Proposed property charge would need mortgage-holder sign-off before it's levied
A new white paper is urging British Columbia to adopt a property-secured financing tool for building retrofits, a model that would require mortgage lenders to consent before a senior-ranking charge is placed on commercial and multi-unit residential properties.
The paper was authored by the Zero Emissions Innovation Centre in partnership with AdvantageBC and the University of British Columbia's Centre for Climate and Business Solutions. It recommends a made-in-B.C. Property-Secured Improvement Financing (PSIF) program modelled on Commercial Property Assessed Clean Energy (C-PACE) programs that have operated in the US for nearly two decades.
Under the model, building owners finance energy efficiency upgrades through loans secured against the property. The financing is repaid over two or three decades through a property-based charge that stays with the building if it is sold.
According to the report, the approach lowers annual debt payments by about 10% to 20% compared with conventional commercial mortgages. Total interest costs may be higher over the life of the loan, but lower annual payments improve cash flow and make more retrofit projects financially viable.
The authors say the target market is purpose-built rental, non-profit housing, and B- and C-class commercial properties, where margins are thinnest and retrofit need is greatest. The paper notes conventional loan terms often run only five to 10 years, against PSIF terms of two to three decades.
Lien priority draws lender review
The mechanism carries direct implications for mortgage holders. Under PACE-style programs, the repayment charge is collected like a property tax assessment, and past-due amounts can rank ahead of an existing mortgage in a foreclosure.
Because of that priority, PACE programs generally require mortgage holders to consent before a charge is levied against a property. According to law firm Mintz, the senior lender's written consent — memorialized in a lender acknowledgment or intercreditor agreement — is a prerequisite to closing.
Industry material aimed at lenders sets out why holders in other markets have signed on. The charge does not accelerate, meaning that on a missed payment only the past-due instalment ranks ahead of the mortgage, not the full balance. In the event of a default in the payment of an annual or semi-annual C-PACE assessment obligation, only the past due portion of the C-PACE financing is senior to a mortgage lender's claim. Program guidance also notes that senior lenders may escrow the assessment alongside taxes and insurance, and that foreclosure rights are preserved.
Uptake among lenders has grown in the United States. One Texas program administrator reports that more than 350 senior lenders have consented to C-PACE. Cumulative C-PACE originations in the U.S. reached about $13 billion in 2025, across 40 states with active programs, Mintz noted.
Legislation the missing step
The program cannot proceed without provincial action. Enabling PSIF would require B.C. to amend the Community Charter and Vancouver Charter to authorize the charge, according to the Pembina Institute, which has advocated for such legislation.
B.C. has examined the tool before. In fall 2020, the province committed $2 million to a PACE roadmap and pilot through its Economic Recovery Plan. In January 2021, the consultancy Dunsky was awarded the mandate to develop a PACE roadmap for the province's Ministry of Environment and Climate Change Strategy.
The proposed PSIF program would rely primarily on private capital, reducing pressure on government balance sheets. A centralized, non-profit administrator would oversee the program, while municipalities could opt in and retain responsibility for registering property liens.
The paper recommends broad eligibility for retrofit measures, prudent loan-to-value limits, standardized documentation, and strong consumer protections. It argues that concerns about municipal liability and loan defaults can be addressed through program design, noting that experiences in other jurisdictions have shown that municipalities are not financially responsible for defaulted commercial PACE loans.
