How Could It Affect My Closing?
What Does “HERO” Stand For?
HERO is an acronym for Home Energy Renovation Opportunity. HERO partners with local governments to make energy efficient, water efficient and renewable energy products more affordable for homeowners.
Program Eligibility
Program eligibility requirements may vary in each city or county. In accordance with California law, the Program maintains certain minimum standards for property valuation and underwriting. HERO Programs take into consideration the property owner’s debts, expenses, and verified income. All financed properties must be located in a city or county that is a participating HERO community.
To see if a city or county is a participating HERO community, visit www.renovateamerica.com.
Some of the basic requirements can include, but are not limited to, the following:
- Financing recipients are legal owners of the underlying property.
- Financing recipients are current on mortgage and property tax payments.
- Financing recipients are not in default or in bankruptcy proceedings.
- The property is within the geographical boundaries of the participating city or county.
- Products to be installed must be on the eligible products list or be approved in advance by the program.
- Eligible products must be permanently fixed, new products
- Products must meet minimum efficiency and/or other requirements.
Frequently Asked Questions
How is HERO Financing paid through property taxes?
The program will record assessment lien documents with the County where the property is located. Once a year, the program submits a tax roll identifying the assessment lien and any applicable administrative fees. The assessment payment will appear as a separate line item on the property tax bill for the term of the financing. Property owners will repay principal and interest over 5, 10, 15, 20, or 25 years, depending on the approved term. If a property owner uses an impound account to pay property taxes, they can contact the lender to increase monthly impound payments by an amount equal to the total annual assessment divided by twelve (12) months.
Do I need to obtain a building permit?
Property owners are responsible for obtaining any required building permits, including final inspection sign off by the appropriate city or county building department. Property owners are also responsible for ensuring that the Eligible Products have met all other applicable federal, state and local laws and regulations. Property owners should speak with their contractor(s) to determine if the Eligible Products will require a permit and/or inspection and the requirements that must be met.
Can a property that has an outstanding HERO assessment be sold or refinanced?
Yes. Under California law, clear disclosures must be provided to interested buyers that a HERO assessment exists. California law states that property taxes and assessments usually stay with the property when sold or refinanced. Under the HERO Program, the Agent and the County where the property is located will allow the assessment to stay with the property. However, lenders may allow the assessment to remain with the property or require the unpaid balance be paid at the close of escrow. Property owners/buyers should consult with their lender to determine the lender’s specific requirements.
How does an interested buyer find out if a property has a HERO assessment?
Under California law, clear disclosures must be provided, either by the real estate agent or the seller, to interested buyers that a HERO assessment exists. When escrow is opened, HERO assessment will appear on the preliminary title report that lists all property taxes on the property.
Will prepayment penalties be charged if a HERO assessment is paid at the close of escrow?
There are no prepayment penalties associated with the HERO Program. However, the property owner will be required to pay recording fees charged by the County in connection with a prepayment or discharge of the assessment.
Do buyers purchasing a home with a HERO assessment need to qualify or reapply for HERO financing?
The potential buyer of a home with a HERO assessment does not need to qualify or reapply
for HERO. The HERO tax assessment is transferred automatically with the sale of the property. However, the buyer’s lender may require the unpaid balance of the assessment be paid at the close of escrow.
For more information, HERO Property Advisors are available at 1-855-CAL-HERO, or go to www.heroprogram.com.
