insert Attn: Right to Cancel Notification end insert

begin insert Address: __________ end insert

begin insert   end insert

begin insert Deadline to Cancel: end insert

begin insert   end insert

begin insert If you want to cancel this transaction, you must submit this form on or before [Insert date]. end insert

begin insert   end insert

begin insert If you cancel by mail or email, you must send the notice no later than midnight of the third business day following the date on which you signed the contractual assessment. If you send or deliver your written notice to cancel some other way, it must be delivered to the above address no later than the time indicated above. end insert

 

(B) The property owner is deemed to have given notice of
cancellation at the moment that the property owner sends the notice
by mail or email or at the moment that the property owner
otherwise delivers the notice, as applicable.

(c) Failure to comply with the requirements of subdivision (b)
renders the contractual obligations of a property owner for a
contractual assessment entered into pursuant to this chapter void.

(d) Except as provided in subdivision (b), nothing in this chapter
shall be construed to void or otherwise release a property owner
from the contractual obligations incurred by a contractual
assessment on a property.

(e) This section only applies to a property owner who seeks to
participate in a program established pursuant to this chapter for
a residential property with four or fewer units.

end insert

begin delete SEC. 4. end delete

begin insert SEC. 6. end insert   

Section begin delete 5898.16 end delete begin insert 5898.17 end insert is added to the Streets and
Highways Code, to read:

begin delete 5898.16. end delete

begin insert 5898.17. end insert   

begin insert (a) end insert begin insert   end insert The disclosure set forth begin delete below end delete begin insert below, or a
substantially equivalent document that displays the same
information in a substantially similar format, end insert shall be completed
and delivered to a begin delete homeowner as soon as practicable before, and
in no event later than when, a homeowner becomes obligated on
an agreement to end delete begin insert property owner at least three business days before
the property owner consummates end insert a voluntary contractual
assessment described in this chapter or a special tax described in
Section 53328.1 of the Government Code. begin insert The disclosure shall be
provided to the property owner as a printed copy, if requested by
the property owner. A sample of the disclosure set forth below
shall be maintained on a public Internet Web site available to
property owners. end insert

begin insert

(b) This section only applies to disclosure to a property owner
who seeks to participate in a program established pursuant to this
chapter for a residential property with four or fewer units.

end insert

 

Financing Estimate and Disclosure
Notice to begin delete Homeowners: end delete begin insert Property Owner end insert begin insert : You have the right to request that a hard copy of this document be provided to you before and after reviewing and signing. end insert The financing arrangement described below will result in an assessment against your property which will be collected along with your property taxes. The begin delete assessment end delete begin insert lien against your property end insert may jeopardize your ability to sell or refinance your property unless you repay the underlying debt. begin insert You may request a subordination of the lien in order to address complications in your ability to refinance or sell your property. end insert There may be cheaper alternative financing arrangements begin delete available from conventional lenders. end delete begin insert available. end insert You should read and review the terms carefully, and if necessary, consult with a tax professional or attorney.
begin insert Customer Service Toll-Free telephone number and email: end insert begin insert In the event you have a consumer complaint, questions about your financing obligations related to the contractual assessment or your contractual rights under the terms of this contract, you can contact either this toll-free telephone number or email address provided below and receive a response within 24 hours or one business day. end insert begin insert   end insert begin insert Toll-Free telephone number: ___________ end insert begin insert Customer service email address: ___________ end insert
Products and Costs
Product costs (including labor/installation)	$________
Description 1. 2. 3.
Financing Costs
Application fees and costs Prepaid Interest Other Costs Total Amount Financed	$________   $________   $________   $________
Annual Percentage Rate (APR)   Simple Interest Rate   Total Annual Principal, Interest, and Administrative Fees		______%     ______%  $______
Note: If your property taxes are paid through an impound account, your lender may apportion the amount and add it to your monthly payment.
See “Other important considerations,” below
Total Amount you will have paid over the life of the loan	$________
Other Costs Appraisal Fees Bond related costs Annual Administrative fees Estimated closing costs Credit Reporting Fees Recording Fees	$________  $________  $________    $________  $________  $________
Total Financing Costs and Closing Costs	$________
Estimated Cash (out of pocket) to close	$________
Other Terms Prepayment fee Assumable by new owner	◻ No ◻ No	◻ Yes ______ ◻ Yes ______
Additional Information About begin delete This end delete begin insert These end insert Financing Comparisons [Use this information to compare to other financing options]
In 10 years	$________ Principal you will have paid off.  $________ Amount of interest you have paid.  $________ Amount of financing and other costs         you will have paid.  $________ Total you will have paid.
Annual Percentage Rate	______%
Total Interest Paid (as a percentage of all the payments you have made)		______%
begin insert Estimated market value of home without the improvement:__________ end insert begin insert Estimated market value of home with the improvement:__________ end insert
begin insert The estimated market value of your home is derived using one of the following: 1) an automated valuation model, which is a computerized property valuation system that is used to derive a real property value; 2) a broker’s price opinion conducted by a real estate broker licensed pursuant to Part 1 (commencing with Section 10000) of Division 4 of the Business and Professions Code; or, 3) an appraisal conducted by a state licensed real estate appraiser licensed pursuant to Part 3 (commencing with Section 11300) of Division 4 of the Business and Professions Code. end insert
Other Important Considerations
Assumption by New Buyer		◻ Yes - Allowed on original terms ◻ No - Not Allowed on original terms
I understand that if I refinance my home, my mortgage company may require me to pay off the full remaining balance of this begin delete obligation. end delete begin insert obligation, unless I request that the lien be subordinated to an existing mortgage. end insert If I sell my home, the buyer or their mortgage company may require me to pay off the full remaining balance of this obligation.
		_______________    [Borrower initials]
Monthly Mortgage Payments
Your payments will be added to your property tax bill. Whether you pay your property taxes through your mortgage payment, using an impound account, or if you pay them directly to the tax collector, you will need to save an estimated $_______ for your first tax installment. begin delete After your first payment, if end delete begin insert If end insert you pay your taxes through an impound begin delete account, end delete begin insert account end insert begin insert you should notify your lender, so that end insert your monthly mortgage payment begin delete should end delete begin insert can end insert be adjusted by your lender to cover your increased property tax bill.
		_______________    [Borrower initials]
Tax Benefits: Consult your tax advisor regarding tax credits, credits and deductions, tax deductibility, and other tax benefits available. Making an appropriate application for the benefit is your responsibility.
		_______________    [Borrower initials]
Three Day Right to Cancel begin insert end insert You, the begin delete homeowner, end delete begin insert property owner, end insert may cancel the contract at any time prior to midnight on the third business day after the date of the transaction to enter into the agreement without any penalty or obligation. To cancel this transaction, you may mail or deliver a signed and dated copy of the contract with notice of cancellation to:   ___________ [name of business] at ___________ [address] You may also cancel the contract by sending notification of cancellation by email to the following email address: _________________[email address of business].    _______________    [Borrower initials]
begin insert Senior Lien Resulting from This Transaction end insert begin insert This contractual assessment will result in a senior lien on your property. A lien occurs when an assessment, obligation, or claim (debt) is secured by the value of your property, such as a mortgage. Once the debt associated with the lien is paid in full, the lien can be released. If you fail to pay the debt, a lien permits the foreclosure (sale) of your property in order to pay the amount owed. If the property is sold or refinanced, the debt must generally be paid from the proceeds. If you have more than one lien on your property, the priority of liens will determine which debts must be paid first from the sale proceeds. The lien attached to your property in connection with assessment has “senior” lien status, which means that it has priority and must be satisfied before any other private liens, including a mortgage. The existence of this senior lien may jeopardize your ability to refinance or sell your property unless the debt is paid in full or the holder of the lien agrees to subordinate (allow another lien to take a higher priority). The foreclosure of a property subject to a senior lien will terminate all other liens on the property with a lower priority. A senior lien may be in conflict with the terms of your mortgage contract with your lender. It is your responsibility to ensure that you are authorized to enter into this transaction. end insert
begin insert    _______________ end insert begin insert    [Borrower initials] end insert
Confirmation of Receipt This confirms the receipt of the information in this form. You do not have to accept this financing just because you acknowledge that you have received or signed this form, and it is NOT a contract.
__________________________ [Property Owner Signature - Date]		__________________________ [Property Owner Signature - Date]