Civil Code — Part 12 | CIV — United States — California law | Esheria

Civil Code

Part 12 of 20 · provisions 2,201–2,400

This section names the act the Civil Code of the State of California and says it is divided into four parts.

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Occupancy can create title, but that title is subject to listed superior claims and does not by itself let the occupant bring or keep a quiet title action unless prescription has matured the title. Occupancy for the time required by the Code of Civil Procedure can create title by prescription, except for property dedicated to public use or owned by the state or a public entity. A use of land does not become a prescriptive easement if the owner posts notice signs at each entrance or every 200 feet along the boundary. Public use of private property does not create a permanent vested right unless there is an express written irrevocable offer of dedication that is accepted as required; special rules apply to certain coastal property. A person who in good faith and by mistake affixes improvements to another’s land may remove them, but must pay damages as required.

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Provisions of Civil Code

Showing 200 of 3,922

  1. 2932.2.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. )

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    For certain residential properties, the mortgagee, beneficiary, or authorized agent must give the borrower a written disclosure before signing.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. ) ## 2932.2. With respect to residential real property containing no more than four dwelling units, a mortgagee, beneficiary, or authorized agent shall provide to the mortgagor or trustor, before the mortgagor or trustor signs the mortgage or deed of trust, a written disclosure that a third party, such as a family member, HUD-certified housing counselor, or attorney, may record a request to receive copies of any notice of default and notice of sale. A request for notice under this section shall comply with Section 2924b. (Added by Stats. 2024, Ch. 311, Sec. 5. (AB 2424) Effective January 1, 2025.)
  2. 2932.5.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. )

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    If a mortgage-related instrument gives a power to sell real property, that power follows the secured debt and can be exercised by an assignee when the assignment is properly acknowledged and recorded.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. ) ## 2932.5. Where a power to sell real property is given to a mortgagee, or other encumbrancer, in an instrument intended to secure the payment of money, the power is part of the security and vests in any person who by assignment becomes entitled to payment of the money secured by the instrument. The power of sale may be exercised by the assignee if the assignment is duly acknowledged and recorded. (Added by Stats. 1986, Ch. 820, Sec. 11. Operative July 1, 1987, by Sec. 43 of Ch. 820.)
  3. 2932.6.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. )

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    A financial institution may repair property it acquired through foreclosure on a mortgage or deed of trust.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. ) ## 2932.6. (a) Notwithstanding any other provision of law, a financial institution may undertake to repair any property acquired through foreclosure under a mortgage or deed of trust. (b) As used in this section, the term “financial institution” includes, but is not limited to, banks, savings associations, credit unions, and industrial loan companies. (c) The rights granted to a financial institution by this section are in addition to, and not in derogation of, the rights of a financial institution which otherwise exist. (Amended by Stats. 1988, Ch. 125, Sec. 1.)
  4. 2933.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. )

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    A power of attorney used to execute a mortgage must meet writing, signature/attestation, certification, and recording requirements.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. ) ## 2933. A power of attorney to execute a mortgage must be in writing, subscribed, acknowledged, or proved, certified, and recorded in like manner as powers of attorney for grants of real property. (Enacted 1872.)
  5. 2934.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. )

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    Assignments of mortgages or beneficial interests under deeds of trust may be recorded, and recorded instruments can serve as constructive notice to everyone once filed.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. ) ## 2934. Any assignment of a mortgage and any assignment of the beneficial interest under a deed of trust may be recorded, and from the time the same is filed for record operates as constructive notice of the contents thereof to all persons; and any instrument by which any mortgage or deed of trust of, lien upon or interest in real property, (or by which any mortgage of, lien upon or interest in personal property a document evidencing or creating which is required or permitted by law to be recorded), is subordinated or waived as to priority may be recorded, and from the time the same is filed for record operates as constructive notice of the contents thereof, to all persons. (Amended by Stats. 1935, Ch. 818.)
  6. 2934a

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. )

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    This section lets a trustee under a deed of trust be replaced by recording a signed substitution, and it sets notice, recording, resignation, and sale-validity rules.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. ) ## 2934a. (a) (1) The trustee under a trust deed upon real property or an estate for years given to secure an obligation to pay money and conferring no other duties upon the trustee than those which are incidental to the exercise of the power of sale therein conferred, may be substituted by the recording in the county in which the property is located of a substitution executed and acknowledged by either of the following: (A) All of the beneficiaries under the trust deed, or their successors in interest, and the substitution shall be effective notwithstanding any contrary provision in any trust deed executed on or after January 1, 1968. (B) The holders of more than 50 percent of the record beneficial interest of a series of notes secured by the same real property or of undivided interests in a note secured by real property equivalent to a series transaction, exclusive of any notes or interests of a licensed real estate broker that is the issuer or servicer of the notes or interests or of any affiliate of that licensed real estate broker. (2) A substitution executed pursuant to subparagraph (B) of paragraph (1) is not effective unless all the parties signing the substitution sign, under penalty of perjury, a separate written document stating the following: (A) The substitution has been signed pursuant to subparagraph (B) of paragraph (1). (B) None of the undersigned is a licensed real estate broker or an affiliate of the broker that is the issuer or servicer of the obligation secured by the deed of trust. (C) The undersigned together hold more than 50 percent of the record beneficial interest of a series of notes secured by the same real property or of undivided interests in a note secured by real property equivalent to a series transaction. (D) Notice of the substitution was sent by certified mail, postage prepaid, with return receipt requested to each holder of an interest in the obligation secured by the deed of trust who has not joined in the execution of the substitution or the separate document. The separate document shall be attached to the substitution and recorded in the office of the county recorder of each county in which the real property described in the deed of trust is located. Once the document is recorded, it shall constitute conclusive evidence of compliance with the requirements of this paragraph in favor of substituted trustees acting pursuant to this section, subsequent assignees of the obligation secured by the deed of trust and subsequent bona fide purchasers or encumbrancers for value of the real property described therein. (3) For purposes of this section, “affiliate of the licensed real estate broker” includes any person as defined in Section 25013 of the Corporations Code that is controlled by, or is under common control with, or who controls, a licensed real estate broker. “Control” means the possession, direct or indirect, of the power to direct or cause the direction of management and policies. (4) The substitution shall contain the date of recordation of the trust deed, the name of the trustor, the book and page or instrument number where the trust deed is recorded, and the name of the new trustee. From the time the substitution is filed for record, the new trustee shall succeed to all the powers, duties, authority, and title granted and delegated to the trustee named in the deed of trust. A substitution may be accomplished, with respect to multiple deeds of trust that are recorded in the same county in which the substitution is being recorded and that all have the same trustee and beneficiary or beneficiaries, by recording a single document, complying with the requirements of this section, substituting trustees for all those deeds of trust. (b) If the substitution is executed, but not recorded, prior to or concurrently with the recording of the notice of default, the beneficiary or beneficiaries or their authorized agents shall mail notice of the substitution before or concurrently with the recording thereof, in the manner provided in Section 2924b, to all persons to whom a copy of the notice of default would be required to be mailed by Section 2924b. An affidavit shall be attached to the substitution that notice has been given to those persons, as required by this subdivision. (c) If the substitution is effected after a notice of default has been recorded but prior to the recording of the notice of sale, the beneficiary or beneficiaries or their authorized agents shall mail a copy of the substitution, before, or concurrently with, the recording thereof, as provided in Section 2924b, to the trustee then of record and to all persons to whom a copy of the notice of default would be required to be mailed by Section 2924b. An affidavit shall be attached to the substitution that notice has been given to those persons, as required by this subdivision. (d) (1) A trustee named in a recorded substitution of trustee shall be deemed to be authorized to act as the trustee under the mortgage or deed of trust for all purposes from the date the substitution is executed by the mortgagee, beneficiaries, or by their authorized agents. A trustee under a recorded substitution is not required to accept the substitution, and may either resign or refuse to accept appointment as trustee pursuant to this subdivision. (2) (A) A trustee named in a recorded substitution of trustee may resign or refuse to accept appointment as trustee at that trustee’s own election without the consent of the beneficiary or beneficiaries or their authorized agents. The trustee shall give prompt written notice of that resignation or refusal to accept appointment as trustee to the beneficiary or beneficiaries or their authorized agents by doing both of the following: (i) Depositing or causing to be deposited in the United States mail an envelope containing a notice of resignation of trustee, sent by registered or certified mail with postage prepaid, to all beneficiaries or their authorized agents at the address shown on the last-recorded substitution of trustee for that real property or estate for years in that county. (ii) Recording the notice of resignation of trustee, mailed in the manner described in clause (i), in each county in which the substitution of trustee under which the trustee was appointed is recorded. An affidavit stating that notice has been mailed to all beneficiaries and their authorized agents in the manner provided in clause (i) shall be attached to the recorded notice of resignation of trustee. (B) The resignation of the trustee or refusal to accept appointment as trustee pursuant to this subdivision shall become effective upon the recording of the notice of resignation of trustee in each county in which the substitution of trustee under which the trustee was appointed is recorded. (C) The resignation of the trustee or refusal to accept appointment as trustee pursuant to this subdivision does not affect the validity of the mortgage or deed of trust, except that no action required to be performed by the trustee under this chapter or under the mortgage or deed of trust may be taken until a substituted trustee is appointed pursuant to this section. If a trustee is not designated in the deed of trust, or upon the resignation, incapacity, disability, absence or death of the trustee, or the election of the beneficiary or beneficiaries to replace the trustee, the beneficiary or beneficiaries or their authorized agents shall appoint a trustee or a successor trustee. (D) A notice of resignation of trustee mailed and recorded pursuant to this paragraph shall set forth the intention of the trustee to resign or refuse appointment as trustee and the recording date and instrument number of the recorded substitution of trustee under which the trustee was appointed. (E) A notice of resignation of trustee mailed and recorded pursuant to this paragraph shall contain an address at which the trustee and any successor in interest will be available for service of process for at least five years after the date that the notice of resignation is recorded. (F) For at least five years after a notice of resignation of trustee is mailed and recorded pursuant to this paragraph, the trustee and any successor in interest to that trustee shall retain and preserve every writing, as that term is defined in Section 250 of the Evidence Code, relating to the trust deed or estate for years under which the trustee was appointed. (3) For purposes of this section, paragraph (2) sets forth the exclusive procedure for a trustee to either resign or refuse to accept appointment as trustee. (4) Once recorded, the substitution shall constitute conclusive evidence of the authority of the substituted trustee or their authorized agents to act pursuant to this section, unless prompt written notice of resignation of trustee has been given in accordance with the procedures set forth in paragraph (2). (e) Notwithstanding any provision of this section or any provision in any deed of trust, unless a new notice of sale containing the name, street address, and telephone number of the substituted trustee is given pursuant to Section 2924f after execution of the substitution, any sale conducted by the substituted trustee shall be void. (Amended by Stats. 2019, Ch. 474, Sec. 1. (SB 306) Effective January 1, 2020.)
  7. 2934b

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. )

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    Probate Code sections 15643 and 18102 apply to trustees under deeds of trust given to secure obligations.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. ) ## 2934b. Sections 15643 and 18102 of the Probate Code apply to trustees under deeds of trust given to secure obligations. (Added by Stats. 1986, Ch. 820, Sec. 12. Operative July 1, 1987, by Sec. 43 of Ch. 820.)
  8. 2935.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. )

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    Recording an assignment of a mortgage or deed of trust is not, by itself, notice to the debtor, heirs, or personal representatives.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. ) ## 2935. When a mortgage or deed of trust is executed as security for money due or to become due, on a promissory note, bond, or other instrument, designated in the mortgage or deed of trust, the record of the assignment of the mortgage or of the assignment of the beneficial interest under the deed of trust, is not of itself notice to the debtor, his heirs, or personal representatives, so as to invalidate any payment made by them, or any of them, to the person holding such note, bond, or other instrument. (Amended by Stats. 1931, Ch. 80.)
  9. 2936.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. )

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    If a debt secured by a mortgage is assigned, the mortgage security goes with the debt.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. ) ## 2936. The assignment of a debt secured by mortgage carries with it the security. (Enacted 1872.)
  10. 2937.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. )

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    When servicing of a mortgage-related debt is transferred, the transferor and new servicer must give written notice to the borrower or subsequent obligor before payments are owed to the new servicer.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. ) ## 2937. (a) The Legislature hereby finds and declares that borrowers or subsequent obligors have the right to know when a person holding a promissory note, bond, or other instrument transfers servicing of the indebtedness secured by a mortgage or deed of trust on real property containing one to four residential units located in this state. The Legislature also finds that notification to the borrower or subsequent obligor of the transfer may protect the borrower or subsequent obligor from fraudulent business practices and may ensure timely payments. It is the intent of the Legislature in enacting this section to mandate that a borrower or subsequent obligor be given written notice when a person transfers the servicing of the indebtedness on notes, bonds, or other instruments secured by a mortgage or deed of trust on real property containing one to four residential units and located in this state. (b) Any person transferring the servicing of indebtedness as provided in subdivision (a) to a different servicing agent and any person assuming from another responsibility for servicing the instrument evidencing indebtedness, shall give written notice to the borrower or subsequent obligor before the borrower or subsequent obligor becomes obligated to make payments to a new servicing agent. (c) In the event a notice of default has been recorded or a judicial foreclosure proceeding has been commenced, the person transferring the servicing of the indebtedness and the person assuming from another the duty of servicing the indebtedness shall give written notice to the trustee or attorney named in the notice of default or judicial foreclosure of the transfer. A notice of default, notice of sale, or judicial foreclosure shall not be invalidated solely because the servicing agent is changed during the foreclosure process. (d) Any person transferring the servicing of indebtedness as provided in subdivision (a) to a different servicing agent shall provide to the new servicing agent all existing insurance policy information that the person is responsible for maintaining, including, but not limited to, flood and hazard insurance policy information. (e) The notices required by subdivision (b) shall be sent by first-class mail, postage prepaid, to the borrower’s or subsequent obligor’s address designated for loan payment billings, or if escrow is pending, as provided in the escrow, and shall contain each of the following: (1) The name and address of the person to which the transfer of the servicing of the indebtedness is made. (2) The date the transfer was or will be completed. (3) The address where all payments pursuant to the transfer are to be made. (f) Any person assuming from another responsibility for servicing the instrument evidencing indebtedness shall include in the notice required by subdivision (b) a statement of the due date of the next payment. (g) The borrower or subsequent obligor shall not be liable to the holder of the note, bond, or other instrument or to any servicing agent for payments made to the previous servicing agent or for late charges if these payments were made prior to the borrower or subsequent obligor receiving written notice of the transfer as provided by subdivision (e) and the payments were otherwise on time. (h) For purposes of this section, the term servicing agent shall not include a trustee exercising a power of sale pursuant to a deed of trust. (Amended by Stats. 2002, Ch. 70, Sec. 1. Effective January 1, 2003.)
  11. 2937.7.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. )

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    Serving process on a trustee is not treated as service on the trustor or beneficiary, and it does not create a duty for the trustee to notify them.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. ) ## 2937.7. In any action affecting the interest of any trustor or beneficiary under a deed of trust or mortgage, service of process to the trustee does not constitute service to the trustor or beneficiary and does not impose any obligation on the trustee to notify the trustor or beneficiary of the action. (Added by Stats. 1988, Ch. 530, Sec. 1.)
  12. 2938.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. )

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    A written assignment of certain real-property income rights can create a present security interest, may be recorded, and after default the assignee can enforce it and require tenants to pay the assignee instead of the landlord.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. ) ## 2938. (a) A written assignment of an interest in leases, rents, issues, or profits of real property made in connection with an obligation secured by real property, irrespective of whether the assignment is denoted as absolute, absolute conditioned upon default, additional security for an obligation, or otherwise, shall, upon execution and delivery by the assignor, be effective to create a present security interest in existing and future leases, rents, issues, or profits of that real property. As used in this section, “leases, rents, issues, and profits of real property” includes the cash proceeds thereof. “Cash proceeds” means cash, checks, deposit accounts, and the like. (b) An assignment of an interest in leases, rents, issues, or profits of real property may be recorded in the records of the county recorder in the county in which the underlying real property is located in the same manner as any other conveyance of an interest in real property, whether the assignment is in a separate document or part of a mortgage or deed of trust, and when so duly recorded in accordance with the methods, procedures, and requirements for recordation of conveyances of other interests in real property, (1) the assignment shall be deemed to give constructive notice of the content of the assignment with the same force and effect as any other duly recorded conveyance of an interest in real property and (2) the interest granted by the assignment shall be deemed fully perfected as of the time of recordation with the same force and effect as any other duly recorded conveyance of an interest in real property, notwithstanding a provision of the assignment or a provision of law that would otherwise preclude or defer enforcement of the rights granted the assignee under the assignment until the occurrence of a subsequent event, including, but not limited to, a subsequent default of the assignor, or the assignee’s obtaining possession of the real property or the appointment of a receiver. (c) Upon default of the assignor under the obligation secured by the assignment of leases, rents, issues, and profits, the assignee shall be entitled to enforce the assignment in accordance with this section. On and after the date the assignee takes one or more of the enforcement steps described in this subdivision, the assignee shall be entitled to collect and receive all rents, issues, and profits that have accrued but remain unpaid and uncollected by the assignor or its agent or for the assignor’s benefit on that date, and all rents, issues, and profits that accrue on or after the date. The assignment shall be enforced by one or more of the following: (1) The appointment of a receiver. (2) Obtaining possession of the rents, issues, or profits. (3) Delivery to any one or more of the tenants of a written demand for turnover of rents, issues, and profits in the form specified in subdivision (k), a copy of which demand shall also be delivered to the assignor; and a copy of which shall be mailed to all other assignees of record of the leases, rents, issues, and profits of the real property at the address for notices provided in the assignment or, if none, to the address to which the recorded assignment was to be mailed after recording. (4) Delivery to the assignor of a written demand for the rents, issues, or profits, a copy of which shall be mailed to all other assignees of record of the leases, rents, issues, and profits of the real property at the address for notices provided in the assignment or, if none, to the address to which the recorded assignment was to be mailed after recording. Moneys received by the assignee pursuant to this subdivision, net of amounts paid pursuant to subdivision (g), if any, shall be applied by the assignee to the debt or otherwise in accordance with the assignment or the promissory note, deed of trust, or other instrument evidencing the obligation, provided, however, that neither the application nor the failure to so apply the rents, issues, or profits shall result in a loss of any lien or security interest that the assignee may have in the underlying real property or any other collateral, render the obligation unenforceable, constitute a violation of Section 726 of the Code of Civil Procedure, or otherwise limit a right available to the assignee with respect to its security. (d) If an assignee elects to take the action provided for under paragraph (3) of subdivision (c), the demand provided for therein shall be signed under penalty of perjury by the assignee or an authorized agent of the assignee and shall be effective as against the tenant when actually received by the tenant at the address for notices provided under the lease or other contractual agreement under which the tenant occupies the property or, if no address for notices is so provided, at the property. Upon receipt of this demand, the tenant shall be obligated to pay to the assignee all rents, issues, and profits that are past due and payable on the date of receipt of the demand, and all rents, issues, and profits coming due under the lease following the date of receipt of the demand, unless either of the following occurs: (1) The tenant has previously received a demand that is valid on its face from another assignee of the leases, issues, rents, and profits sent by the other assignee in accordance with this subdivision and subdivision (c). (2) The tenant, in good faith and in a manner that is not inconsistent with the lease, has previously paid, or within 10 days following receipt of the demand notice pays, the rent to the assignor. Payment of rent to an assignee following a demand under an assignment of leases, rents, issues, and profits shall satisfy the tenant’s obligation to pay the amounts under the lease. If a tenant pays rent to the assignor after receipt of a demand other than under the circumstances described in this subdivision, the tenant shall not be discharged of the obligation to pay rent to the assignee, unless the tenant occupies the property for residential purposes. The obligation of a tenant to pay rent pursuant to this subdivision and subdivision (c) shall continue until receipt by the tenant of a written notice from a court directing the tenant to pay the rent in a different manner or receipt by the tenant of a written notice from the assignee from whom the demand was received canceling the demand, whichever occurs first. This subdivision does not affect the entitlement to rents, issues, or profits as between assignees as set forth in subdivision (h). (e) An enforcement action of the type authorized by subdivision (c), and a collection, distribution, or application of rents, issues, or profits by the assignee following an enforcement action of the type authorized by subdivision (c), shall not do any of the following: (1) Make the assignee a mortgagee in possession of the property, except if the assignee obtains actual possession of the real property, or an agent of the assignor. (2) Constitute an action, render the obligation unenforceable, violate Section 726 of the Code of Civil Procedure, or, other than with respect to marshaling requirements, otherwise limit any rights available to the assignee with respect to its security. (3) Be deemed to create a bar to a deficiency judgment pursuant to a provision of law governing or relating to deficiency judgments following the enforcement of any encumbrance, lien, or security interest, notwithstanding that the action, collection, distribution, or application may reduce the indebtedness secured by the assignment or by a deed of trust or other security instrument. The application of rents, issues, or profits to the secured obligation shall satisfy the secured obligation to the extent of those rents, issues, or profits, and, notwithstanding any provisions of the assignment or other loan documents to the contrary, shall be credited against any amounts necessary to cure any monetary default for purposes of reinstatement under Section 2924c. (f) If cash proceeds of rents, issues, or profits to which the assignee is entitled following enforcement as set forth in subdivision (c) are received by the assignor or its agent for collection or by another person who has collected such rents, issues, or profits for the assignor’s benefit, or for the benefit of a subsequent assignee under the circumstances described in subdivision (h), following the taking by the assignee of either of the enforcement actions authorized in paragraph (3) or (4) of subdivision (c), and the assignee has not authorized the assignor’s disposition of the cash proceeds in a writing signed by the assignee, the rights to the cash proceeds and to the recovery of the cash proceeds shall be determined by the following: (1) The assignee shall be entitled to an immediate turnover of the cash proceeds received by the assignor or its agent for collection or any other person who has collected the rents, issues, or profits for the assignor’s benefit, or for the benefit of a subsequent assignee under the circumstances described in subdivision (h), and the assignor or other described party in possession of those cash proceeds shall turn over the full amount of cash proceeds to the assignee, less any amount representing payment of expenses authorized by the assignee in writing. The assignee shall have a right to bring an action for recovery of the cash proceeds, and to recover the cash proceeds, without the necessity of bringing an action to foreclose a security interest that it may have in the real property. This action shall not violate Section 726 of the Code of Civil Procedure or otherwise limit a right available to the assignee with respect to its security. (2) As between an assignee with an interest in cash proceeds perfected in the manner set forth in subdivision (b) and enforced in accordance with paragraph (3) or (4) of subdivision (c) and another person claiming an interest in the cash proceeds, other than the assignor or its agent for collection or one collecting rents, issues, and profits for the benefit of the assignor, and subject to subdivision (h), the assignee shall have a continuously perfected security interest in the cash proceeds to the extent that the cash proceeds are identifiable. For purposes hereof, cash proceeds are identifiable if they are either (A) segregated or (B) if commingled with other funds of the assignor or its agent or one acting on its behalf, can be traced using the lowest intermediate balance principle, unless the assignor or other party claiming an interest in proceeds shows that some other method of tracing would better serve the interests of justice and equity under the circumstances of the case. The provisions of this paragraph are subject to any generally applicable law with respect to payments made in the operation of the assignor’s business. (g) (1) If the assignee enforces the assignment under subdivision (c) by means other than the appointment of a receiver and receives rents, issues, or profits pursuant to this enforcement, the assignor or another assignee of the affected real property may make written demand upon the assignee to pay the reasonable costs of protecting and preserving the property, including payment of taxes and insurance and compliance with building and housing codes, if any. (2) On and after the date of receipt of the demand, the assignee shall pay for the reasonable costs of protecting and preserving the real property to the extent of any rents, issues, or profits actually received by the assignee, provided, however, that no such acts by the assignee shall cause the assignee to become a mortgagee in possession and the assignee’s duties under this subdivision, upon receipt of a demand from the assignor or any other assignee of the leases, rents, issues, and profits pursuant to paragraph (1), shall not be construed to require the assignee to operate or manage the property, which obligation shall remain that of the assignor. (3) The obligation of the assignee hereunder shall continue until the earlier of (A) the date on which the assignee obtains the appointment of a receiver for the real property pursuant to application to a court of competent jurisdiction, or (B) the date on which the assignee ceases to enforce the assignment. (4) This subdivision does not supersede or diminish the right of the assignee to the appointment of a receiver. (h) The lien priorities, rights, and interests among creditors concerning rents, issues, or profits collected before the enforcement by the assignee shall be governed by subdivisions (a) and (b). Without limiting the generality of the foregoing, if an assignee who has recorded its interest in leases, rents, issues, and profits prior to the recordation of that interest by a subsequent assignee seeks to enforce its interest in those rents, issues, or profits in accordance with this section after any enforcement action has been taken by a subsequent assignee, the prior assignee shall be entitled only to the rents, issues, and profits that are accrued and unpaid as of the date of its enforcement action and unpaid rents, issues, and profits accruing thereafter. The prior assignee shall have no right to rents, issues, or profits paid prior to the date of the enforcement action, whether in the hands of the assignor or any subsequent assignee. Upon receipt of notice that the prior assignee has enforced its interest in the rents, issues, and profits, the subsequent assignee shall immediately send a notice to any tenant to whom it has given notice under subdivision (c). The notice shall inform the tenant that the subsequent assignee cancels its demand that the tenant pay rent to the subsequent assignee. (i) (1) This section shall apply to contracts entered into on or after January 1, 1997. (2) Sections 2938 and 2938.1, as these sections were in effect prior to January 1, 1997, shall govern contracts entered into prior to January 1, 1997, and shall govern actions and proceedings initiated on the basis of these contracts. (j) “Real property,” as used in this section, means real property or any estate or interest therein. (k) The demand required by paragraph (3) of subdivision (c) shall be in the following form: DEMAND TO PAY RENT TO PARTY OTHER THAN LANDLORD (SECTION 2938 OF THE CIVIL CODE) Tenant:[Name of Tenant] Property Occupied by Tenant:[Address] Landlord:[Name of Landlord] Secured Party:[Name of Secured Party] Address:[Address for Payment of Rent to Secured Party and for Further Information]: The secured party named above is the assignee of leases, rents, issues, and profits under [name of document] dated ______, and recorded at [recording information] in the official records of ___________ County, California. You may request a copy of the assignment from the secured party at ____ (address). THIS NOTICE AFFECTS YOUR LEASE OR RENTAL AGREEMENT RIGHTS AND OBLIGATIONS. YOU ARE THEREFORE ADVISED TO CONSULT AN ATTORNEY CONCERNING THOSE RIGHTS AND OBLIGATIONS IF YOU HAVE ANY QUESTIONS REGARDING YOUR RIGHTS AND OBLIGATIONS UNDER THIS NOTICE. IN ACCORDANCE WITH SUBDIVISION (C) OF SECTION 2938 OF THE CIVIL CODE, YOU ARE HEREBY DIRECTED TO PAY TO THE SECURED PARTY, ____ (NAME OF SECURED PARTY) AT ____ (ADDRESS), ALL RENTS UNDER YOUR LEASE OR OTHER RENTAL AGREEMENT WITH THE LANDLORD OR PREDECESSOR IN INTEREST OF LANDLORD, FOR THE OCCUPANCY OF THE PROPERTY AT ____ (ADDRESS OF RENTAL PREMISES) WHICH ARE PAST DUE AND PAYABLE ON THE DATE YOU RECEIVE THIS DEMAND, AND ALL RENTS COMING DUE UNDER THE LEASE OR OTHER RENTAL AGREEMENT FOLLOWING THE DATE YOU RECEIVE THIS DEMAND UNLESS YOU HAVE ALREADY PAID THIS RENT TO THE LANDLORD IN GOOD FAITH AND IN A MANNER NOT INCONSISTENT WITH THE AGREEMENT BETWEEN YOU AND THE LANDLORD. IN THIS CASE, THIS DEMAND NOTICE SHALL REQUIRE YOU TO PAY TO THE SECURED PARTY, ____ (NAME OF THE SECURED PARTY), ALL RENTS THAT COME DUE FOLLOWING THE DATE OF THE PAYMENT TO THE LANDLORD. IF YOU PAY THE RENT TO THE UNDERSIGNED SECURED PARTY, ____ (NAME OF SECURED PARTY), IN ACCORDANCE WITH THIS NOTICE, YOU DO NOT HAVE TO PAY THE RENT TO THE LANDLORD. YOU WILL NOT BE SUBJECT TO DAMAGES OR OBLIGATED TO PAY RENT TO THE SECURED PARTY IF YOU HAVE PREVIOUSLY RECEIVED A DEMAND OF THIS TYPE FROM A DIFFERENT SECURED PARTY. [For other than residential tenants] IF YOU PAY RENT TO THE LANDLORD THAT BY THE TERMS OF THIS DEMAND YOU ARE REQUIRED TO PAY TO THE SECURED PARTY, YOU MAY BE SUBJECT TO DAMAGES INCURRED BY THE SECURED PARTY BY REASON OF YOUR FAILURE TO COMPLY WITH THIS DEMAND, AND YOU MAY NOT BE DISCHARGED FROM YOUR OBLIGATION TO PAY THAT RENT TO THE SECURED PARTY. YOU WILL NOT BE SUBJECT TO THOSE DAMAGES OR OBLIGATED TO PAY THAT RENT TO THE SECURED PARTY IF YOU HAVE PREVIOUSLY RECEIVED A DEMAND OF THIS TYPE FROM A DIFFERENT ASSIGNEE. Your obligation to pay rent under this demand shall continue until you receive either (1) a written notice from a court directing you to pay the rent in a manner provided therein, or (2) a written notice from the secured party named above canceling this demand. The undersigned hereby certifies, under penalty of perjury, that the undersigned is an authorized officer or agent of the secured party and that the secured party is the assignee, or the current successor to the assignee, under an assignment of leases, rents, issues, or profits executed by the landlord, or a predecessor in interest, that is being enforced pursuant to and in accordance with Section 2938 of the Civil Code. Executed at _________, California, this ____ day of _________, _____. [Secured Party] _____ Name: _____ Title: (Amended by Stats. 2008, Ch. 179, Sec. 33. Effective January 1, 2009.)
  13. 2939.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. )

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    A recorded mortgage is discharged by a signed certificate from the mortgagee, personal representatives, or assigns, with the required acknowledgment or proof and certification.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. ) ## 2939. A recorded mortgage must be discharged by a certificate signed by the mortgagee, his personal representatives or assigns, acknowledged or proved and certified as prescribed by the chapter on “recording transfers,” stating that the mortgage has been paid, satisfied, or discharged. Reference shall be made in said certificate to the book and page where the mortgage is recorded. (Amended by Stats. 1957, Ch. 1865.)
  14. 2939.5.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. )

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    Foreign executors, administrators, and guardians may satisfy a mortgage on county records if they file a certified, authenticated copy of their letters and the certificate says the letters have not been revoked.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. ) ## 2939.5. Foreign executors, administrators and guardians may satisfy mortgages upon the records of any county in this state, upon producing and recording in the office of the county recorder of the county in which such mortgage is recorded, a duly certified and authenticated copy of their letters testamentary, or of administration or of guardianship, and which certificate or authentication shall also recite that said letters have not been revoked. For the purposes of this section, “guardian” includes a foreign conservator, committee, or comparable fiduciary. (Added by renumbering Section 2939½ by Stats. 1979, Ch. 730.)
  15. 2940.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. )

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    A certificate of the discharge of a mortgage, and the proof or acknowledgment of it, must be recorded in the county recorder’s office where the mortgage is recorded.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. ) ## 2940. A certificate of the discharge of a mortgage, and the proof or acknowledgment thereof, must be recorded in the office of the county recorder in which the mortgage is recorded. (Amended by Stats. 1957, Ch. 1865.)
  16. 2941.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. )

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    After a mortgage or deed of trust is paid off, the mortgagee, beneficiary, trustee, or related assignees must complete and record the required discharge or reconveyance paperwork within set deadlines, and some fees and notices are limited.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. ) ## 2941. (a) Within 30 days after any mortgage has been satisfied, the mortgagee or the assignee of the mortgagee shall execute a certificate of the discharge thereof, as provided in Section 2939, and shall record or cause to be recorded in the office of the county recorder in which the mortgage is recorded. The mortgagee shall then deliver, upon the written request of the mortgagor or the mortgagor’s heirs, successors, or assignees, as the case may be, the original note and mortgage to the person making the request. (b) (1) Within 30 calendar days after the obligation secured by any deed of trust has been satisfied, the beneficiary or the assignee of the beneficiary shall execute and deliver to the trustee the original note, deed of trust, request for a full reconveyance, and other documents as may be necessary to reconvey, or cause to be reconveyed, the deed of trust. (A) The trustee shall execute the full reconveyance and shall record or cause it to be recorded in the office of the county recorder in which the deed of trust is recorded within 21 calendar days after receipt by the trustee of the original note, deed of trust, request for a full reconveyance, the fee that may be charged pursuant to subdivision (e), recorder’s fees, and other documents as may be necessary to reconvey, or cause to be reconveyed, the deed of trust. (B) The trustee shall deliver a copy of the reconveyance to the beneficiary, its successor in interest, or its servicing agent, if known. The reconveyance instrument shall specify one of the following options for delivery of the instrument, the addresses of which the recorder has no duty to validate: (i) The trustor or successor in interest, and that person’s last known address, as the person to whom the recorder will deliver the recorded instrument pursuant to Section 27321 of the Government Code. (ii) That the recorder shall deliver the recorded instrument to the trustee’s address. If the trustee’s address is specified for delivery, the trustee shall mail the recorded instrument to the trustor or the successor in interest to the last known address for that party. (C) Following execution and recordation of the full reconveyance, upon receipt of a written request by the trustor or the trustor’s heirs, successors, or assignees, the trustee shall then deliver, or caused to be delivered, the original note and deed of trust to the person making that request. (D) If the note or deed of trust, or any copy of the note or deed of trust, is electronic, upon satisfaction of an obligation secured by a deed of trust, any electronic original, or electronic copy which has not been previously marked solely for use as a copy, of the note and deed of trust, shall be altered to indicate that the obligation is paid in full. (2) If the trustee has failed to execute and record, or cause to be recorded, the full reconveyance within 60 calendar days of satisfaction of the obligation, the beneficiary, upon receipt of a written request by the trustor or trustor’s heirs, successor in interest, agent, or assignee, shall execute and acknowledge a document pursuant to Section 2934a substituting itself or another as trustee and issue a full reconveyance. (3) If a full reconveyance has not been executed and recorded pursuant to either paragraph (1) or paragraph (2) within 75 calendar days of satisfaction of the obligation, then a title insurance company may prepare and record a release of the obligation. However, at least 10 days prior to the issuance and recording of a full release pursuant to this paragraph, the title insurance company shall mail by first-class mail with postage prepaid, the intention to release the obligation to the trustee, trustor, and beneficiary of record, or their successor in interest of record, at the last known address. (A) The release shall set forth: (i) The name of the beneficiary. (ii) The name of the trustor. (iii) The recording reference to the deed of trust. (iv) A recital that the obligation secured by the deed of trust has been paid in full. (v) The date and amount of payment. (B) The release issued pursuant to this subdivision shall be entitled to recordation and, when recorded, shall be deemed to be the equivalent of a reconveyance of a deed of trust. (4) Where an obligation secured by a deed of trust was paid in full prior to July 1, 1989, and no reconveyance has been issued and recorded by October 1, 1989, then a release of obligation as provided for in paragraph (3) may be issued. (5) Paragraphs (2) and (3) do not excuse the beneficiary or the trustee from compliance with paragraph (1). Paragraph (3) does not excuse the beneficiary from compliance with paragraph (2). (6) In addition to any other remedy provided by law, a title insurance company preparing or recording the release of the obligation shall be liable to any party for damages, including attorney’s fees, which any person may sustain by reason of the issuance and recording of the release, pursuant to paragraphs (3) and (4). (7) A beneficiary may, at its discretion, in accordance with the requirements and procedures of Section 2934a, substitute the title company conducting the escrow through which the obligation is satisfied for the trustee of record, in which case the title company assumes the obligation of a trustee under this subdivision, and may collect the fee authorized by subdivision (e). (8) In lieu of delivering the original note and deed of trust to the trustee within 30 days of loan satisfaction, as required by paragraph (1) of subdivision (b), a beneficiary who executes and delivers to the trustee a request for a full reconveyance within 30 days of loan satisfaction may, within 120 days of loan satisfaction, deliver the original note and deed of trust to either the trustee or trustor. If the note and deed of trust are delivered as provided in this paragraph, upon satisfaction of the note and deed of trust, the note and deed of trust shall be altered to indicate that the obligation is paid in full. Nothing in this paragraph alters the requirements and obligations set forth in paragraphs (2) and (3). (c) For the purposes of this section, the phrases “cause to be recorded” and “cause it to be recorded” include, but are not limited to, sending by certified mail with the United States Postal Service or by an independent courier service using its tracking service that provides documentation of receipt and delivery, including the signature of the recipient, the full reconveyance or certificate of discharge in a recordable form, together with payment for all required fees, in an envelope addressed to the county recorder’s office of the county in which the deed of trust or mortgage is recorded. Within two business days from the day of receipt, if received in recordable form together with all required fees, the county recorder shall stamp and record the full reconveyance or certificate of discharge. Compliance with this subdivision shall entitle the trustee to the benefit of the presumption found in Section 641 of the Evidence Code. (d) The violation of this section shall make the violator liable to the person affected by the violation for all damages which that person may sustain by reason of the violation, and shall require that the violator forfeit to that person the sum of five hundred dollars ($500). (e) (1) The trustee, beneficiary, or mortgagee may charge a reasonable fee to the trustor or mortgagor, or the owner of the land, as the case may be, for all services involved in the preparation, execution, and recordation of the full reconveyance, including, but not limited to, document preparation and forwarding services rendered to effect the full reconveyance, and, in addition, may collect official fees. This fee may be made payable no earlier than the opening of a bona fide escrow or no more than 60 days prior to the full satisfaction of the obligation secured by the deed of trust or mortgage. (2) If the fee charged pursuant to this subdivision does not exceed forty-five dollars ($45), the fee is conclusively presumed to be reasonable. (3) The fee described in paragraph (1) may not be charged unless demand for the fee was included in the payoff demand statement described in Section 2943. (f) For purposes of this section, “original” may include an optically imaged reproduction when the following requirements are met: (1) The trustee receiving the request for reconveyance and executing the reconveyance as provided in subdivision (b) is an affiliate or subsidiary of the beneficiary or an affiliate or subsidiary of the assignee of the beneficiary, respectively. (2) The optical image storage media used to store the document shall be nonerasable write once, read many (WORM) optical image media that does not allow changes to the stored document. (3) The optical image reproduction shall be made consistent with the minimum standards of quality approved by either the National Institute of Standards and Technology or the Association for Information and Image Management. (4) Written authentication identifying the optical image reproduction as an unaltered copy of the note, deed of trust, or mortgage shall be stamped or printed on the optical image reproduction. (g) No fee or charge may be imposed on the trustor in connection with, or relating to, any act described in this section except as expressly authorized by this section. (h) The amendments to this section enacted at the 1999–2000 Regular Session shall apply only to a mortgage or an obligation secured by a deed of trust that is satisfied on or after January 1, 2001. (i) (1) In any action filed before January 1, 2002, that is dismissed as a result of the amendments to this section enacted at the 2001–02 Regular Session, the plaintiff shall not be required to pay the defendant’s costs. (2) Any claimant, including a claimant in a class action lawsuit, whose claim is dismissed or barred as a result of the amendments to this section enacted at the 2001–02 Regular Session, may, within 6 months of the dismissal or barring of the action or claim, file or refile a claim for actual damages occurring before January 1, 2002, that were proximately caused by a time lapse between loan satisfaction and the completion of the beneficiary’s obligations as required under paragraph (1) of subdivision (b). In any action brought under this section, the defendant may be found liable for actual damages, but may not be found liable for any civil penalty authorized by Section 2941. (j) Notwithstanding any other penalties, if a beneficiary collects a fee for reconveyance and thereafter has knowledge, or should have knowledge, that no reconveyance has been recorded, the beneficiary shall cause to be recorded the reconveyance, or in the event a release of obligation is earlier and timely recorded, the beneficiary shall refund to the trustor the fee charged to perform the reconveyance. Evidence of knowledge includes, but is not limited to, notice of a release of obligation pursuant to paragraph (3) of subdivision (b). (Amended by Stats. 2003, Ch. 62, Sec. 20. Effective January 1, 2004.)
  17. 2941.1.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. )

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    If no payoff demand statement is issued under Section 2943, Section 2941 does not stop a reconveyance fee from being charged.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. ) ## 2941.1. Notwithstanding any other provision of law, if no payoff demand statement is issued pursuant to Section 2943, nothing in Section 2941 shall be construed to prohibit the charging of a reconveyance fee. (Added by Stats. 2001, Ch. 438, Sec. 6. Effective October 2, 2001. Operative January 1, 2002, by Sec. 7 of Ch. 438.)
  18. 2941.5.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. )

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    A person who willfully violates Section 2941 commits a misdemeanor and can be fined, jailed, or both.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. ) ## 2941.5. Every person who willfully violates Section 2941 is guilty of a misdemeanor punishable by fine of not less than fifty dollars ($50) nor more than four hundred dollars ($400), or by imprisonment in the county jail for not to exceed six months, or by both such fine and imprisonment. For purposes of this section, “willfully” means simply a purpose or willingness to commit the act, or make the omission referred to. It does not require an intent to violate the law, to injure another, or to acquire any advantage. (Amended by Stats. 1988, Ch. 1006, Sec. 2. Operative July 1, 1989, by Sec. 3 of Ch. 1006.)
  19. 2941.7.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. )

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    This section lets a mortgagor, trustor, or successor clear a mortgage or deed of trust lien by recording a qualifying corporate bond and declaration, and sometimes a reconveyance.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. ) ## 2941.7. Whenever the obligation secured by a mortgage or deed of trust has been fully satisfied and the present mortgagee or beneficiary of record cannot be located after diligent search, or refuses to execute and deliver a proper certificate of discharge or request for reconveyance, or whenever a specified balance, including principal and interest, remains due and the mortgagor or trustor or the mortgagor’s or trustor’s successor in interest cannot, after diligent search, locate the then mortgagee or beneficiary of record, the lien of any mortgage or deed of trust shall be released when the mortgagor or trustor or the mortgagor’s or trustor’s successor in interest records or causes to be recorded, in the office of the county recorder of the county in which the encumbered property is located, a corporate bond accompanied by a declaration, as specified in subdivision (b), and with respect to a deed of trust, a reconveyance as hereinafter provided. (a) The bond shall be acceptable to the trustee and shall be issued by a corporation lawfully authorized to issue surety bonds in the State of California in a sum equal to the greater of either (1) two times the amount of the original obligation secured by the mortgage or deed of trust and any additional principal amounts, including advances, shown in any recorded amendment thereto, or (2) one-half of the total amount computed pursuant to (1) and any accrued interest on such amount, and shall be conditioned for payment of any sum which the mortgagee or beneficiary may recover in an action on the obligation secured by the mortgage or deed of trust, with costs of suit and reasonable attorneys’ fees. The obligees under the bond shall be the mortgagee or mortgagee’s successor in interest or the trustee who executes a reconveyance under this section and the beneficiary or beneficiary’s successor in interest. The bond recorded by the mortgagor or trustor or mortgagor’s or trustor’s successor in interest shall contain the following information describing the mortgage or deed of trust: (1) Recording date and instrument number or book and page number of the recorded instrument. (2) Names of original mortgagor and mortgagee or trustor and beneficiary. (3) Amount shown as original principal sum secured thereby. (4) The recording information and new principal amount shown in any recorded amendment thereto. (b) The declaration accompanying the corporate bond recorded by the mortgagor or trustor or the mortgagor’s or trustor’s successor in interest shall state: (1) That it is recorded pursuant to this section. (2) The name of the original mortgagor or trustor and mortgagee or beneficiary. (3) The name and address of the person making the declaration. (4) That either the obligation secured by the mortgage or deed of trust has been fully satisfied and the present mortgagee or beneficiary of record cannot be located after diligent search, or refuses to execute and deliver a proper certificate of discharge or request for reconveyance as required under Section 2941; or that a specified balance, including principal and interest, remains due and the mortgagor or trustor or mortgagor’s or trustor’s successor in interest cannot, after diligent search, locate the then mortgagee or beneficiary. (5) That the declarant has mailed by certified mail, return receipt requested, to the last address of the person to whom payments under the mortgage or deed of trust were made and to the last mortgagee or beneficiary of record at the address for such mortgagee or beneficiary shown on the instrument creating, assigning, or conveying the interest, a notice of recording a declaration and bond under this section and informing the recipient of the name and address of the mortgagor or trustee, if any, and of the right to record a written objection with respect to the release of the lien of the mortgage or, with respect to a deed of trust, notify the trustee in writing of any objection to the reconveyance of the deed of trust. The declaration shall state the date any notices were mailed pursuant to this section and the names and addresses of all persons to whom mailed. The declaration provided for in this section shall be signed by the mortgagor or trustor under penalty of perjury. (c) With respect to a deed of trust, after the expiration of 30 days following the recording of the corporate bond and accompanying declaration provided in subdivisions (a) and (b), and delivery to the trustee of the usual reconveyance fees plus costs and a demand for reconveyance under this section, the trustee shall execute and record, or otherwise deliver as provided in Section 2941, a reconveyance in the same form as if the beneficiary had delivered to the trustee a proper request for reconveyance, provided that the trustee has not received a written objection to the reconveyance from the beneficiary of record. No trustee shall have any liability to any person by reason of its execution of a reconveyance in reliance upon a trustor’s or trustor’s successor’s in interest substantial compliance with this section. The sole remedy of any person damaged by reason of the reconveyance shall be against the trustor, the affiant, or the bond. With respect to a mortgage, a mortgage shall be satisfied of record when 30 days have expired following recordation of the corporate bond and accompanying declaration, provided no objection to satisfaction has been recorded by the mortgagee within that period. A bona fide purchaser or encumbrancer for value shall take the interest conveyed free of such mortgage, provided there has been compliance with subdivisions (a) and (b) and the deed to the purchaser recites that no objections by the mortgagee have been recorded. Upon recording of a reconveyance under this section, or, in the case of a mortgage the expiration of 30 days following recordation of the corporate bond and accompanying declaration without objection thereto having been recorded, interest shall no longer accrue as to any balance remaining due to the extent the balance due has been alleged in the declaration recorded under subdivision (b). The sum of any specified balance, including principal and interest, which remains due and which is remitted to any issuer of a corporate bond in conjunction with the issuance of a bond pursuant to this section shall, if unclaimed, escheat to the state after three years pursuant to the Unclaimed Property Law. From the date of escheat the issuer of the bond shall be relieved of any liability to pay to the beneficiary or his or her heirs or other successors in interest the escheated funds and the sole remedy shall be a claim for property paid or delivered to the Controller pursuant to the Unclaimed Property Law. (d) The term “diligent search,” as used in this section, shall mean all of the following: (1) The mailing of notices as provided in paragraph (5) of subdivision (b), and to any other address that the declarant has used to correspond with or contact the mortgagee or beneficiary. (2) A check of the telephone directory in the city where the mortgagee or beneficiary maintained the mortgagee’s or beneficiary’s last known address or place of business. (3) In the event the mortgagee or beneficiary or the mortgagee’s or beneficiary’s successor in interest is a corporation, a check of the records of the California Secretary of State and the secretary of state in the state of incorporation, if known. (4) In the event the mortgagee or beneficiary is a state or national bank or a state or federal savings and loan association, an inquiry of the regulatory authority of such bank or savings and loan association. (e) This section shall not be deemed to create an exclusive procedure for the issuance of reconveyances and the issuance of bonds and declarations to release the lien of a mortgage and shall not affect any other procedures, whether or not such procedures are set forth in statute, for the issuance of reconveyances and the issuance of bonds and declarations to release the lien of a mortgage. (f) For purposes of this section, the trustor or trustor’s successor in interest may substitute the present trustee of record without conferring any duties upon the trustee other than those that are incidental to the execution of a reconveyance pursuant to this section if all of the following requirements are met: (1) The present trustee of record and the present mortgagee or beneficiary of record cannot be located after diligent search. (2) The declaration filed pursuant to subdivision (b) shall state in addition that it is filed pursuant to this subdivision, and shall, in lieu of the provisions of paragraph (4) of subdivision (b), state that the obligation secured by the mortgage or deed of trust has been fully satisfied and the present trustee of record and present mortgagee or beneficiary of record cannot be located after diligent search. (3) The substitute trustee is a title insurance company that agrees to accept the substitution. This subdivision shall not impose a duty upon a title insurance company to accept the substitution. (4) The corporate bond required in subdivision (a) is for a period of five or more years. (Amended by Stats. 1996, Ch. 762, Sec. 2. Effective January 1, 1997.)
  20. 2941.9.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. )

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    This section lets holders of trust deed notes agree to follow a majority-interest process, but only if specific written, disclosure, signing, and recording requirements are met.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. ) ## 2941.9. (a) The purpose of this section is to establish a process through which all of the beneficiaries under a trust deed may agree to be governed by beneficiaries holding more than 50 percent of the record beneficial interest of a series of notes secured by the same real property or of undivided interests in a note secured by real property equivalent to a series transaction, exclusive of any notes or interests of a licensed real estate broker that is the issuer or servicer of the notes or interests or any affiliate of that licensed real estate broker. (b) All holders of notes secured by the same real property or a series of undivided interests in notes secured by real property equivalent to a series transaction may agree in writing to be governed by the desires of the holders of more than 50 percent of the record beneficial interest of those notes or interests, exclusive of any notes or interests of a licensed real estate broker that is the issuer or servicer of the notes or interests of any affiliate of the licensed real estate broker, with respect to actions to be taken on behalf of all holders in the event of default or foreclosure for matters that require direction or approval of the holders, including designation of the broker, servicing agent, or other person acting on their behalf, and the sale, encumbrance, or lease of real property owned by the holders resulting from foreclosure or receipt of a deed in lieu of foreclosure. (c) A description of the agreement authorized in subdivision (b) of this section shall be disclosed pursuant to Section 10232.5 of the Business and Professions Code and shall be included in a recorded document such as the deed of trust or the assignment of interests. (d) Any action taken pursuant to the authority granted in this section is not effective unless all the parties agreeing to the action sign, under penalty of perjury, a separate written document entitled “Majority Action Affidavit” stating the following: (1) The action has been authorized pursuant to this section. (2) None of the undersigned is a licensed real estate broker or an affiliate of the broker that is the issuer or servicer of the obligation secured by the deed of trust. (3) The undersigned together hold more than 50 percent of the record beneficial interest of a series of notes secured by the same real property or of undivided interests in a note secured by real property equivalent to a series transaction. (4) Notice of the action was sent by certified mail, postage prepaid, with return receipt requested, to each holder of an interest in the obligation secured by the deed of trust who has not joined in the execution of the substitution or this document. This document shall be recorded in the office of the county recorder of each county in which the real property described in the deed of trust is located. Once the document in this subdivision is recorded, it shall constitute conclusive evidence of compliance with the requirements of this subdivision in favor of trustees acting pursuant to this section, substituted trustees acting pursuant to Section 2934a, subsequent assignees of the obligation secured by the deed of trust, and subsequent bona fide purchasers or encumbrancers for value of the real property described therein. (e) For purposes of this section, “affiliate of the licensed real estate broker” includes any person as defined in Section 25013 of the Corporations Code who is controlled by, or is under common control with, or who controls, a licensed real estate broker. “Control” means the possession, direct or indirect, of the power to direct or cause the direction of management and policies. (Added by Stats. 1996, Ch. 839, Sec. 3. Effective January 1, 1997.)
  21. 2942.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. )

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    Contracts of bottomry or respondentia are not affected by this chapter, even though they are in the nature of mortgages.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. ) ## 2942. Contracts of bottomry or respondentia, although in the nature of mortgages, are not affected by any of the provisions of this Chapter. (Enacted 1872.)
  22. 2943.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. )

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    A beneficiary must provide certain loan and payoff statements within 21 days after a written demand from an entitled person or authorized agent, subject to foreclosure timing limits and a possible proof-of-identity request.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. ) ## 2943. (a) As used in this section: (1) “Beneficiary” means a mortgagee or beneficiary of a mortgage or deed of trust, or his or her assignees. (2) “Beneficiary statement” means a written statement showing: (A) The amount of the unpaid balance of the obligation secured by the mortgage or deed of trust and the interest rate, together with the total amounts, if any, of all overdue installments of either principal or interest, or both. (B) The amounts of periodic payments, if any. (C) The date on which the obligation is due in whole or in part. (D) The date to which real estate taxes and special assessments have been paid to the extent the information is known to the beneficiary. (E) The amount of hazard insurance in effect and the term and premium of that insurance to the extent the information is known to the beneficiary. (F) The amount in an account, if any, maintained for the accumulation of funds with which to pay taxes and insurance premiums. (G) The nature and, if known, the amount of any additional charges, costs, or expenses paid or incurred by the beneficiary which have become a lien on the real property involved. (H) Whether the obligation secured by the mortgage or deed of trust can or may be transferred to a new borrower. (3) “Delivery” means depositing or causing to be deposited in the United States mail an envelope with postage prepaid, containing a copy of the document to be delivered, addressed to the person whose name and address is set forth in the demand therefor. The document may also be transmitted by facsimile machine to the person whose name and address is set forth in the demand therefor. (4) “Entitled person” means the trustor or mortgagor of, or his or her successor in interest in, the mortgaged or trust property or any part thereof, any beneficiary under a deed of trust, any person having a subordinate lien or encumbrance of record thereon, the escrowholder licensed as an agent pursuant to Division 6 (commencing with Section 17000) of the Financial Code, or the party exempt by virtue of Section 17006 of the Financial Code who is acting as the escrowholder. (5) “Payoff demand statement” means a written statement, prepared in response to a written demand made by an entitled person or authorized agent, setting forth the amounts required as of the date of preparation by the beneficiary, to fully satisfy all obligations secured by the loan that is the subject of the payoff demand statement. The written statement shall include information reasonably necessary to calculate the payoff amount on a per diem basis for the period of time, not to exceed 30 days, during which the per diem amount is not changed by the terms of the note. (b) (1) A beneficiary, or his or her authorized agent, shall, within 21 days of the receipt of a written demand by an entitled person or his or her authorized agent, prepare and deliver to the person demanding it a true, correct, and complete copy of the note or other evidence of indebtedness with any modification thereto, and a beneficiary statement. (2) A request pursuant to this subdivision may be made by an entitled person or his or her authorized agent at any time before, or within two months after, the recording of a notice of default under a mortgage or deed of trust, or may otherwise be made more than 30 days prior to the entry of the decree of foreclosure. (c) A beneficiary, or his or her authorized agent, shall, on the written demand of an entitled person, or his or her authorized agent, prepare and deliver a payoff demand statement to the person demanding it within 21 days of the receipt of the demand. However, if the loan is subject to a recorded notice of default or a filed complaint commencing a judicial foreclosure, the beneficiary shall have no obligation to prepare and deliver this statement as prescribed unless the written demand is received prior to the first publication of a notice of sale or the notice of the first date of sale established by a court. (d) (1) A beneficiary statement or payoff demand statement may be relied upon by the entitled person or his or her authorized agent in accordance with its terms, including with respect to the payoff demand statement reliance for the purpose of establishing the amount necessary to pay the obligation in full. If the beneficiary notifies the entitled person or his or her authorized agent of any amendment to the statement, then the amended statement may be relied upon by the entitled person or his or her authorized agent as provided in this subdivision. (2) If notification of any amendment to the statement is not given in writing, then a written amendment to the statement shall be delivered to the entitled person or his or her authorized agent no later than the next business day after notification. (3) Upon the dates specified in subparagraphs (A) and (B) any sums that were due and for any reason not included in the statement or amended statement shall continue to be recoverable by the beneficiary as an unsecured obligation of the obligor pursuant to the terms of the note and existing provisions of law. (A) If the transaction is voluntary, the entitled party or his or her authorized agent may rely upon the statement or amended statement upon the earlier of (i) the close of escrow, (ii) transfer of title, or (iii) recordation of a lien. (B) If the loan is subject to a recorded notice of default or a filed complaint commencing a judicial foreclosure, the entitled party or his or her authorized agent may rely upon the statement or amended statement upon the acceptance of the last and highest bid at a trustee’s sale or a court supervised sale. (e) The following provisions apply to a demand for either a beneficiary statement or a payoff demand statement: (1) If an entitled person or his or her authorized agent requests a statement pursuant to this section and does not specify a beneficiary statement or a payoff demand statement the beneficiary shall treat the request as a request for a payoff demand statement. (2) If the entitled person or the entitled person’s authorized agent includes in the written demand a specific request for a copy of the deed of trust or mortgage, it shall be furnished with the written statement at no additional charge. (3) The beneficiary may, before delivering a statement, require reasonable proof that the person making the demand is, in fact, an entitled person or an authorized agent of an entitled person, in which event the beneficiary shall not be subject to the penalties of this section until 21 days after receipt of the proof herein provided for. A statement in writing signed by the entitled person appointing an authorized agent when delivered personally to the beneficiary or delivered by registered return receipt mail shall constitute reasonable proof as to the identity of an agent. Similar delivery of a policy of title insurance, preliminary report issued by a title company, original or photographic copy of a grant deed or certified copy of letters testamentary, guardianship, or conservatorship shall constitute reasonable proof as to the identity of a successor in interest, provided the person demanding a statement is named as successor in interest in the document. (4) If a beneficiary for a period of 21 days after receipt of the written demand willfully fails to prepare and deliver the statement, he or she is liable to the entitled person for all damages which he or she may sustain by reason of the refusal and, whether or not actual damages are sustained, he or she shall forfeit to the entitled person the sum of three hundred dollars ($300). Each failure to prepare and deliver the statement, occurring at a time when, pursuant to this section, the beneficiary is required to prepare and deliver the statement, creates a separate cause of action, but a judgment awarding an entitled person a forfeiture, or damages and forfeiture, for any failure to prepare and deliver a statement bars recovery of damages and forfeiture for any other failure to prepare and deliver a statement, with respect to the same obligation, in compliance with a demand therefor made within six months before or after the demand as to which the award was made. For the purposes of this subdivision, “willfully” means an intentional failure to comply with the requirements of this section without just cause or excuse. (5) If the beneficiary has more than one branch, office, or other place of business, then the demand shall be made to the branch or office address set forth in the payment billing notice or payment book, and the statement, unless it specifies otherwise, shall be deemed to apply only to the unpaid balance of the single obligation named in the request and secured by the mortgage or deed of trust which is payable at the branch or office whose address appears on the aforesaid billing notice or payment book. (6) The beneficiary may make a charge not to exceed thirty dollars ($30) for furnishing each required statement. The provisions of this paragraph shall not apply to mortgages or deeds of trust insured by the Federal Housing Administrator or guaranteed by the Administrator of Veterans Affairs. (f) The preparation and delivery of a beneficiary statement or a payoff demand statement pursuant to this section shall not change a date of sale established pursuant to Section 2924g. (g) This section shall become operative on January 1, 2014. (Repealed (in Sec. 5) and added by Stats. 2009, Ch. 43, Sec. 6. (SB 306) Effective January 1, 2010. Section operative January 1, 2014, by its own provisions.)
  23. 2943.1.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. )

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    A beneficiary must list a delivery contact on payoff demand statements for equity lines of credit, and must suspend and later close the line when the required instruction and payoff are received.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. ) ## 2943.1. (a) For purposes of this section, the following definitions apply: (1) “Beneficiary” has the same meaning as defined in Section 2943. (2) “Borrower’s Instruction to Suspend and Close Equity Line of Credit” means the instruction described in subdivision (c), signed by the borrower or borrowers under an equity line of credit. (3) “Entitled person” has the same meaning as defined in Section 2943. (4) “Equity line of credit” means a revolving line of credit used for consumer purposes, which is secured by a mortgage or deed of trust encumbering residential real property consisting of one to four dwelling units, at least one of which is occupied by the borrower. (5) “Payoff demand statement” has the same meaning as defined in Section 2943. (6) “Suspend” means to prohibit the borrower from drawing on, increasing, or incurring any additional principal debt on the equity line of credit. (b) Notwithstanding paragraph (5) of subdivision (a) of Section 2943, a payoff demand statement issued by a beneficiary in connection with an equity line of credit shall include an email address, fax number, or mailing address designated by the beneficiary for delivery of the Borrower’s Instruction to Suspend and Close Equity Line of Credit by the entitled person. (c) Upon receipt from an entitled person of a Borrower’s Instruction to Suspend and Close Equity Line of Credit, that has been prepared and presented to the borrower by the entitled person and signed by a borrower, a beneficiary shall suspend the equity line of credit for a minimum of 30 days. A Borrower’s Instruction to Suspend and Close Equity Line of Credit shall be effective if made substantially in the following form and signed by the borrower: “Borrower’s Instruction to Suspend and Close Equity Line of Credit Lender:[Name of Lender] Borrower(s):[Name of Borrower(s)] Account Number of the Equity Line of Credit:[Account Number] Encumbered Property Address:[Property Address] Escrow or Settlement Agent:[Name of Agent]: In connection with a sale or refinance of the above-referenced property, my Escrow or Settlement Agent has requested a payoff demand statement for the above-described equity line of credit. I understand my ability to use this equity line of credit has been suspended for at least 30 days to accommodate this pending transaction. I understand that I cannot use any credit cards, debit cards, or checks associated with this equity line of credit while it is suspended and all amounts will be due and payable upon close of escrow. I also understand that when payment is made in accordance with the payoff demand statement, my equity line of credit will be closed. If any amounts remain due after the payment is made, I understand I will remain personally liable for those amounts even if the equity line of credit has been closed and the property released. This is my written authorization and instruction that you are to close my equity line of credit and cause the secured lien against this property to be released when you are in receipt of both this instruction and payment in accordance with your payoff demand statement. (Date) (Signature of Each Borrower)” (d) When a beneficiary is in receipt of both a Borrower’s Instruction to Suspend and Close Equity Line of Credit and payment in accordance with the payoff demand statement as set forth in Section 2943, the beneficiary shall do all of the following: (1) Close the equity line of credit. (2) Release or reconvey the property securing the equity line of credit, as provided by this chapter. (e) The beneficiary may conclusively rely on the Borrower’s Instruction to Suspend and Close Equity Line of Credit provided by the entitled person as coming from the borrower. (f) This section shall become operative on July 1, 2015. (Amended by Stats. 2018, Ch. 90, Sec. 1. (SB 1139) Effective January 1, 2019.)
  24. 2944.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. )

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    This section says the chapter does not apply to transactions or security interests governed by the Commercial Code, unless a secured party makes the specified election under Section 9604.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. ) ## 2944. None of the provisions of this chapter applies to any transaction or security interest governed by the Commercial Code, except to the extent made applicable by reason of an election made by the secured party pursuant to subparagraph (B) of paragraph (1) of subdivision (a) of Section 9604 of the Commercial Code. (Amended by Stats. 1999, Ch. 991, Sec. 7. Effective January 1, 2000. Operative July 1, 2001, by Sec. 75 of Ch. 991.)
  25. 2944.10.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. )

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    A lawsuit to enforce a cause of action under Sections 2944.7 or 2944.8 must be filed within four years after the cause of action accrues.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. ) ## 2944.10. Any action to enforce any cause of action pursuant to Section 2944.7 or 2944.8 shall be commenced within four years after the cause of action accrued. No cause of action barred under existing law on the effective date of this section shall be revived by its enactment. (Added by Stats. 2014, Ch. 457, Sec. 3. (AB 1730) Effective January 1, 2015.)
  26. 2944.5.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. )

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    Lenders, mortgagees, and certain other property-interest holders may not refuse an admitted insurer’s policy just because it has no fixed expiration date and is billed every six months.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. ) ## 2944.5. No lender, mortgagee, or any third party having an interest in real or personal property shall refuse to accept a policy issued by an admitted insurer solely because the policy is issued for a continuous period without a fixed expiration date even though the policy premium is due and payable every six months, provided the lender, mortgagee, or third party is entitled to receive (a) notice of renewal from the insurer within 15 days of receipt of payment on the policy by the insured or (b) notice of cancellation or nonrenewal under the terms and conditions set forth in Sections 678 and 2074.8 of the Insurance Code, whichever is applicable. (Added by Stats. 1993, Ch. 522, Sec. 1. Effective January 1, 1994.)
  27. 2944.6.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. )

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    People who charge for mortgage loan modification or forbearance services must give borrowers a required disclosure before a fee agreement, and a translated copy if the services are offered in certain languages.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. ) ## 2944.6. (a) Notwithstanding any other provision of law, any person who negotiates, attempts to negotiate, arranges, attempts to arrange, or otherwise offers to perform a mortgage loan modification or other form of mortgage loan forbearance for a fee or other compensation paid by the borrower, shall provide the following to the borrower, as a separate statement, in not less than 14-point bold type, prior to entering into any fee agreement with the borrower: It is not necessary to pay a third party to arrange for a loan modification or other form of forbearance from your mortgage lender or servicer. You may call your lender directly to ask for a change in your loan terms. Nonprofit housing counseling agencies also offer these and other forms of borrower assistance free of charge. A list of nonprofit housing counseling agencies approved by the United States Department of Housing and Urban Development (HUD) is available from your local HUD office or by visiting www.hud.gov.(b) If loan modification or other mortgage loan forbearance services are offered or negotiated in one of the languages set forth in Section 1632, a translated copy of the statement in subdivision (a) shall be provided to the borrower in that foreign language. (c) A violation of this section by a natural person is a public offense punishable by a fine not exceeding ten thousand dollars ($10,000), by imprisonment in the county jail for a term not to exceed one year, or by both that fine and imprisonment, or if by a business entity, the violation is punishable by a fine not exceeding fifty thousand dollars ($50,000). These penalties are cumulative to any other remedies or penalties provided by law. (d) This section does not apply to a person, or an agent acting on that person’s behalf, offering loan modification or other loan forbearance services for a loan owned or serviced by that person. (e) This section shall apply only to mortgages and deeds of trust secured by residential real property containing four or fewer dwelling units. (Added by Stats. 2009, Ch. 630, Sec. 9. (SB 94) Effective October 11, 2009.)
  28. 2944.7.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. )

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    People who arrange mortgage loan modifications or forbearance for borrower-paid compensation cannot collect compensation early or take certain liens, wage assignments, or powers of attorney.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. ) ## 2944.7. (a) Notwithstanding any other law, it shall be unlawful for any person who negotiates, attempts to negotiate, arranges, attempts to arrange, or otherwise offers to perform a mortgage loan modification or other form of mortgage loan forbearance for a fee or other compensation paid by the borrower, to do any of the following: (1) Claim, demand, charge, collect, or receive any compensation until after the person has fully performed each and every service the person contracted to perform or represented that he or she would perform. (2) Take any wage assignment, any lien of any type on real or personal property, or other security to secure the payment of compensation. (3) Take any power of attorney from the borrower for any purpose. (b) A violation of this section by a natural person is punishable by a fine not exceeding ten thousand dollars ($10,000), by imprisonment in the county jail for a term not to exceed one year, or by both that fine and imprisonment, or if by a business entity, the violation is punishable by a fine not exceeding fifty thousand dollars ($50,000). These penalties are cumulative to any other remedies or penalties provided by law. (c) In addition to the penalties and remedies provided by Chapter 5 (commencing with Section 17200) of Part 2 of Division 7 of the Business and Professions Code, a person who violates this section shall be liable for a civil penalty not to exceed twenty thousand dollars ($20,000) for each violation, which shall be assessed and recovered in a civil action brought in the name of the people of the State of California by the Attorney General, by any district attorney, by any county counsel authorized by agreement with the district attorney in actions involving a violation of a county ordinance, by any city attorney of a city having a population in excess of 750,000, by any city attorney of any city and county, or, with the consent of the district attorney, by a city prosecutor in any city having a full-time city prosecutor, in any court of competent jurisdiction pursuant to Chapter 5 (commencing with Section 17200) of Part 2 of Division 7 of the Business and Professions Code. (d) Nothing in this section precludes a person, or an agent acting on that person’s behalf, who offers loan modification or other loan forbearance services for a loan owned or serviced by that person, from doing any of the following: (1) Collecting principal, interest, or other charges under the terms of a loan, before the loan is modified, including charges to establish a new payment schedule for a nondelinquent loan, after the borrower reduces the unpaid principal balance of that loan for the express purpose of lowering the monthly payment due under the terms of the loan. (2) Collecting principal, interest, or other charges under the terms of a loan, after the loan is modified. (3) Accepting payment from a federal agency in connection with the federal Making Home Affordable Plan or other federal plan intended to help borrowers refinance or modify their loans or otherwise avoid foreclosures. (e) This section shall apply only to mortgages and deeds of trust secured by residential real property containing four or fewer dwelling units. (Amended by Stats. 2014, Ch. 457, Sec. 1. (AB 1730) Effective January 1, 2015.)
  29. 2944.8.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. )

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    If someone violates Section 2944.7 and the victim is a senior citizen or disabled person, the violator may owe a civil penalty of up to $2,500 per violation. The court must also consider listed aggravating factors and may order restoration of money or property.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1. Mortgages in General [2920 - 2944.10] ( Article 1 enacted 1872. ) ## 2944.8. (a) In addition to any liability for a civil penalty pursuant to Section 2944.7, if a person violates Section 2944.7 with respect to a victim who is a senior citizen or a disabled person, the violator may be liable for a civil penalty not to exceed two thousand five hundred dollars ($2,500) for each violation, which may be assessed and recovered in a civil action. (b) As used in this section, the following terms have the following meanings: (1) “Disabled person” means a person who has a physical or mental disability, as defined in Sections 12926 and 12926.1 of the Government Code. (2) “Senior citizen” means a person who is 65 years of age or older. (c) In determining whether to impose a civil penalty pursuant to subdivision (a) and the amount thereof, the court shall consider, in addition to any other appropriate factors, the extent to which one or more of the following factors are present: (1) Whether the defendant knew or should have known that his or her conduct was directed to one or more senior citizens or disabled persons. (2) Whether the defendant’s conduct caused one or more senior citizens or disabled persons to suffer any of the following: loss or encumbrance of a primary residence, principal employment, or source of income, substantial loss of property set aside for retirement, or for personal or family care and maintenance, or substantial loss of payments received under a pension or retirement plan or a government benefits program, or assets essential to the health or welfare of the senior citizen or disabled person. (3) Whether one or more senior citizens or disabled persons are substantially more vulnerable than other members of the public to the defendant’s conduct because of age, poor health or infirmity, impaired understanding, restricted mobility, or disability, and actually suffered substantial physical, emotional, or economic damage resulting from the defendant’s conduct. (d) A court of competent jurisdiction hearing an action pursuant to this section may make orders and judgments as necessary to restore to a senior citizen or disabled person money or property, real or personal, that may have been acquired by means of a violation of Section 2944.7. (Added by Stats. 2014, Ch. 457, Sec. 2. (AB 1730) Effective January 1, 2015.)
  30. 2945.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1.5. Mortgage Foreclosure Consultants [2945 - 2945.11] ( Article 1.5 added by Stats. 1979, Ch. 1029. )

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    This section says foreclosure consultant service agreements should be in writing and that the article is intended to protect homeowners, allow rescission of foreclosure consultation contracts, and stop misleading statements.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1.5. Mortgage Foreclosure Consultants [2945 - 2945.11] ( Article 1.5 added by Stats. 1979, Ch. 1029. ) ## 2945. (a) The Legislature finds and declares that homeowners whose residences are in foreclosure are subject to fraud, deception, harassment, and unfair dealing by foreclosure consultants from the time a Notice of Default is recorded pursuant to Section 2924 until the time surplus funds from any foreclosure sale are distributed to the homeowner or his or her successor. Foreclosure consultants represent that they can assist homeowners who have defaulted on obligations secured by their residences. These foreclosure consultants, however, often charge high fees, the payment of which is often secured by a deed of trust on the residence to be saved, and perform no service or essentially a worthless service. Homeowners, relying on the foreclosure consultants’ promises of help, take no other action, are diverted from lawful businesses which could render beneficial services, and often lose their homes, sometimes to the foreclosure consultants who purchase homes at a fraction of their value before the sale. Vulnerable homeowners are increasingly relying on the services of foreclosure consultants who advise the homeowner that the foreclosure consultant can obtain the remaining funds from the foreclosure sale if the homeowner executes an assignment of the surplus, a deed, or a power of attorney in favor of the foreclosure consultant. This results in the homeowner paying an exorbitant fee for a service when the homeowner could have obtained the remaining funds from the trustee’s sale from the trustee directly for minimal cost if the homeowner had consulted legal counsel or had sufficient time to receive notices from the trustee pursuant to Section 2924j regarding how and where to make a claim for excess proceeds. (b) The Legislature further finds and declares that foreclosure consultants have a significant impact on the economy of this state and on the welfare of its citizens. (c) The intent and purposes of this article are the following: (1) To require that foreclosure consultant service agreements be expressed in writing; to safeguard the public against deceit and financial hardship; to permit rescission of foreclosure consultation contracts; to prohibit representations that tend to mislead; and to encourage fair dealing in the rendition of foreclosure services. (2) The provisions of this article shall be liberally construed to effectuate this intent and to achieve these purposes. (Amended by Stats. 2004, Ch. 177, Sec. 6. Effective January 1, 2005.)
  31. 2945.1.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1.5. Mortgage Foreclosure Consultants [2945 - 2945.11] ( Article 1.5 added by Stats. 1979, Ch. 1029. )

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    This section defines “foreclosure consultant,” “person,” “service,” “residence in foreclosure,” “owner,” and “contract” for this chapter.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1.5. Mortgage Foreclosure Consultants [2945 - 2945.11] ( Article 1.5 added by Stats. 1979, Ch. 1029. ) ## 2945.1. The following definitions apply to this chapter: (a) “Foreclosure consultant” means any person who makes any solicitation, representation, or offer to any owner to perform for compensation or who, for compensation, performs any service which the person in any manner represents will in any manner do any of the following: (1) Stop or postpone the foreclosure sale. (2) Obtain any forbearance from any beneficiary or mortgagee. (3) Assist the owner to exercise the right of reinstatement provided in Section 2924c. (4) Obtain any extension of the period within which the owner may reinstate his or her obligation. (5) Obtain any waiver of an acceleration clause contained in any promissory note or contract secured by a deed of trust or mortgage on a residence in foreclosure or contained that deed of trust or mortgage. (6) Assist the owner to obtain a loan or advance of funds. (7) Avoid or ameliorate the impairment of the owner’s credit resulting from the recording of a notice of default or the conduct of a foreclosure sale. (8) Save the owner’s residence from foreclosure. (9) Assist the owner in obtaining from the beneficiary, mortgagee, trustee under a power of sale, or counsel for the beneficiary, mortgagee, or trustee, the remaining proceeds from the foreclosure sale of the owner’s residence. (b) A foreclosure consultant does not include any of the following: (1) A person licensed to practice law in this state when the person renders service in the course of his or her practice as an attorney at law. (2) A person licensed under Division 3 (commencing with Section 12000) of the Financial Code when the person is acting as a prorater as defined therein. (3) A person licensed under Part 1 (commencing with Section 10000) of Division 4 of the Business and Professions Code when the person is acting under the authority of that license, as described in Section 10131 or 10131.1 of the Business and Professions Code. (4) A person licensed under Chapter 1 (commencing with Section 5000) of Division 3 of the Business and Professions Code when the person is acting in any capacity for which the person is licensed under those provisions. (5) A person or his or her authorized agent acting under the express authority or written approval of the Department of Housing and Urban Development or other department or agency of the United States or this state to provide services. (6) A person who holds or is owed an obligation secured by a lien on any residence in foreclosure when the person performs services in connection with this obligation or lien. (7) Any person licensed to make loans pursuant to Division 9 (commencing with Section 22000) of the Financial Code when the person is acting under the authority of that license. (8) Any person or entity doing business under any law of this state, or of the United States relating to banks, trust companies, savings and loan associations, industrial loan companies, pension trusts, credit unions, insurance companies, or any person or entity authorized under the laws of this state to conduct a title or escrow business, or a mortgagee which is a United States Department of Housing and Urban Development approved mortgagee and any subsidiary or affiliate of the above, and any agent or employee of the above while engaged in the business of these persons or entities. (9) A person licensed as a residential mortgage lender or servicer pursuant to Division 20 (commencing with Section 50000) of the Financial Code, when acting under the authority of that license. (c) Notwithstanding subdivision (b), any person who provides services pursuant to paragraph (9) of subdivision (a) is a foreclosure consultant unless he or she is the owner’s attorney. (d) “Person” means any individual, partnership, corporation, limited liability company, association or other group, however organized. (e) “Service” means and includes, but is not limited to, any of the following: (1) Debt, budget, or financial counseling of any type. (2) Receiving money for the purpose of distributing it to creditors in payment or partial payment of any obligation secured by a lien on a residence in foreclosure. (3) Contacting creditors on behalf of an owner of a residence in foreclosure. (4) Arranging or attempting to arrange for an extension of the period within which the owner of a residence in foreclosure may cure his or her default and reinstate his or her obligation pursuant to Section 2924c. (5) Arranging or attempting to arrange for any delay or postponement of the time of sale of the residence in foreclosure. (6) Advising the filing of any document or assisting in any manner in the preparation of any document for filing with any bankruptcy court. (7) Giving any advice, explanation, or instruction to an owner of a residence in foreclosure which in any manner relates to the cure of a default in or the reinstatement of an obligation secured by a lien on the residence in foreclosure, the full satisfaction of that obligation, or the postponement or avoidance of a sale of a residence in foreclosure pursuant to a power of sale contained in any deed of trust. (8) Arranging or attempting to arrange for the payment by the beneficiary, mortgagee, trustee under a power of sale, or counsel for the beneficiary, mortgagee, or trustee, of the remaining proceeds to which the owner is entitled from a foreclosure sale of the owner’s residence in foreclosure. Arranging or attempting to arrange for the payment shall include any arrangement where the owner transfers or assigns the right to the remaining proceeds of a foreclosure sale to the foreclosure consultant or any person designated by the foreclosure consultant, whether that transfer is effected by agreement, assignment, deed, power of attorney, or assignment of claim. (9) Arranging or attempting to arrange an audit of any obligation secured by a lien on a residence in foreclosure. (f) “Residence in foreclosure” means a residence in foreclosure as defined in Section 1695.1. (g) “Owner” means a property owner as defined in Section 1695.1. (h) “Contract” means any agreement, or any term thereof, between a foreclosure consultant and an owner for the rendition of any service as defined in subdivision (e). (Amended by Stats. 2010, Ch. 596, Sec. 1. (AB 2325) Effective January 1, 2011.)
  32. 2945.10.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1.5. Mortgage Foreclosure Consultants [2945 - 2945.11] ( Article 1.5 added by Stats. 1979, Ch. 1029. )

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    Certain contract clauses in foreclosure consultant contracts are void, and the owner may void the contract in some cases.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1.5. Mortgage Foreclosure Consultants [2945 - 2945.11] ( Article 1.5 added by Stats. 1979, Ch. 1029. ) ## 2945.10. (a) Any provision in a contract which attempts or purports to limit the liability of the foreclosure consultant under Section 2945.9 shall be void and shall at the option of the owner render the contract void. The foreclosure consultant shall be liable to the owner for all damages proximately caused by that provision. Any provision in a contract which attempts or purports to require arbitration of any dispute arising under this chapter shall be void at the option of the owner only upon grounds as exist for the revocation of any contract. (b) This section shall apply to any contract entered into on or after January 1, 1991. (Added by Stats. 1990, Ch. 1537, Sec. 5.)
  33. 2945.11.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1.5. Mortgage Foreclosure Consultants [2945 - 2945.11] ( Article 1.5 added by Stats. 1979, Ch. 1029. )

    Verify source ↗

    Representatives tied to a foreclosure consultant must give the owner proof of a current California real estate sales license and required bonding, and must also provide a written statement under penalty of perjury before any transfer of the property interest.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1.5. Mortgage Foreclosure Consultants [2945 - 2945.11] ( Article 1.5 added by Stats. 1979, Ch. 1029. ) ## 2945.11. (a) Any representative, as defined in subdivision (b) of Section 2945.9, deemed to be the agent or employee or both the agent and the employee of the foreclosure consultant shall be required to provide both of the following: (1) Written proof to the owner that the representative has a valid current California Real Estate Sales License and that the representative is bonded by an admitted surety insurer in an amount equal to at least twice the fair market value of the real property that is the subject of the contract. (2) A statement in writing, under penalty of perjury, that the representative has a valid current California Real Estate Sales License, that the representative is bonded by an admitted surety insurer in an amount equal to at least twice the value of the real property that is the subject of the contract and has complied with paragraph (1). The written statement required by this paragraph shall be provided to all parties to the contract prior to the transfer of any interest in the real property that is the subject of the contract. (b) The failure to comply with subdivision (a) shall, at the option of the owner, render the contract void and the foreclosure consultant shall be liable to the owner for all damages proximately caused by the failure to comply. (Amended by Stats. 1996, Ch. 124, Sec. 8. Effective January 1, 1997.)
  34. 2945.2.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1.5. Mortgage Foreclosure Consultants [2945 - 2945.11] ( Article 1.5 added by Stats. 1979, Ch. 1029. )

    Verify source ↗

    An owner may cancel a qualifying contract until midnight of the fifth business day after signing it.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1.5. Mortgage Foreclosure Consultants [2945 - 2945.11] ( Article 1.5 added by Stats. 1979, Ch. 1029. ) ## 2945.2. (a) In addition to any other right under law to rescind a contract, an owner has the right to cancel such a contract until midnight of the fifth business day, as defined in subdivision (e) of Section 1689.5, after the day on which the owner signs a contract that complies with Section 2945.3. (b) Cancellation occurs when the owner gives written notice of cancellation to the foreclosure consultant by mail at the address specified in the contract, or by facsimile or electronic mail at the number or address identified in the contract. (c) Notice of cancellation, if given by mail, is effective when deposited in the mail properly addressed with postage prepaid. If given by facsimile or electronic mail, notice of cancellation is effective when successfully transmitted. (d) Notice of cancellation given by the owner need not take the particular form as provided with the contract and, however expressed, is effective if it indicates the intention of the owner not to be bound by the contract. (Amended by Stats. 2008, Ch. 278, Sec. 2. Effective January 1, 2009. Operative July 1, 2009, by Sec. 7 of Ch. 278.)
  35. 2945.3.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1.5. Mortgage Foreclosure Consultants [2945 - 2945.11] ( Article 1.5 added by Stats. 1979, Ch. 1029. )

    Verify source ↗

    Foreclosure consultant contracts must be written, disclose services and compensation, include required notices, and give the owner cancellation rights.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1.5. Mortgage Foreclosure Consultants [2945 - 2945.11] ( Article 1.5 added by Stats. 1979, Ch. 1029. ) ## 2945.3. (a) Every contract shall be in writing and shall fully disclose the exact nature of the foreclosure consultant’s services and the total amount and terms of compensation. (b) The following notice, printed in at least 14-point boldface type and completed with the name of the foreclosure consultant, shall be printed immediately above the statement required by subdivision (d): “NOTICE REQUIRED BY CALIFORNIA LAW or anyone working (Name) for him or her CANNOT: (1) Take any money from you or ask you for money untilhas (Name) completely finished doing everything he or she said he or she would do; and (2) Ask you to sign or have you sign any lien, deed of trust, or deed.” (c) The contract shall be written in the same language as principally used by the foreclosure consultant to describe his or her services or to negotiate the contract. In addition, the foreclosure consultant shall provide the owner, before the owner signs the contract, with a copy of a completed contract written in any other language used in any communication between the foreclosure consultant and the owner and in any language described in subdivision (b) of Section 1632 and requested by the owner. If English is the language principally used by the foreclosure consultant to describe the foreclosure consultant’s services or to negotiate the contract, the foreclosure consultant shall notify the owner orally and in writing before the owner signs the contract that the owner has the right to ask for a completed copy of the contract in a language described in subdivision (b) of Section 1632. (d) The contract shall be dated and signed by the owner and shall contain in immediate proximity to the space reserved for the owner’s signature a conspicuous statement in a size equal to at least 10-point boldface type, as follows: “You, the owner, may cancel this transaction at any time prior to midnight of the fifth business day after the date of this transaction. See the attached notice of cancellation form for an explanation of this right.” (e) The contract shall contain on the first page, in a type size no smaller than that generally used in the body of the document, each of the following: (1) The name, mailing address, electronic mail address, and facsimile number of the foreclosure consultant to which the notice of cancellation is to be mailed. (2) The date the owner signed the contract. (f) The contract shall be accompanied by a completed form in duplicate, captioned “notice of cancellation,” which shall be attached to the contract, shall be easily detachable, and shall contain in type of at least 10-point the following statement written in the same language as used in the contract: “NOTICE OF CANCELLATION (Enter date of transaction) (Date) You may cancel this transaction, without any penalty or obligation, within five business days from the above date. To cancel this transaction, mail or deliver a signed and dated copy of this cancellation notice, or any other written notice, or send a telegram, to (Name of foreclosure consultant) at (Address of foreclosure consultant’s place of business) You may also cancel by sending a facsimile (fax) of a signed and dated copy of this cancellation notice, or any other written notice, to the following number: (Facsimile telephone number of foreclosure consultant’s place of business) You may also cancel by sending an e-mail canceling this transaction to the following e-mail address: (E-mail address of foreclosure consultant’s business) I hereby cancel this transaction . (Date) ” (Owner’s signature) (g) The foreclosure consultant shall provide the owner with a copy of the contract and the attached notice of cancellation. (h) Until the foreclosure consultant has complied with this section, the owner may cancel the contract. (Amended by Stats. 2008, Ch. 278, Sec. 3. Effective January 1, 2009. Operative July 1, 2009, by Sec. 7 of Ch. 278.)
  36. 2945.4.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1.5. Mortgage Foreclosure Consultants [2945 - 2945.11] ( Article 1.5 added by Stats. 1979, Ch. 1029. )

    Verify source ↗

    A foreclosure consultant must not take prohibited compensation, liens, powers of attorney, or other interests, and must not induce noncompliant contracts.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1.5. Mortgage Foreclosure Consultants [2945 - 2945.11] ( Article 1.5 added by Stats. 1979, Ch. 1029. ) ## 2945.4. It shall be a violation for a foreclosure consultant to: (a) Claim, demand, charge, collect, or receive any compensation until after the foreclosure consultant has fully performed each and every service the foreclosure consultant contracted to perform or represented that he or she would perform. (b) Claim, demand, charge, collect, or receive any fee, interest, or any other compensation for any reason which exceeds 10 percent per annum of the amount of any loan which the foreclosure consultant may make to the owner. (c) Take any wage assignment, any lien of any type on real or personal property, or other security to secure the payment of compensation. That security shall be void and unenforceable. (d) Receive any consideration from any third party in connection with services rendered to an owner unless that consideration is fully disclosed to the owner. (e) Acquire any interest in a residence in foreclosure from an owner with whom the foreclosure consultant has contracted. Any interest acquired in violation of this subdivision shall be voidable, provided that nothing herein shall affect or defeat the title of a bona fide purchaser or encumbrancer for value and without notice of a violation of this article. Knowledge that the property was “residential real property in foreclosure,” does not constitute notice of a violation of this article. This subdivision may not be deemed to abrogate any duty of inquiry which exists as to rights or interests of persons in possession of residential real property in foreclosure. (f) Take any power of attorney from an owner for any purpose. (g) Induce or attempt to induce any owner to enter into a contract which does not comply in all respects with Sections 2945.2 and 2945.3. (h) Enter into an agreement at any time to assist the owner in arranging, or arrange for the owner, the release of surplus funds after the trustee’s sale is conducted, whether the agreement involves direct payment, assignment, deed, power of attorney, assignment of claim from an owner to the foreclosure consultant or any person designated by the foreclosure consultant, or any other compensation. (Amended by Stats. 2008, Ch. 278, Sec. 4. Effective January 1, 2009. Operative July 1, 2009, by Sec. 7 of Ch. 278.)
  37. 2945.45.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1.5. Mortgage Foreclosure Consultants [2945 - 2945.11] ( Article 1.5 added by Stats. 1979, Ch. 1029. )

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    A person acting as a foreclosure consultant may not take the listed actions unless they register with the Department of Justice, keep the registration active, and meet the required filing and bond conditions.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1.5. Mortgage Foreclosure Consultants [2945 - 2945.11] ( Article 1.5 added by Stats. 1979, Ch. 1029. ) ## 2945.45. (a) Except as provided in subdivision (b) of Section 2945.1, a person shall not take any action specified in subdivision (a) of Section 2945.1 unless the person satisfies the following requirements: (1) The person registers with, and is issued and maintains a certificate of registration from, the Department of Justice in accordance with the following requirements: (A) The person shall submit a completed registration form, along with applicable fees, to the department. The registration form shall include the name, address, and telephone number of the foreclosure consultant, all of the names, addresses, telephone numbers, Internet Web sites, and e-mail addresses used or proposed to be used in connection with acting as a foreclosure consultant, a statement that the person has not been convicted of, or pled nolo contendere to, any crime involving fraud, misrepresentation, dishonesty, or a violation of this article, a statement that the person has not been liable under any civil judgment for fraud, misrepresentation, or violations of this article or of Section 17200 or 17500 of the Business and Professions Code, and any additional information required by the department. (B) The registration form shall be accompanied by a copy of all print or electronic advertising and other promotional material, and scripts of all telephonic or broadcast advertising and other statements used or proposed to be used in connection with acting as a foreclosure consultant. (C) The registration form shall be accompanied by a copy of the bond required pursuant to paragraph (2). (D) The person shall file an update of any material change in the information required by subparagraphs (A) and (B) with the department. (E) The person shall pay any fee set by the department to defray reasonable costs incurred in connection with the department’s responsibilities under this article. (2) The person obtains and maintains in force a surety bond in the amount of one hundred thousand dollars ($100,000). The bond shall be executed by a corporate surety admitted to do business in this state. The bond shall be made in favor of the State of California for the benefit of homeowners for damages caused by the foreclosure consultant’s violation of this article or any other provision of law. A copy of the bond shall be filed with the Secretary of State, with a copy provided to the department pursuant to subparagraph (C) of paragraph (1). (b) The Foreclosure Consultant Regulation Fund is hereby created in the State Treasury for the deposit of fees submitted to the Department of Justice pursuant to subparagraph (A) of paragraph (1) of subdivision (a) for registration as a foreclosure consultant. Moneys in the fund shall be available, upon appropriation by the Legislature, for the costs of the department incurred in connection with the administration of the registration program. (c) The Department of Justice may refuse to issue, or may revoke, a certificate of registration because of any misstatement in the registration form, because the foreclosure consultant has been held liable for the violation of any law described in subparagraph (A) of paragraph (1) of subdivision (a), because the foreclosure consultant has failed to maintain the bond required under paragraph (2) of subdivision (a), or because of any violation of this chapter. (d) A person who violates subdivision (a) shall be punished, for each violation, by a fine of not less than one thousand dollars ($1,000) and not more than twenty-five thousand dollars ($25,000), by imprisonment in the county jail for not more than one year, or by both that fine and imprisonment. The imposition of a penalty pursuant to this subdivision shall not be affected by the availability of any other relief, remedy, or penalty provided by law, and shall not affect the availability of any such relief, remedy, or penalty. (Added by Stats. 2008, Ch. 278, Sec. 5. Effective January 1, 2009. Operative July 1, 2009, by Sec. 7 of Ch. 278.)
  38. 2945.5.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1.5. Mortgage Foreclosure Consultants [2945 - 2945.11] ( Article 1.5 added by Stats. 1979, Ch. 1029. )

    Verify source ↗

    A homeowner cannot validly waive rights under this article, and a foreclosure consultant’s attempt to get an owner to waive those rights is treated as a violation.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1.5. Mortgage Foreclosure Consultants [2945 - 2945.11] ( Article 1.5 added by Stats. 1979, Ch. 1029. ) ## 2945.5. Any waiver by an owner of the provisions of this article shall be deemed void and unenforceable as contrary to public policy. Any attempt by a foreclosure consultant to induce an owner to waive his rights shall be deemed a violation of this article. (Amended by Stats. 1980, Ch. 676, Sec. 53.)
  39. 2945.6.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1.5. Mortgage Foreclosure Consultants [2945 - 2945.11] ( Article 1.5 added by Stats. 1979, Ch. 1029. )

    Verify source ↗

    An owner may sue a foreclosure consultant for violating this chapter, and the court can award damages, fees, costs, equitable relief, and sometimes exemplary damages. The action must be filed within four years of the alleged violation.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1.5. Mortgage Foreclosure Consultants [2945 - 2945.11] ( Article 1.5 added by Stats. 1979, Ch. 1029. ) ## 2945.6. (a) An owner may bring an action against a foreclosure consultant for any violation of this chapter. Judgment shall be entered for actual damages, reasonable attorneys’ fees and costs, and appropriate equitable relief. The court also may, in its discretion, award exemplary damages and shall award exemplary damages equivalent to at least three times the compensation received by the foreclosure consultant in violation of subdivision (a), (b), or (d) of Section 2945.4, and three times the owner’s actual damages for any violation of subdivision (c), (e), or (g) of Section 2945.4, in addition to any other award of actual or exemplary damages. (b) The rights and remedies provided in subdivision (a) are cumulative to, and not a limitation of, any other rights and remedies provided by law. Any action brought pursuant to this section shall be commenced within four years from the date of the alleged violation. (Amended by Stats. 1997, Ch. 50, Sec. 5. Effective January 1, 1998.)
  40. 2945.7.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1.5. Mortgage Foreclosure Consultants [2945 - 2945.11] ( Article 1.5 added by Stats. 1979, Ch. 1029. )

    Verify source ↗

    A person who violates Section 2945.4 can be fined, jailed, or both.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1.5. Mortgage Foreclosure Consultants [2945 - 2945.11] ( Article 1.5 added by Stats. 1979, Ch. 1029. ) ## 2945.7. Any person who commits any violation described in Section 2945.4 shall be punished by a fine of not more than ten thousand dollars ($10,000), by imprisonment in the county jail for not more than one year, or pursuant to subdivision (h) of Section 1170 of the Penal Code, or by both that fine and imprisonment for each violation. These penalties are cumulative to any other remedies or penalties provided by law. (Amended by Stats. 2011, Ch. 15, Sec. 35. (AB 109) Effective April 4, 2011. Operative October 1, 2011, by Sec. 636 of Ch. 15, as amended by Stats. 2011, Ch. 39, Sec. 68.)
  41. 2945.8.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1.5. Mortgage Foreclosure Consultants [2945 - 2945.11] ( Article 1.5 added by Stats. 1979, Ch. 1029. )

    Verify source ↗

    If any part of this article, or its application to a person or situation, is held unconstitutional, the rest of the article still applies.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1.5. Mortgage Foreclosure Consultants [2945 - 2945.11] ( Article 1.5 added by Stats. 1979, Ch. 1029. ) ## 2945.8. If any provision of this article or the application thereof to any person or circumstance is held to be unconstitutional, the remainder of the article and the application of such provision to other persons and circumstances shall not be affected thereby. (Added by Stats. 1979, Ch. 1029.)
  42. 2945.9.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1.5. Mortgage Foreclosure Consultants [2945 - 2945.11] ( Article 1.5 added by Stats. 1979, Ch. 1029. )

    Verify source ↗

    A foreclosure consultant can be liable for damages caused by its representative’s statements or acts connected with the consultant’s services, receipt of consideration or property, or prohibited acts. The section also defines “representative.”

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 1.5. Mortgage Foreclosure Consultants [2945 - 2945.11] ( Article 1.5 added by Stats. 1979, Ch. 1029. ) ## 2945.9. (a) A foreclosure consultant is liable for all damages resulting from any statement made or act committed by the foreclosure consultant’s representative in any manner connected with the foreclosure consultant’s (1) performance, offer to perform, or contract to perform any of the services described in subdivision (a) of Section 2945.1, (2) receipt of any consideration or property from or on behalf of an owner, or (3) performance of any act prohibited by this article. (b) “Representative” for the purposes of this section means a person who in any manner solicits, induces, or causes (1) any owner to contract with a foreclosure consultant, (2) any owner to pay any consideration or transfer title to the residence in foreclosure to the foreclosure consultant, or (3) any member of the owner’s family or household to induce or cause any owner to pay any consideration or transfer title to the residence in foreclosure to the foreclosure consultant. (Amended by Stats. 2006, Ch. 538, Sec. 55. Effective January 1, 2007.)
  43. 2947.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. )

    Verify source ↗

    Real property interests that can be transferred may be mortgaged.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. ) ## 2947. Any interest in real property which is capable of being transferred may be mortgaged. (Enacted 1872.)
  44. 2948.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. )

    Verify source ↗

    A mortgage of real property may be created in substantially the form set out in this section.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. ) ## 2948. A mortgage of real property may be made in substantially the following form: This mortgage, made the ____ day of ________, in the year ____, by A B, of _____, mortgagor, to C D, of ______, mortgagee, witnesseth: That the mortgagor mortgages to the mortgagee [here describe the property], as security for the payment to him of _______ dollars, on [or before] the _____ day of ________, in the year ____, with interest thereon [or as security for the payment of an obligation, describing it, etc.] A B. (Enacted 1872.)
  45. 2948.5.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. )

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    A borrower generally cannot be charged interest for certain periods before loan funds are disbursed on a mortgage or deed of trust for a 1–4 unit residential property.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. ) ## 2948.5. (a) A borrower shall not be required to pay interest on a principal obligation under a promissory note secured by a mortgage or deed of trust on real property improved with between one to four residential dwelling units for any period that meets any of the following requirements: (1) Is more than one day prior to the date that the loan proceeds are disbursed from escrow. (2) In the event of no escrow, if a request for recording is made in connection with the disbursement, is more than one day prior to the date the loan proceeds are disbursed to the borrower, to a third party on behalf of the borrower, or to the lender to satisfy an existing obligation of the borrower. (3) In all other circumstances where there is no escrow and no request for recording, is prior to the date funds are disbursed to the borrower, to a third party on behalf of the borrower, or to the lender to satisfy an existing obligation of the borrower. (b) Interest may commence to accrue on the business day immediately preceding the day of disbursement, for obligations described in paragraphs (1) and (2) of subdivision (a) if both of the following occur: (1) The borrower affirmatively requests, and the lender agrees, that the disbursement will occur on Monday, or a day immediately following a bank holiday. (2) The following information is disclosed to the borrower in writing: (A) the amount of additional per diem interest charged to facilitate disbursement on Monday or the day following a holiday, as the case may be, and (B) that it may be possible to avoid the additional per diem interest charge by disbursing the loan proceeds on a day immediately following a business day. This disclosure shall be provided to the borrower and acknowledged by the borrower by signing a copy of the disclosure document prior to placing funds in escrow. (c) This section does not apply to a loan that is subject to subdivision (c) of Section 10242 of the Business and Professions Code. (Amended by Stats. 2003, Ch. 554, Sec. 1. Effective January 1, 2004.)
  46. 2949.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. )

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    A mortgage or deed of trust on a single-family, owner-occupied dwelling cannot be put in default, or accelerated, just because the owner adds a junior mortgage or junior deed of trust.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. ) ## 2949. (a) No mortgage or deed of trust on real property containing only a single-family, owner-occupied dwelling may be declared in default, nor may the maturity date of the indebtedness secured thereby be accelerated, solely by reason of the owner further encumbering the real property or any portion thereof, with a junior mortgage or junior deed of trust. (b) As used in this section, “single-family, owner-occupied dwelling” means a dwelling which will be owned and occupied by a signatory to the mortgage or deed of trust secured by such dwelling within 90 days of the execution of such mortgage or deed of trust. (Added by Stats. 1972, Ch. 698.)
  47. 2950.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. )

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    A grant that looks like an absolute conveyance is not treated as defeasible against third parties unless a duly executed and acknowledged defeasance instrument is recorded.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. ) ## 2950. When a grant of real property purports to be an absolute conveyance, but is intended to be defeasible on the performance of certain conditions, such grant is not defeated or affected as against any person other than the grantee or his or her heirs or devisees, or persons having actual notice, unless an instrument of defeasance, duly executed and acknowledged, shall have been recorded in the office of the county recorder of the county where the property is situated. (Amended by Stats. 2013, Ch. 76, Sec. 19. (AB 383) Effective January 1, 2014.)
  48. 2951.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. )

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    Certain new conventional home mortgage loans must include a term allowing an existing borrower to buy out another borrower’s interest by assuming that borrower’s share of the mortgage, if the buyout is tied to divorce, legal separation, or a property settlement and the borrower qualifies under the lender’s standards.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. ) ## 2951. (a) A conventional home mortgage loan originated on or after January 1, 2027, and secured by owner-occupied residential real property containing four or fewer dwelling units with multiple borrowers shall include provisions to allow for any of the existing borrowers to purchase the property interest of another borrower on the loan by assuming the seller’s portion of the mortgage in connection with a decree of dissolution of marriage, a legal separation agreement, or an incidental property settlement if the assuming borrower qualifies for the underlying loan, as determined by the lender. (b) For purposes of this section: (1) “Conventional home mortgage loan” means a mortgage loan that is not insured or guaranteed by the federal government. (2) “Owner-occupied” means that the property is the principal residence of the borrowers and is security for a loan made for personal, family, or household purposes. (Added by Stats. 2024, Ch. 431, Sec. 1. (AB 3100) Effective January 1, 2025.)
  49. 2952.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. )

    Verify source ↗

    Fictitious mortgages and deeds of trust of real property may be recorded, and the county recorder must index, record, and mark them as fictitious.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. ) ## 2952. Mortgages and deeds of trust of real property may be acknowledged or proved, certified and recorded, in like manner and with like effect, as grants thereof; provided, however, that a mortgage or deed of trust of real property may be recorded and constructive notice of the same and the contents thereof given in the following manner: Any person may record in the office of the county recorder of any county fictitious mortgages and deeds of trust of real property. Those fictitious mortgages and deeds of trust need not be acknowledged, or proved or certified to be recorded or entitled to record. Those mortgages and deeds of trust shall have noted upon the face thereof that they are fictitious. The county recorder shall index and record fictitious mortgages and deeds of trust in the same manner as other mortgages and deeds of trust are recorded, and shall note on all indices and records of the same that they are fictitious. Thereafter, any of the provisions of any recorded fictitious mortgage or deed of trust may be included for any and all purposes in any mortgage or deed of trust by reference therein to any of those provisions, without setting the same forth in full; provided, the fictitious mortgage or deed of trust is of record in the county in which the mortgage or deed of trust adopting or including by reference any of the provisions thereof is recorded. The reference shall contain a statement, as to each county in which the mortgage or deed of trust containing such a reference is recorded, of the date the fictitious mortgage or deed of trust was recorded, the county recorder’s office wherein it is recorded, and the book or volume and the first page of the records in the recorder’s office wherein and at which the fictitious mortgage or deed of trust was recorded, and a statement by paragraph numbers or any other method that will definitely identify the same, of the specific provisions of the fictitious mortgage or deed of trust that are being so adopted and included therein. The recording of any mortgage or deed of trust which has included therein any of those provisions by reference as aforesaid shall operate as constructive notice of the whole thereof including the terms, as a part of the written contents of the mortgage or deed of trust, of those provisions so included by reference as though the same were written in full therein. The parties bound or to be bound by provisions so adopted and included by reference shall be bound thereby in the same manner and with like effect for all purposes as though those provisions had been and were set forth in full in any mortgage or deed of trust. The amendment to this section enacted by the 1957 Regular Session of the Legislature does not constitute a change in, but is declaratory of, the preexisting law. (Amended by Stats. 2000, Ch. 924, Sec. 1. Effective January 1, 2001.)
  50. 2953.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. )

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    A borrower cannot make a loan-related agreement that waives certain statutory rights; such a waiver agreement is void unless an exception applies.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. ) ## 2953. Any express agreement made or entered into by a borrower at the time of or in connection with the making of or renewing of any loan secured by a deed of trust, mortgage or other instrument creating a lien on real property, whereby the borrower agrees to waive the rights, or privileges conferred upon the borrower by Sections 2924, 2924b, or 2924c of the Civil Code or by Sections 580a or 726 of the Code of Civil Procedure, shall be void and of no effect. The provisions of this section shall not apply to any deed of trust, mortgage, or other liens given to secure the payment of bonds or other evidences of indebtedness authorized or permitted to be issued by the Commissioner of Financial Protection and Innovation, or made by a public utility subject to the provisions of the Public Utilities Act. (Amended by Stats. 2022, Ch. 452, Sec. 36. (SB 1498) Effective January 1, 2023.)
  51. 2953.1.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. )

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    This section defines “real property security instrument,” “subordination clause,” and “subordination agreement.”

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. ) ## 2953.1. As used in this section: (a) “Real property security instrument” shall include any mortgage or trust deed or land contract in or on real property. (b) “Subordination clause” shall mean a clause in a real property security instrument whereby the holder of the security interest under such instrument agrees that upon the occurrence of conditions or circumstances specified therein his security interest will become subordinate to or he will execute an agreement subordinating his interest to the lien of another real property security instrument which would otherwise be of lower priority than his lien or security interest. (c) “Subordination agreement” shall mean a separate agreement or instrument whereby the holder of the security interest under a real property security instrument agrees that (1) his existing security interest is subordinate to, or (2) upon the occurrence of conditions or circumstances specified in such separate agreement his security interest will become subordinate to, or (3) he will execute an agreement subordinating his interest to, the lien of another real property security instrument which would otherwise be of lower priority than his lien or security interest. (Added by Stats. 1963, Ch. 1861.)
  52. 2953.2.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. )

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    Real property security instruments with a subordination clause must include specific disclosure wording and formatting.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. ) ## 2953.2. Every real property security instrument which contains or has attached a subordination clause shall contain: (a) At the top of the real property security instrument there shall appear in at least 10-point bold type, or, if typewritten, in capital letters and underlined, the word “Subordinated” followed by a description of the type of security instrument. (b) A notice in at least eight-point bold type, or, if typewritten, in capital letters, shall appear immediately below the legend required by subdivision (a) of this section reading as follows: “Notice: This (insert description of real property security instrument) contains a subordination clause which may result in your security interest in the property becoming subject to and of lower priority than the lien of some other or later security instrument.” (c) If the terms of the subordination clause allow the obligor on the debt secured by the real property security instrument to obtain a loan, secured by another real property security instrument covering all or any part of the same parcel of real property, the proceeds of which may be used for any purpose or purposes other than defraying the costs for improvement of the land covered by the real property security instrument containing the subordination clause, a notice in at least eight-point bold type, or, if typewritten, in capital letters shall appear directly above the space reserved for the signature of the person whose security interest is to be subordinated, reading as follows: “Notice: This (insert description of real property security instrument) contains a subordination clause which allows the person obligated on your real property security instrument to obtain a loan a portion of which may be expended for other purposes than improvement of the land.” (Added by Stats. 1963, Ch. 1861.)
  53. 2953.3.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. )

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    Subordination agreements must include specific warning language and formatting.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. ) ## 2953.3. Every subordination agreement shall contain: (a) At the top of the subordination agreement there shall appear in at least 10-point bold type, or, if typewritten, in capital letters and underlined, the words “Subordination Agreement.” (b) A notice in at least eight-point bold type, or, if typewritten, in capital letters, shall appear immediately below the legend required by subdivision (a) of this section reading as follows: “Notice: This subordination agreement (“may result” or “results” as appropriate) in your security interest in the property becoming subject to and of lower priority than the lien of some other or later security instrument.” (c) If the terms of the subordination agreement provide that the obligor on the debt secured by the real property security instrument may either obtain a loan, or obtain an agreement from the holder of the real property security which will allow him to obtain a loan, the proceeds of which may be used for any purpose or purposes other than defraying the actual contract costs for improvement of the land, covered by the real property security instrument which is, or is to become subordinated, a notice in at least eight-point bold type or, if typewritten, in capital letters, shall appear directly above the space reserved for the signature of the person whose security interest is to be subordinated, reading as follows: “Notice: This subordination agreement contains a provision which (“allows” or “may allow” as appropriate) the person obligated on your real property security to obtain a loan a portion of which may be expended for other purposes than improvement of the land.” (Added by Stats. 1963, Ch. 1861.)
  54. 2953.4.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. )

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    A noncompliant subordination clause or agreement may be voided by the affected security-interest holder or successor-in-interest, but only within two years and not if they had actual knowledge of it; the holder can also waive these rules in writing and record it.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. ) ## 2953.4. (a) Any subordination clause and any subordination agreement which is executed after the effective date of this act and which does not substantially comply with the provisions of Section 2953.2 or Section 2953.3 shall be voidable upon the election of the person whose security interest is to be subordinated or his successor-in-interest exercised within two years of the date on which the instrument to which his security interest is subordinated is executed; provided that such power of avoidance shall not be exercisable by any person having actual knowledge of the existence and terms of the subordination clause or agreement. (b) The person whose security interest was to be subordinated or his successor-in-interest shall exercise his election to void the subordination clause or subordination agreement provided by subdivision (a) of this section by recording a notice stating that the provisions of Civil Code Section 2953.2 or Civil Code Section 2953.3 have not been complied with, and that he is the holder of the security instrument which is or was to become subordinated and that he elects to avoid the effect of the subordination clause or subordination agreement. (c) The provisions of this section may be waived by the subsequent execution and recordation by the holder of the security interest which is or may become subordinated, of a statement that he knows of the existence of the subordination clause or agreement and of its terms and that he waives the provisions of this section and the requirements of Sections 2953.1, 2953.2, and 2953.3. (Added by Stats. 1963, Ch. 1861.)
  55. 2953.5.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. )

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    Sections 2953.1 through 2953.4 do not apply to certain subordination clauses or agreements involving loans over $25,000.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. ) ## 2953.5. (a) Sections 2953.1 through 2953.4 shall not apply to any subordination clause or subordination agreement which expressly states that the subordinating loan shall exceed twenty-five thousand dollars ($25,000). (b) Sections 2953.1 through 2953.4 shall not apply to any subordination clause or subordination agreement which is executed in connection with a loan which exceeds twenty-five thousand dollars ($25,000). (Added by Stats. 1963, Ch. 1861.)
  56. 2954.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. )

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    This section limits when an impound, trust, or similar account may be required for certain single-family owner-occupied real property loans and sale contracts, and it requires annual accountings on request.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. ) ## 2954. (a) (1) No impound, trust, or other type of account for payment of taxes on the property, insurance premiums, or other purposes relating to the property shall be required as a condition of a real property sale contract or a loan secured by a deed of trust or mortgage on real property containing only a single-family, owner-occupied dwelling, except: (A) where required by a state or federal regulatory authority, (B) where a loan is made, guaranteed, or insured by a state or federal governmental lending or insuring agency, (C) upon a failure of the purchaser or borrower to pay two consecutive tax installments on the property prior to the delinquency date for such payments, (D) where the original principal amount of such a loan is (i) 90 percent or more of the sale price, if the property involved is sold, or is (ii) 90 percent or more of the appraised value of the property securing the loan, (E) whenever the combined principal amount of all loans secured by the real property exceeds 80 percent of the appraised value of the property securing the loans, (F) where a loan is made in compliance with the requirements for higher priced mortgage loans established in Regulation Z, whether or not the loan is a higher priced mortgage loan, or (G) where a loan is refinanced or modified in connection with a lender’s homeownership preservation program or a lender’s participation in such a program sponsored by a federal, state, or local government authority or a nonprofit organization. Nothing contained in this section shall preclude establishment of such an account on terms mutually agreeable to the parties to the loan, if, prior to the execution of the loan or sale agreement, the seller or lender has furnished to the purchaser or borrower a statement in writing, which may be set forth in the loan application, to the effect that the establishment of such an account shall not be required as a condition to the execution of the loan or sale agreement, and further, stating whether or not interest will be paid on the funds in such an account. An impound, trust, or other type of account for the payment of taxes, insurance premiums, or other purposes relating to property established in violation of this subdivision is voidable, at the option of the purchaser or borrower, at any time, but shall not otherwise affect the validity of the loan or sale. (2) For the purposes of this subdivision, “Regulation Z” means any rule, regulation, or interpretation promulgated by the Board of Governors of the Federal Reserve System and any interpretation or approval issued by an official or employee duly authorized by the board to issue interpretations or approvals dealing with, respectively, consumer leasing or consumer lending, pursuant to the federal Truth in Lending Act, as amended (15 U.S.C. Sec. 1601 et seq.). (b) Every mortgagee of real property, beneficiary under a deed of trust on real property, or vendor on a real property sale contract upon the written request of the mortgagor, trustor, or vendee shall furnish to the mortgagor, trustor, or vendee for each calendar year within 60 days after the end of the year an itemized accounting of moneys received for interest and principal repayment and received and held in or disbursed from an impound or trust account, if any, for payment of taxes on the property, insurance premiums, or other purposes relating to the property subject to the mortgage, deed of trust, or real property sale contract. The mortgagor, trustor, or vendee shall be entitled to receive one such accounting for each calendar year without charge and shall be entitled to additional similar accountings for one or more months upon written request and on payment in advance of fees as follows: (1) Fifty cents ($0.50) per statement when requested in advance on a monthly basis for one or more years. (2) One dollar ($1) per statement when requested for only one month. (3) Five dollars ($5) if requested for a single cumulative statement giving all the information described above back to the last statement rendered. If the mortgagee, beneficiary, or vendor transmits to the mortgagor, trustor, or vendee a monthly statement or passbook showing moneys received for interest and principal repayment and received and held in and disbursed from an impound or trust account, if any, the mortgagee, beneficiary, or vendor shall be deemed to have complied with this section. No increase in the monthly rate of payment of a mortgagor, trustor, or vendee on a real property sale contract for impound or trust accounts shall be effective until after the mortgagee, beneficiary, or vendor has furnished the mortgagor, trustor, or vendee with an itemized accounting of the moneys presently held by it in the accounts, and a statement of the new monthly rate of payment, and an explanation of the factors necessitating the increase. The provisions of this section shall be in addition to the obligations of the parties as stated by Section 2943. Every person who willfully or repeatedly violates this subdivision shall be subject to punishment by a fine of not less than fifty dollars ($50) nor more than two hundred dollars ($200). (c) As used in this section, “single-family, owner-occupied dwelling” means a dwelling that will be owned and occupied by a signatory to the mortgage or deed of trust secured by that dwelling within 90 days of the execution of the mortgage or deed of trust. (Amended by Stats. 2010, Ch. 328, Sec. 30. (SB 1330) Effective January 1, 2011.)
  57. 2954.1.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. )

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    Lenders and related account holders must limit impound account collections and uses, refund excess amounts within 30 days, and must not manage payments so insurance is canceled or taxes become delinquent.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. ) ## 2954.1. No lender or person who purchases obligations secured by real property, or any agent of such lender or person, who maintains an impound, trust, or other type of account for the payment of taxes and assessments on real property, insurance premiums, or other purposes relating to such property shall do any of the following: (a) Require the borrower or vendee to deposit in such account in any month an amount in excess of that which would be permitted in connection with a federally related mortgage loan pursuant to Section 10 of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2609), as amended. (b) Require the sums maintained in such account to exceed at any time the amount or amounts reasonably necessary to pay such obligations as they become due. Any sum held in excess of the reasonable amount shall be refunded within 30 days unless the parties mutually agree to the contrary. Such an agreement may be rescinded at any time by any party. (c) Make payments from the account in a manner so as to cause any policy of insurance to be canceled or so as to cause property taxes or other similar payments to become delinquent. Nothing contained herein shall prohibit requiring additional amounts to be paid into an impound account in order to recover any deficiency which may exist in the account. Any person harmed by a violation of this section shall be entitled to sue to recover his or her damages or for injunctive relief; but such violation shall not otherwise affect the validity of the loan or sale. This section applies to all such accounts maintained after the effective date of this act. (Amended by Stats. 1983, Ch. 74, Sec. 1.)
  58. 2954.10.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. )

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    If an obligee accelerates a mortgage loan after a property transfer, it may not charge a prepayment fee or penalty for the resulting prepayment.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. ) ## 2954.10. An obligee which accelerates the maturity date of the principal and accrued interest, pursuant to contract, on any loan secured by a mortgage or deed of trust on real property or an estate for years therein, upon the conveyance of any right, title, or interest in that property, may not claim, exact, or collect any charge, fee, or penalty for any prepayment resulting from that acceleration. The provisions of this section shall not apply to a loan other than a loan secured by residential real property or any interest therein containing four units or less, in which the obligor has expressly waived, in writing, the right to repay in whole or part without penalty, or has expressly agreed, in writing, to the payment of a penalty for prepayment upon acceleration. For any loan executed on or after January 1, 1984, this waiver or agreement shall be separately signed or initialed by the obligor and its enforcement shall be supported by evidence of a course of conduct by the obligee of individual weight to the consideration in that transaction for the waiver or agreement. (Amended by Stats. 1989, Ch. 698, Sec. 11.)
  59. 2954.11.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. )

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    Borrowers on covered installment loans may prepay at any time, but lenders may charge a limited prepayment fee only in specific circumstances and must give written disclosure.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. ) ## 2954.11. (a) As used in this section: (1) “Open-end credit plan” has the meaning set forth in Regulation Z of the Federal Reserve System (12 C.F.R. 226.2(a)(20)). (2) “Installment loan” means any loan specified in subdivision (h) extended under an installment loan feature. (3) “Installment loan feature” means a feature of an open-end credit plan which provides for a separate subaccount of the open-end credit plan pursuant to which the principal of, and interest on, the loan associated with that subaccount are to be repaid in substantially equal installments over a specified period without regard to the amount outstanding under any other feature of the open-end credit plan or the payment schedule with respect to the other feature. (b) (1) Except as otherwise provided by statute, the borrower under any installment loan shall be entitled to prepay the whole or any part of the installment loan, together with any accrued interest, at any time. (2) With respect to any installment loan, nothing in this section shall preclude a borrower from becoming obligated, by an agreement in writing, to pay a prepayment charge; but only a prepayment made within five years of the date the installment loan is made may be subject to a prepayment charge and then solely as herein set forth. An amount not exceeding 20 percent of the original principal amount of the installment loan may be prepaid in any one 12-month period without incurring a prepayment charge. A prepayment charge may be imposed on any amount prepaid in any 12-month period in excess of 20 percent of the original principal amount of the installment loan, which charge shall not exceed an amount equal to the payment of six months’ advance interest on the amount prepaid in excess of 20 percent of the original principal amount of the installment loan. (c) For purposes of subdivision (b): (1) If the deed of trust or mortgage secures repayment of more than one installment loan, each of the installment loans shall be deemed to have been separately made on the date that the proceeds of the installment loan are advanced. (2) If the outstanding balance of a loan advanced pursuant to an open-end credit plan thereafter becomes subject to an installment loan feature of the credit plan, the loan shall be deemed to have been made when the loan becomes subject to the installment loan feature, whether the feature was available at the borrower’s option under original terms of the open-end credit plan or the feature thereafter became available upon modification of the original terms of the open-end credit plan. (d) Notwithstanding subdivision (b), no prepayment charge may be imposed with respect to an installment loan subject to this section if any of the following apply: (1) The residential structure securing the installment loan has been damaged to such an extent by a natural disaster for which a state of emergency is declared by the Governor, pursuant to Chapter 7 (commencing with Section 8550) of Division 1 of Title 2 of the Government Code, that the residential structure cannot be occupied and the prepayment is causally related thereto. (2) The prepayment is made in conjunction with a bona fide sale of the real property securing the installment loan. (3) The lender does not comply with subdivision (e). (4) The term of the installment loan is for not more than five years and the original principal amount of the installment loan is less than five thousand dollars ($5,000). (e) (1) The lender receiving a borrower’s obligation to pay a prepayment charge authorized by subdivision (b) shall furnish the borrower with a written disclosure describing the existence of the prepayment charge obligation, the conditions under which the prepayment charge shall be payable, and the method by which the amount of the prepayment charge shall be determined. If subdivision (f) provides the borrower with a right to rescind the installment loan and the related obligation to pay a prepayment charge, the disclosure required by this subdivision shall also inform the borrower of this right to rescind, how and when to exercise the right, and where to mail or deliver a notice of rescission. (2) The amount of, or the method for determining the amount of, the prepayment charge for an installment loan shall be set forth in the agreement governing the open-end credit plan. (f) (1) The disclosure required by paragraph (1) of subdivision (e) shall be furnished when or up to 30 days before the borrower signs the agreement or other documents required by the lender for the installment loan, or no earlier than 30 days before nor later than 10 days following the making of the installment loan, if made without the borrower having to sign an agreement or other documentation, such as may be the case if the installment loan may be made on the basis of telephone or other discussions between the lender and the borrower not taking place in person. If the installment loan is made before the borrower has been furnished with the disclosure required by paragraph (1) of subdivision (e), the borrower shall have the right to rescind the installment loan and the related obligation to pay a prepayment charge by personally delivering or mailing notice to that effect to the lender, by first-class mail with postage prepaid, at the lender’s location stated in its disclosure concerning the right to rescind within 10 days following the furnishing of the disclosure. (2) If the disclosure required by paragraph (1) of subdivision (e) is included in the agreement or other document signed by the borrower for the installment loan, the disclosure shall be deemed given at that time. In other cases, the disclosure shall be deemed furnished when personally delivered to the borrower or three days after it is mailed to the borrower, first-class mail with postage prepaid, at the address to which billing statements for the open-end credit plan are being sent. (3) The disclosure required by paragraph (1) of subdivision (e) may be separately furnished or may be included in the agreement or other document for the installment loan, provided that a copy of the disclosure that the borrower may retain is furnished to the borrower. (4) If there is more than one borrower with respect to the open-end credit plan, a disclosure to any one of them pursuant to subdivision (e) shall satisfy the requirements of that subdivision with respect to all of them. (g) If after an installment loan is made the lender receives the borrower’s timely notice of the rescission of the installment loan in accordance with subdivision (f), the balance of the installment loan shall be transferred to the open-end subaccount of the open-end credit plan and the borrower shall be obligated to repay the amount under the same terms and conditions, and subject to the same fees and other charges, as would be applicable had the loan initially been extended pursuant to the open-end credit plan or had the installment loan never been made. (h) This section applies to any installment loan secured by a deed of trust or mortgage or any other lien on residential property of four units or less and Section 2954.9 does not apply to such installment loans. This section shall not apply to any loan that is subject to Section 10242.6 of the Business and Professions Code. (Added by Stats. 1996, Ch. 32, Sec. 1. Effective January 1, 1997.)
  60. 2954.12.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. )

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    A lender or servicer generally may not charge or collect future private mortgage insurance payments once the section’s conditions for cancellation are met, unless a specified institutional-third-party rule prohibits cancellation.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. ) ## 2954.12. (a) Notwithstanding Section 2954.7, and except when a statute, regulation, rule, or written guideline promulgated by an institutional third party applicable to notes or evidence of indebtedness secured by a deed of trust or mortgage purchased in whole or in part by an institutional third party specifically prohibits cancellation during the term of the indebtedness, the lender or servicer of a loan evidenced by a note or other evidence of indebtedness that is secured by a deed of trust or mortgage on the subject property may not charge or collect future payments from a borrower for private mortgage insurance or mortgage guaranty insurance as defined in subdivision (a) of Section 12640.02 of the Insurance Code, if all of the following conditions are satisfied: (1) The loan is for personal, family, household, or purchase money purposes, the subject property is owner-occupied, one-to-four unit residential real property, and the outstanding principal balance of the note or evidence of indebtedness secured by the senior deed of trust or mortgage on the subject property is equal to or less than 75 percent of the lesser of (A) if the loan was made for purchase of the property, the sales price of the property under such purchase; or (B) the appraised value of the property, as determined by the appraisal conducted in connection with the making of the loan. (2) The borrower’s scheduled payment of monthly installments of principal, interest, and escrow obligations is current at the time the right to cancellation of mortgage insurance accrues. (3) During the 12 months prior to the date upon which the right to cancellation accrues, the borrower has not been assessed more than one late penalty for any scheduled payment and has not made any scheduled payment more than 30 days late. (4) The loan evidenced by a note or evidence of indebtedness was made or executed on or after January 1, 1998. (5) No notice of default has been recorded against the real property pursuant to Section 2924, as a result of a nonmonetary default on the extension of credit by the borrower during the last 12 months prior to the accrual of the borrower’s right to cancellation. (b) This section does not apply to any of the following: (1) A note or evidence of indebtedness secured by a deed of trust or mortgage, or mortgage insurance, executed under the authority of Part 3 (commencing with Section 50900) or Part 4 (commencing with Section 51600) of Division 31 of the Health and Safety Code. (2) Any note or evidence of indebtedness secured by a deed of trust or mortgage that is funded in whole or in part pursuant to authority granted by statute, regulation, or rule that, as a condition of that funding, prohibits or limits termination of payments for private mortgage insurance or mortgage guaranty insurance during the term of the indebtedness. (c) If the note secured by the deed of trust or mortgage will be or has been sold in whole or in part to an institutional third party, adherence to the institutional third party’s standards for termination of future payments for private mortgage insurance or mortgage guaranty insurance shall be deemed in compliance with the requirements of this section. (d) For the purposes of this section, “institutional third party” means the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, the Government National Mortgage Association and other substantially similar institutions, whether public or private, provided the institutions establish and adhere to rules applicable to the right of cancellation of private mortgage insurance or mortgage guaranty insurance, which are the same or substantially the same as those utilized by the above-named institutions. (Added by Stats. 1997, Ch. 62, Sec. 1. Effective January 1, 1998.)
  61. 2954.2.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. )

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    Mortgagees covered by this section must send certain homeowners or buyers an annual written statement, and the recipient is entitled to one free copy each calendar year.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. ) ## 2954.2. (a) Every mortgagee of record of real property containing only a one- to four-family residence, when the mortgage is given to secure payment of the balance of the purchase price of the property or to refinance such a mortgage, shall furnish to the mortgagor within 60 days after the end of each calendar year a written statement showing the amount of moneys received for interest and principal repayment, late charges, moneys received and held in or disbursed from an impound account, if any, for the payment of taxes on the property, insurance premiums, bond assessments, or other purposes relating to the property, and interest credited to the account, if any. The written statement required to be furnished by this section shall be deemed furnished if the mortgagee of record transmits to the mortgagor of record cumulative statements or receipts which, for each calendar year, provide in one of the statements or receipts the information required by this section. The mortgagor, trustor or vendee shall be entitled to receive one such statement for each calendar year without charge and without request. Such statement shall include a notification in 10-point type that additional accountings can be requested by the mortgagor, trustor, or vendee, pursuant to Section 2954. (b) For the purposes of this section: (1) “Mortgagee” includes a beneficiary under a deed of trust, a vendor under a real property sale contract, and an organization which services a mortgage or deed of trust by receiving and disbursing payments for the mortgagee or beneficiary. (2) “Mortgage” includes a first or second mortgage, a first or second deed of trust, and a real property sale contract. (3) “Impound account” includes a trust or other type of account established for the purposes described in subdivision (a). (c) The requirements of this section shall be in addition to the requirements of Section 2954. (d) This section shall become operative on December 31, 1978, and apply to moneys received by a mortgagee on and after January 1, 1978. (Added by Stats. 1976, Ch. 774.)
  62. 2954.4.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. )

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    Late charges on covered mortgage or deed-of-trust installments are capped, cannot be repeated for the same installment, and cannot be charged until 10 days after the due date.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. ) ## 2954.4. (a) A charge that may be imposed for late payment of an installment due on a loan secured by a mortgage or a deed of trust on real property containing only a single-family, owner-occupied dwelling, shall not exceed either (1) the equivalent of 6 percent of the installment due that is applicable to payment of principal and interest on the loan, or (2) five dollars ($5), whichever is greater. A charge may not be imposed more than once for the late payment of the same installment. However, the imposition of a late charge on any late payment does not eliminate or supersede late charges imposed on prior late payments. A payment is not a “late payment” for the purposes of this section until at least 10 days following the due date of the installment. (b) A late charge may not be imposed on any installment which is paid or tendered in full on or before its due date, or within 10 days thereafter, even though an earlier installment or installments, or any late charge thereon, may not have been paid in full when due. For the purposes of determining whether late charges may be imposed, any payment tendered by the borrower shall be applied by the lender to the most recent installment due. (c) A late payment charge described in subdivision (a) is valid if it satisfies the requirements of this section and Section 2954.5. (d) Nothing in this section shall be construed to alter in any way the duty of the borrower to pay any installment then due or to alter the rights of the lender to enforce the payment of the installments. (e) This section is not applicable to loans made by a credit union subject to Division 5 (commencing with Section 14000) of the Financial Code, by an industrial loan company subject to Division 7 (commencing with Section 18000) of the Financial Code, or by a finance lender subject to Division 9 (commencing with Section 22000) of the Financial Code, and is not applicable to loans made or negotiated by a real estate broker subject to Article 7 (commencing with Section 10240) of Chapter 3 of Part 1 of Division 4 of the Business and Professions Code. (f) As used in this section, “single-family, owner-occupied dwelling” means a dwelling that will be owned and occupied by a signatory to the mortgage or deed of trust secured by the dwelling within 90 days of the execution of the mortgage or deed of trust. (g) This section applies to loans executed on and after January 1, 1976. (Amended by Stats. 2001, Ch. 159, Sec. 35. Effective January 1, 2002.)
  63. 2954.5.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. )

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    Before a lender can assess a first late charge on a delinquent real-property loan, it must give the borrower notice and a chance to cure or state when the charge will be assessed.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. ) ## 2954.5. (a) Before the first default, delinquency, or late payment charge may be assessed by any lender on a delinquent payment of a loan, other than a loan made pursuant to Division 9 (commencing with Section 22000) of the Financial Code, secured by real property, and before the borrower becomes obligated to pay this charge, the borrower shall either (1) be notified in writing and given at least 10 days from mailing of the notice in which to cure the delinquency, or (2) be informed, by a billing or notice sent for each payment due on the loan, of the date after which this charge will be assessed. The notice provided in either paragraph (1) or (2) shall contain the amount of the charge or the method by which it is calculated. (b) If a subsequent payment becomes delinquent the borrower shall be notified in writing, before the late charge is to be imposed, that the charge will be imposed if payment is not received, or the borrower shall be notified at least semiannually of the total amount of late charges imposed during the period covered by the notice. (c) Notice provided by this section shall be sent to the address specified by the borrower, or, if no address is specified, to the borrower’s address as shown in the lender’s records. (d) In case of multiple borrowers obligated on the same loan, a notice mailed to one shall be deemed to comply with this section. (e) The failure of the lender to comply with the requirements of this section does not excuse or defer the borrower’s performance of any obligation incurred in the loan transaction, other than his or her obligation to pay a late payment charge, nor does it impair or defer the right of the lender to enforce any other obligation including the costs and expenses incurred in any enforcement authorized by law. (f) The provisions of this section as added by Chapter 1430 of the Statutes of 1970 shall only affect loans made on and after January 1, 1971. The amendments to this section made at the 1975–76 Regular Session of the Legislature shall only apply to loans executed on and after January 1, 1976. (Amended by Stats. 2001, Ch. 159, Sec. 36. Effective January 1, 2002.)
  64. 2954.6.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. )

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    Lenders or loan arrangers must tell borrowers whether private mortgage insurance can be canceled, and provide written cancellation information when the borrower has that right.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. ) ## 2954.6. (a) If private mortgage insurance or mortgage guaranty insurance, as defined in subdivision (a) of Section 12640.02 of the Insurance Code, is required as a condition of a loan secured by a deed of trust or mortgage on real property, the lender or person making or arranging the loan shall notify the borrower whether or not the borrower has the right to cancel the insurance. If the borrower has the right to cancel, then the lender or person making or arranging the loan shall notify the borrower in writing of the following: (1) Any identifying loan or insurance information necessary to permit the borrower to communicate with the insurer or the lender concerning the insurance. (2) The conditions that are required to be satisfied before the private mortgage insurance or mortgage guaranty insurance may be subject to cancellation, which shall include, but is not limited to, both of the following: (A) If the condition is a minimum ratio between the remaining principal balance of the loan and the original or current value of the property, that ratio shall be stated. (B) Information concerning whether or not an appraisal may be necessary. (3) The procedure the borrower is required to follow to cancel the private mortgage insurance or mortgage guaranty insurance. (b) The notice required in subdivision (a) shall be given to the borrower no later than 30 days after the close of escrow. The notice shall be set forth in at least 10-point bold type. (c) With respect to any loan specified in subdivision (a) for which private mortgage insurance or mortgage guaranty insurance is still maintained, the lender or person making, arranging, or servicing the loan shall provide the borrower with a notice containing the same information as specified in subdivision (a) or a clear and conspicuous written statement indicating that (1) the borrower may be able to cancel the private mortgage insurance or mortgage guaranty insurance based upon various factors, including appreciation of the value of the property derived from a current appraisal performed by an appraiser selected by the lender or servicer, and paid for by the borrower, and (2) the borrower may contact the lender or person making, arranging, or servicing the loan at a designated address and telephone number to determine whether the borrower has a right of cancellation and, if so, the conditions and procedure to effect cancellation. The notice or statement required by this subdivision shall be provided in or with each written statement required by Section 2954.2. (d) The notice required under this section shall be provided without cost to the borrower. (e) Any person harmed by a violation of this section may obtain injunctive relief and may recover treble damages and reasonable attorney’s fees and costs. (f) This section shall not apply to any mortgage funded with bond proceeds issued under an indenture requiring mortgage insurance for the life of the loan nor to any insurance issued pursuant to Part 4 (commencing with Section 51600) of Division 31 of the Health and Safety Code, or loans insured by the Federal Housing Administration or Veterans Administration. (Amended by Stats. 2001, Ch. 137, Sec. 1. Effective January 1, 2002. Operative July 1, 2002, by Sec. 2 of Ch. 137.)
  65. 2954.65.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. )

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    A private mortgage insurer or mortgage guaranty insurer must refund the unused premium balance within 30 days after cancellation notice from the insured, if the policy can be cancelled.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. ) ## 2954.65. Within 30 days after notice of cancellation from the insured, a private mortgage insurer or mortgage guaranty insurer shall, if the policy is cancellable, refund the remaining portion of the unused premium to the person or persons designated by the insured. (Added by Stats. 1990, Ch. 1099, Sec. 2.)
  66. 2954.7.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. )

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    A borrower may stop future private mortgage insurance or mortgage guaranty insurance payments if the listed conditions are met, unless an institutional third-party rule or similar restriction specifically forbids cancellation.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. ) ## 2954.7. Except when a statute, regulation, rule, or written guideline promulgated by an institutional third party applicable to notes or evidence of indebtedness secured by a deed of trust or mortgage purchased in whole or in part by an institutional third party specifically prohibits cancellation during the term of the indebtedness, if a borrower so requests and the conditions established by paragraphs (1) to (5), inclusive, of subdivision (a) are met, a borrower may terminate future payments for private mortgage insurance, or mortgage guaranty insurance as defined in subdivision (a) of Section 12640.02 of the Insurance Code, issued as a condition to the extension of credit in the form of a loan evidenced by a note or other evidence of indebtedness that is secured by a deed of trust or mortgage on the subject real property. (a) The following conditions shall be satisfied in order for a borrower to be entitled to terminate payments for private mortgage insurance or mortgage guaranty insurance: (1) The request to terminate future payments for private mortgage insurance or mortgage guaranty insurance shall be in writing. (2) The origination date of the note or evidence of indebtedness shall be at least two years prior to the date of the request. (3) The note or evidence of indebtedness shall be for personal, family, household, or purchase money purposes, secured by a deed of trust or mortgage on owner-occupied, one- to four-unit, residential real property. (4) The unpaid principal balance owed on the secured obligation that is the subject of the private mortgage insurance or mortgage guaranty insurance shall not be more than 75 percent, unless the borrower and lender or servicer of the loan agree in writing upon a higher loan-to-value ratio, of either of the following: (A) The sale price of the property at the origination date of the note or evidence of indebtedness, provided that the current fair market value of the property is equal to or greater than the original appraised value used at the origination date. (B) The current fair market value of the property as determined by an appraisal, the cost of which shall be paid for by the borrower. The appraisal shall be ordered and the appraiser shall be selected by the lender or servicer of the loan. (5) The borrower’s monthly installments of principal, interest, and escrow obligations on the encumbrance or encumbrances secured by the real property shall be current at the time the request is made and those installments shall not have been more than 30 days past due over the 24-month period immediately preceding the request, provided further, that no notice of default has been recorded against the security real property pursuant to Section 2924, as a result of a nonmonetary default by the borrower (trustor) during the 24-month period immediately preceding the request. (b) This section does not apply to any of the following: (1) A note or evidence of indebtedness secured by a deed of trust or mortgage, or mortgage insurance, executed under the authority of Part 3 (commencing with Section 50900) or Part 4 (commencing with Section 51600) of Division 31 of the Health and Safety Code. (2) Any note or evidence of indebtedness secured by a deed of trust or mortgage that is funded in whole or in part pursuant to authority granted by statute, regulation, or rule that, as a condition of that funding, prohibits or limits termination of payments for private mortgage insurance or mortgage guaranty insurance during the term of the indebtedness. (3) Notes or evidence of indebtedness that require private mortgage insurance and were executed prior to January 1, 1991. (c) If the note secured by the deed of trust or mortgage will be or has been sold in whole or in part to an institutional third party, adherence to the institutional third party’s standards for termination of future payments for private mortgage insurance or mortgage guaranty insurance shall be deemed in compliance with the requirements of this section. (d) For the purposes of this section, “institutional third party” means the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, the Government National Mortgage Association, and other substantially similar institutions, whether public or private, provided the institutions establish and adhere to rules applicable to the right of cancellation of private mortgage insurance or mortgage guaranty insurance, which are the same or substantially the same as those utilized by the above-named institutions. (Amended by Stats. 2006, Ch. 538, Sec. 56. Effective January 1, 2007.)
  67. 2954.8.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. )

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    Covered financial institutions must pay at least 2% simple interest on certain advance funds and credit that interest to the borrower annually or when the account ends, whichever comes first.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. ) ## 2954.8. (a) Every financial institution that makes loans upon the security of real property containing only a one- to four-family residence and located in this state or purchases obligations secured by such property and that receives money in advance for payment of taxes and assessments on the property, for insurance, or for other purposes relating to the property, shall pay interest on the amount so held to the borrower. The interest on such amounts shall be at the rate of at least 2 percent simple interest per annum. Such interest shall be credited to the borrower’s account annually or upon termination of such account, whichever is earlier. (b) No financial institution subject to the provisions of this section shall impose any fee or charge in connection with the maintenance or disbursement of money received in advance for the payment of taxes and assessments on real property securing loans made by such financial institution, or for the payment of insurance, or for other purposes relating to such real property, that will result in an interest rate of less than 2 percent per annum being paid on the moneys so received. (c) For the purposes of this section, “financial institution” means a bank, savings and loan association or credit union chartered under the laws of this state or the United States, or any other person or organization making loans upon the security of real property containing only a one- to four-family residence. (d) The provisions of this section do not apply to any of the following: (1) Loans executed prior to the effective date of this section. (2) Moneys which are required by a state or federal regulatory authority to be placed by a financial institution other than a bank in a non-interest-bearing demand trust fund account of a bank. The amendment of this section made by the 1979–80 Regular Session of the Legislature shall only apply to loans executed on or after January 1, 1980. (Amended by Stats. 1979, Ch. 803.)
  68. 2954.85.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. )

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    Financial institutions covered by this section must pay at least 2% simple interest on certain hazard insurance proceeds held in a loss draft account, and they may not use fees or charges to reduce that rate below 2%.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. ) ## 2954.85. (a) A financial institution that makes loans upon the security of real property containing only a one- to four-family residence and located in this state or purchases obligations secured by the property and that holds hazard insurance proceeds in a loss draft account pending property rebuilding or repair shall pay interest on those funds at a rate of at least 2 percent simple interest per annum. That interest shall be credited to the loss draft account annually or upon termination of the account, whichever is earlier. (b) A financial institution shall not impose a fee or charge in connection with the maintenance or disbursement of hazard insurance proceeds held in a loss draft account pending rebuilding or repair of the real property securing loans made by the financial institution that will result in an interest rate of less than 2 percent per annum being paid on the hazard insurance proceeds held. (c) For the purposes of this section, “financial institution” means a bank, savings and loan association, or credit union chartered under the laws of this state or the United States, or any other person or organization making loans upon the security of real property containing only a one- to four-family residence. (d) This section shall not apply to hazard insurance proceeds held in a loss draft account that are required by a state or federal regulatory authority to be placed by a financial institution other than a bank in a non-interest-bearing demand trust fund account of a bank. (e) Notwithstanding any other law, a financial institution may deposit hazard insurance proceeds in an interest-bearing account in a federally insured depository institution, a federal home loan bank, a federal reserve bank, or another similar government-sponsored enterprise. (f) For funds held in a loss draft account as of the effective date of this section, the interest described in subdivision (a) shall begin to accrue on the effective date of this section. (g) The provisions of this section are severable. If any provision of this section or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application. (Added by Stats. 2025, Ch. 103, Sec. 1. (AB 493) Effective August 29, 2025.)
  69. 2954.9.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. )

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    Borrowers have a right to prepay certain residential real-estate loans, and limited prepayment charges are allowed only in specified circumstances.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. ) ## 2954.9. (a) (1) Except as otherwise provided by statute, where the original principal obligation is a loan for residential property of four units or less, the borrower under any note or evidence of indebtedness secured by a deed of trust or mortgage or any other lien on real property shall be entitled to prepay the whole or any part of the balance due, together with accrued interest, at any time. (2) Nothing in this subdivision shall prevent a borrower from obligating himself, by an agreement in writing, to pay a prepayment charge. (3) This subdivision does not apply during any calendar year to a bona fide loan secured by a deed of trust or mortgage given back during such calendar year to the seller by the purchaser on account of the purchase price if the seller does not take back four or more such deeds of trust or mortgages during such calendar year. Nothing in this subdivision shall be construed to prohibit a borrower from making a prepayment by an agreement in writing with the lender. (b) Except as otherwise provided in Section 10242.6 of the Business and Professions Code, the principal and accrued interest on any loan secured by a mortgage or deed of trust on owner-occupied residential real property containing only four units or less may be prepaid in whole or in part at any time but only a prepayment made within five years of the date of execution of such mortgage or deed of trust may be subject to a prepayment charge and then solely as herein set forth. An amount not exceeding 20 percent of the original principal amount may be prepaid in any 12-month period without penalty. A prepayment charge may be imposed on any amount prepaid in any 12-month period in excess of 20 percent of the original principal amount of the loan which charge shall not exceed an amount equal to the payment of six months’ advance interest on the amount prepaid in excess of 20 percent of the original principal amount. (c) Notwithstanding subdivisions (a) and (b), there shall be no prepayment penalty charged to a borrower under a loan subject to this section if the residential structure securing the loan has been damaged to such an extent by a natural disaster for which a state of emergency is declared by the Governor, pursuant to Chapter 7 (commencing with Section 8550) of Division 1 of Title 2 of the Government Code, that the residential structure cannot be occupied and the prepayment is causally related thereto. (Amended by Stats. 1990, Ch. 663, Sec. 2.)
  70. 2955.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. )

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    Money in certain real-property impound accounts must stay in California, unless a listed first-lien mortgagee or beneficiary may place it with an out-of-state FDIC-insured depository institution.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. ) ## 2955. (a) Money held by a mortgagee or a beneficiary of a deed of trust on real property in this state, or held by a vendor on a contract of sale of real property in this state, in an impound account for the payment of taxes and assessments or insurance premiums or other purposes on or relating to the property, shall be retained in this state and, if invested, shall be invested only with residents of this state in the case of individuals, or with partnerships, corporations, or other persons, or the branches or subsidiaries thereof, which are engaged in business within this state. (b) Notwithstanding subdivision (a), a mortgagee or beneficiary of a deed of trust, secured by a first lien on real property, may deposit money held for the payment of taxes and assessments or insurance premiums or other purposes in an impound account in an out-of-state depository institution insured by the Federal Deposit Insurance Corporation if the mortgagee or beneficiary is any one of the following: (1) The Federal National Mortgage Association, the Government National Mortgage Association, the Federal Home Loan Mortgage Corporation, the Federal Housing Administration, or the Veteran’s Administration. (2) A bank or subsidiary thereof, bank holding company or subsidiary thereof, trust company, savings bank or savings and loan association or subsidiary thereof, savings bank or savings association holding company or subsidiary thereof, credit union, industrial bank or industrial loan company, commercial finance lender, personal property broker, consumer finance lender, or insurer doing business under the authority of and in accordance with the laws of this state, any other state, or of the United States relating to banks, trust companies, savings banks or savings associations, credit unions, industrial banks or industrial loan companies, commercial finance lenders, personal property brokers, consumer finance lenders, or insurers, as evidenced by a license, certificate, or charter issued by the United States or a state, district, territory, or commonwealth of the United States. (3) Trustees of a pension, profit-sharing, or welfare fund, if the pension, profit-sharing, or welfare fund has a net worth of not less than fifteen million dollars ($15,000,000). (4) A corporation with outstanding securities registered under Section 12 of the Securities Exchange Act of 1934, or a wholly owned subsidiary of that corporation. (5) A syndication or other combination of any of the entities specified in paragraphs (1) to (4), inclusive, that is organized to purchase the promissory note. (6) The California Housing Finance Agency or a local housing finance agency organized under the Health and Safety Code. (7) A licensed real estate broker selling all or part of the loan, note, or contract to a lender or purchaser described in paragraphs (1) to (6), inclusive, of this subdivision. (8) A licensed residential mortgage lender or servicer when acting under the authority of that license. (c) A mortgagee or beneficiary of a deed of trust who deposits funds held in trust in an out-of-state depository institution in accordance with subdivision (b) shall make available, in this state, the books, records, and files pertaining to those trust accounts to the appropriate state regulatory department or agency, or pay the reasonable expenses for travel and lodging incurred by the regulatory department or agency in order to conduct an examination at an out-of-state location. (d) The Attorney General may bring an action on behalf of the people of California to enjoin a violation of subdivision (a) or subdivision (b). (Amended (as amended by Stats. 1992, Ch. 1055, Sec. 3) by Stats. 1995, Ch. 564, Sec. 5. Effective January 1, 1996.)
  71. 2955.1.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. )

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    A lender making certain condominium mortgage loans must give the borrower a written disclosure about earthquake insurance and related reserve requirements.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. ) ## 2955.1. (a) Any lender originating a loan secured by the borrower’s separate interest in a condominium project, as defined in Section 4125 or 6542, which requires earthquake insurance or imposes a fee or any other condition in lieu thereof pursuant to an underwriting requirement imposed by an institutional third-party purchaser shall disclose all of the following to the potential borrower: (1) That the lender or the institutional third party in question requires earthquake insurance or imposes a fee or any other condition in lieu thereof pursuant to an underwriting requirement imposed by an institutional third-party purchaser. (2) That not all lenders or institutional third parties require earthquake insurance or impose a fee or any other condition in lieu thereof pursuant to an underwriting requirement imposed by an institutional third-party purchaser. (3) Earthquake insurance may be required on the entire condominium project. (4) That lenders or institutional third parties may also require that a condominium project maintain, or demonstrate an ability to maintain, financial reserves in the amount of the earthquake insurance deductible. (b) For the purposes of this section, “institutional third party” means the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association, the Government National Mortgage Association, and other substantially similar institutions, whether public or private. (c) The disclosure required by this section shall be made in writing by the lender as soon as reasonably practicable. (Amended (as amended by Stats. 2012, Ch. 181, Sec. 41) by Stats. 2013, Ch. 605, Sec. 18. (SB 752) Effective January 1, 2014.)
  72. 2955.5.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. )

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    A lender may not require hazard insurance above replacement value for a real-property loan, and must give the borrower a written disclosure before the note or security documents are signed.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 2. Mortgage of Real Property [2947 - 2955.5] ( Article 2 enacted 1872. ) ## 2955.5. (a) No lender shall require a borrower, as a condition of receiving or maintaining a loan secured by real property, to provide hazard insurance coverage against risks to the improvements on that real property in an amount exceeding the replacement value of the improvements on the property. (b) A lender shall disclose to a borrower, in writing, the contents of subdivision (a), as soon as practicable, but before execution of any note or security documents. (c) Any person harmed by a violation of this section shall be entitled to obtain injunctive relief and may recover damages and reasonable attorney’s fees and costs. (d) A violation of this section does not affect the validity of the loan, note secured by a deed of trust, mortgage, or deed of trust. (e) For purposes of this section: (1) “Hazard insurance coverage” means insurance against losses caused by perils which are commonly covered in policies described as a “Homeowner’s Policy,” “General Property Form,” “Guaranteed Replacement Cost Insurance,” “Special Building Form,” “Standard Fire,” “Standard Fire with Extended Coverage,” “Standard Fire with Special Form Endorsement,” or comparable insurance coverage to protect the real property against loss or damage from fire and other perils covered within the scope of a standard extended coverage endorsement. (2) “Improvements” means buildings or structures attached to the real property. (Amended by Stats. 1999, Ch. 412, Sec. 1. Effective January 1, 2000. Operative July 1, 2000, by Sec. 2 of Ch. 412.)
  73. 2956.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 3. Disclosures on Purchase Money Liens on Residential Property [2956 - 2967] ( Article 3 added by Stats. 1982, Ch. 968, Sec. 1. )

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    For certain residential purchase transactions with an arranger of credit and vendor financing, written disclosure must be made to the purchaser and to the vendor.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 3. Disclosures on Purchase Money Liens on Residential Property [2956 - 2967] ( Article 3 added by Stats. 1982, Ch. 968, Sec. 1. ) ## 2956. In a transaction for the purchase of a dwelling for not more than four families in which there is an arranger of credit, which purchase includes an extension of credit by the vendor, a written disclosure with respect to that credit transaction shall be made, as required by this article: (a) To the purchaser, by the arranger of credit and the vendor (with respect to information within the knowledge of the vendor). (b) To the vendor, by the arranger of credit and the purchaser (with respect to information within the knowledge of the purchaser). If there is more than one arranger of credit and one of those arrangers has obtained the offer by the purchaser to purchase the property, that arranger shall make the disclosure, unless the parties designate another person in writing. (Added by Stats. 1982, Ch. 968, Sec. 1. Operative July 1, 1983, by Sec. 2 of Ch. 968.)
  74. 2957.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 3. Disclosures on Purchase Money Liens on Residential Property [2956 - 2967] ( Article 3 added by Stats. 1982, Ch. 968, Sec. 1. )

    Verify source ↗

    This section defines key terms used in the article about disclosures on purchase money liens on residential property.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 3. Disclosures on Purchase Money Liens on Residential Property [2956 - 2967] ( Article 3 added by Stats. 1982, Ch. 968, Sec. 1. ) ## 2957. The following definitions shall apply for the purposes of this article: (a) “Arranger of credit” means: (1) A person, other than a party to the credit transaction (except as provided in paragraph (2)), who is involved in developing or negotiating credit terms, participates in the completion of the credit documents, and directly or indirectly receives compensation for arrangement of the credit or from any transaction or transfer of the real property which is facilitated by that extension of credit. As used in this paragraph, “arranger of credit” does not apply to an attorney who is representing one of the parties to the credit transaction. (2) A party to the transaction who is either a real estate licensee, licensed under provisions of Part 1 (commencing with Section 10000) of Division 4 of the Business and Professions Code, or is an attorney licensed under Chapter 4 (commencing with Section 6000) of Division 3 of the Business and Professions Code if neither party to the transaction is represented by an agent who is a real estate licensee. In any transaction in which disclosure is required solely by the provisions of this paragraph, the obligations of this article shall apply only to a real estate licensee or attorney who is a party to the transaction, and not to any other party. (3) An arranger of credit does not include a person acting in the capacity as an escrow in the transaction. (4) Persons described in paragraph (2) who are acting in the capacity as an escrowholder in the transaction shall nevertheless be deemed arrangers of credit where such persons act on behalf of a party to the transaction or an agent of such party in the development or negotiation of credit terms. Neither the completion of credit documents in accordance with instructions of a party or his or her agent nor the furnishing of information regarding credit terms to a party or his or her agent shall be considered to be the development or negotiation of credit terms. (b) “Balloon payment note” means a note which provides for a final payment as originally scheduled which is more than twice the amount of any of the immediately preceding six regularly scheduled payments or which contains a call provision; provided, however, that if the call provision is not exercised by the holder of the note, the existence of the unexercised call provision shall not cause the note to be deemed to be a balloon payment note. (c) “Call provision” means a note contract term that provides the holder of the note with the right to call the note due and payable either after a specified period has elapsed following closing or after a specified date. (d) “Credit” means the right granted by a vendor to a purchaser to purchase property and to defer payment therefore. The credit involved must be subject to a finance charge or payable by written agreement in more than four installments, whether providing for payment of principal and interest, or interest only, not including a downpayment. (e) “Credit documents” are those documents which contain the binding credit terms, and include a note or a contract of sale if the contract spells out terms upon which a vendor agrees to provide financing for a purchaser. (f) “Purchase” includes acquisition of equitable title by a real property sales contract as defined in Section 2985, or lease with an option to purchase, where the facts demonstrate intent to transfer equitable title. (g) “Security documents” include a mortgage, deed of trust, real property sales contract as defined in Section 2985, or lease with an option to purchase, where the facts demonstrate an intent to transfer equitable title. (h) “All inclusive trust deed” is an instrument which secures indebtedness owed by the trustor to the beneficiary, which indebtedness includes a debt or debts owed by that beneficiary to the beneficiary of another security document secured by the same property which is senior in priority. (Amended by Stats. 1986, Ch. 1360, Sec. 2.)
  75. 2958.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 3. Disclosures on Purchase Money Liens on Residential Property [2956 - 2967] ( Article 3 added by Stats. 1982, Ch. 968, Sec. 1. )

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    This section says a disclosure under this article is not required for certain purchasers or vendors who are already entitled to specified disclosures under other laws or regulations.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 3. Disclosures on Purchase Money Liens on Residential Property [2956 - 2967] ( Article 3 added by Stats. 1982, Ch. 968, Sec. 1. ) ## 2958. A disclosure is not required under this article, to a purchaser when that purchaser is entitled to receive, a disclosure pursuant to the Federal Truth-In-Lending Act (15 U.S. Code 1604, as amended), the Real Estate Settlement Procedures Act (12 U.S. Code 2601, as amended), or Section 10240 of the Business and Professions Code; or to a vendor if the vendor is entitled to receive, a disclosure pursuant to Sections 10232.4 and 10232.5 of the Business and Professions Code, or disclosure pursuant to a qualification under Section 25110 of the Corporations Code or disclosure pursuant to regulations of the Department of Corporations granting an exemption from Section 25110 of the Corporations Code. (Added by Stats. 1982, Ch. 968, Sec. 1. Operative July 1, 1983, by Sec. 2 of Ch. 968.)
  76. 2959.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 3. Disclosures on Purchase Money Liens on Residential Property [2956 - 2967] ( Article 3 added by Stats. 1982, Ch. 968, Sec. 1. )

    Verify source ↗

    Disclosures under this article must be made as soon as practicable and before the note or security documents are executed.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 3. Disclosures on Purchase Money Liens on Residential Property [2956 - 2967] ( Article 3 added by Stats. 1982, Ch. 968, Sec. 1. ) ## 2959. The disclosures required by this article shall be made as soon as practicable, but before execution of any note or security documents. If any disclosure is made after the execution of credit documents by the purchaser, such documents shall be contingent on the purchaser’s approval of the disclosures prior to execution of the security documents. The disclosure statement shall be receipted for by the purchaser and the vendor. The disclosure shall be signed by the arranger of credit and a copy shall be delivered respectively to the purchaser and the vendor and the arranger shall retain a true copy of the executed statements for three years. The provisions of this section do not apply to the disclosures required by Section 2966. (Added by Stats. 1982, Ch. 968, Sec. 1. Operative July 1, 1983, by Sec. 2 of Ch. 968.)
  77. 2960.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 3. Disclosures on Purchase Money Liens on Residential Property [2956 - 2967] ( Article 3 added by Stats. 1982, Ch. 968, Sec. 1. )

    Verify source ↗

    Later changes that make a previously given disclosure inaccurate are not a violation, and when required information is unknown the disclosure may use a clearly identified, reasonable approximation if the arranger has made reasonable efforts to find it.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 3. Disclosures on Purchase Money Liens on Residential Property [2956 - 2967] ( Article 3 added by Stats. 1982, Ch. 968, Sec. 1. ) ## 2960. If information disclosed in accordance with this article is subsequently rendered inaccurate as a result of any act, occurrence, or agreement between the parties to the transaction subsequent to the delivery of the required disclosures, the inaccuracy resulting therefrom shall not constitute a violation of this article. If, at the time disclosure is to be made, an item of information required to be disclosed is unknown or not available to the vendor, purchaser, or arranger of credit, and the arranger of credit has made a reasonable effort to ascertain it, the disclosure may employ an approximation of the information, provided the approximation is clearly identified as such, is reasonable, is based on the best information available to the arranger, and is not used for the purpose of circumventing or evading the provisions of this article. (Added by Stats. 1982, Ch. 968, Sec. 1. Operative July 1, 1983, by Sec. 2 of Ch. 968.)
  78. 2961.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 3. Disclosures on Purchase Money Liens on Residential Property [2956 - 2967] ( Article 3 added by Stats. 1982, Ch. 968, Sec. 1. )

    Verify source ↗

    Disclosures required by this article, and the acts done to make them, must be made in good faith.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 3. Disclosures on Purchase Money Liens on Residential Property [2956 - 2967] ( Article 3 added by Stats. 1982, Ch. 968, Sec. 1. ) ## 2961. Every disclosure required by this article and every act which is to be performed in making that disclosure shall be made in good faith. For the purposes of this article, “good faith” means honesty in fact in the conduct of the transaction. (Added by Stats. 1982, Ch. 968, Sec. 1. Operative July 1, 1983, by Sec. 2 of Ch. 968.)
  79. 2962.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 3. Disclosures on Purchase Money Liens on Residential Property [2956 - 2967] ( Article 3 added by Stats. 1982, Ch. 968, Sec. 1. )

    Verify source ↗

    The person who made a disclosure under this article may amend it in writing, but the amendment must comply with Section 2959.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 3. Disclosures on Purchase Money Liens on Residential Property [2956 - 2967] ( Article 3 added by Stats. 1982, Ch. 968, Sec. 1. ) ## 2962. Any disclosure made pursuant to this article may be amended in writing by the person making the disclosure, provided that any amendment shall be subject to the provisions of Section 2959. (Added by Stats. 1982, Ch. 968, Sec. 1. Operative July 1, 1983, by Sec. 2 of Ch. 968.)
  80. 2963.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 3. Disclosures on Purchase Money Liens on Residential Property [2956 - 2967] ( Article 3 added by Stats. 1982, Ch. 968, Sec. 1. )

    Verify source ↗

    This section lists the disclosures that must be provided to both purchaser and vendor in a purchase-money lien transaction on residential property.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 3. Disclosures on Purchase Money Liens on Residential Property [2956 - 2967] ( Article 3 added by Stats. 1982, Ch. 968, Sec. 1. ) ## 2963. The disclosures required to both purchaser and vendor by this article are: (a) An identification of the note or other credit documents or security documents and of the property which is the security for the transaction. (b) A description of the terms of the promissory note or other credit documents or a copy of the note or other credit documents. (c) Insofar as available, the principal terms and conditions of each recorded encumbrance which constitutes a lien upon the property which is or will be senior to the financing being arranged, including the original balance, the current balance, the periodic payment, any balloon payment, the interest rate (and any provisions with respect to variations in the interest rate), the maturity date, and whether or not there is any current default in payment on that encumbrance. (d) A warning that, if refinancing would be required as a result of lack of full amortization under the terms of any existing or proposed loans, such refinancing might be difficult or impossible in the conventional mortgage marketplace. (e) If negative amortization is possible as a result of any variable or adjustable rate financing being arranged, a clear disclosure of this fact and an explanation of its potential effect. (f) In the event that the financing involves an all inclusive trust deed, the disclosure shall indicate whether the credit or security documents specify who is liable for payment or responsible for defense in the case of an attempted acceleration by a lender or other obligee under a prior encumbrance, and whether or not the credit or security documents specify the responsibilities and rights of the parties in the event of a loan prepayment respecting a prior encumbrance which may result in a requirement for refinancing, a prepayment penalty, or a prepayment discount and, if such specification occurs, a recital of the provisions which apply. (g) If the financing being arranged or any of the financing represented by a prior encumbrance could result in a balloon payment, or in a right in the lender or other obligee under such financing to require a prepayment of the principal balance at or after a stipulated date, or upon the occurrence of a stipulated event, a disclosure of the date and amount of any balloon payment or the amount which would be due upon the exercise of such right by the lender or obligee, and a statement that there is no assurance that new financing or loan extension will be available at the time of such occurrence. (h) If the financing being arranged involves an all inclusive trust deed or real property sales contract, a disclosure of the party to whom payments will be made and who will be responsible for remitting these funds to payees under prior encumbrances and vendors under this transaction and a warning that, if that person is not a neutral third party, the parties may wish to agree to have a neutral third party designated for these purposes. (i) A disclosure on the identity, occupation, employment, income, and credit data about the prospective purchaser, as represented to the arranger by the prospective purchaser; or, specifically, that no representation as to the credit-worthiness of the specific prospective purchaser is made by the arranger. A warning should also be expressed that Section 580b of the Code of Civil Procedure may limit any recovery by the vendor to the net proceeds of the sale of the security property in the event of foreclosure. (j) A statement that loss payee clauses have been added to property insurance protecting the vendor, or that instructions have been or will be directed to the escrowholder, if any, in the transaction or the appropriate insurance carriers for addition of such loss payee clauses, or a statement that, if such provisions have not been made, that the vendor should consider protecting himself or herself by securing such clauses. (k) A statement that a request for notice of default under Section 2924b has been recorded, or that, if it has not been recorded, the vendor should consider recording a request for notice of default. (l) That a policy of title insurance has been obtained or will be obtained and be furnished to the vendor and purchaser, insuring the respective interests of the vendor and purchaser, or that the vendor and purchaser individually should consider obtaining a policy of title insurance. (m) That a tax service has been arranged to report to the vendor whether property taxes have been paid on the property, and who will be responsible for the continued retention and compensation of tax service; or that the vendor should otherwise assure for himself or herself that the taxes on the property have been paid. (n) A disclosure whether the security documents on the financing being arranged have been or will be recorded pursuant to Section 27280 of the Government Code, or a statement that the security of the vendor may be subject to intervening liens or judgments which may occur after the note is executed and before any resort to security occurs if the security documents are not recorded. (o) If the purchaser is to receive any cash from the proceeds of the transaction, a statement of that fact, the amount, the source of the funds, and the purpose of the disbursement as represented by the purchaser. (p) A statement that a request for notice of delinquency under Section 2924e has been made, or that, if it has not been made, the vendor should consider making a request for a notice of delinquency. (Amended (as amended by Stats. 1984, Ch. 1331) by Stats. 1990, Ch. 788, Sec. 2.)
  81. 2964.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 3. Disclosures on Purchase Money Liens on Residential Property [2956 - 2967] ( Article 3 added by Stats. 1982, Ch. 968, Sec. 1. )

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    This section says the article’s disclosure-item list does not limit or reduce any other disclosure duty that may exist to prevent fraud, misrepresentation, or deceit in the transaction.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 3. Disclosures on Purchase Money Liens on Residential Property [2956 - 2967] ( Article 3 added by Stats. 1982, Ch. 968, Sec. 1. ) ## 2964. The specification of items for disclosure in this article does not limit or abridge any obligation for disclosure created by any other provision of law or which may exist in order to avoid fraud, misrepresentation, or deceit in the transaction. (Added by Stats. 1982, Ch. 968, Sec. 1. Operative July 1, 1983, by Sec. 2 of Ch. 968.)
  82. 2965.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 3. Disclosures on Purchase Money Liens on Residential Property [2956 - 2967] ( Article 3 added by Stats. 1982, Ch. 968, Sec. 1. )

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    Willful violations of this article can lead to liability for actual damages; non-intentional bona fide errors with reasonable procedures are exempt from liability.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 3. Disclosures on Purchase Money Liens on Residential Property [2956 - 2967] ( Article 3 added by Stats. 1982, Ch. 968, Sec. 1. ) ## 2965. The validity of any credit document or of any security document subject to the provisions of this article shall not be invalidated solely because of the failure of any person to comply with this article. However, any person who willfully violates any provision of this article shall be liable in the amount of actual damages suffered by the vendor or purchaser as the proximate result of the violation. No person may be held liable in any action under this article if it is shown by a preponderance of the evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adopted to avoid any such error. (Added by Stats. 1982, Ch. 968, Sec. 1. Operative July 1, 1983, by Sec. 2 of Ch. 968.)
  83. 2966.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 3. Disclosures on Purchase Money Liens on Residential Property [2956 - 2967] ( Article 3 added by Stats. 1982, Ch. 968, Sec. 1. )

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    For certain balloon payment notes, the holder must send a written notice to the trustor 90 to 150 days before the balloon payment is due, and the note must include a required statutory statement.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 3. Disclosures on Purchase Money Liens on Residential Property [2956 - 2967] ( Article 3 added by Stats. 1982, Ch. 968, Sec. 1. ) ## 2966. (a) In a transaction regulated by this article, which includes a balloon payment note when the term for repayment is for a period in excess of one year, the holder of the note shall, not less than 90 nor more than 150 days before the balloon payment is due, deliver or mail by first-class mail, with a certificate of mailing obtained from the United States Postal Service, to the trustor, or his or her successor in interest, at the last known address of such person a written notice, to include: (1) A statement of the name and address of the person to whom the balloon payment is required to be paid. (2) The date on or before which the balloon payment was or is required to be paid. (3) The amount of the balloon payment, or if its exact amount is unknown a good faith estimate of the amount thereof, including unpaid principal, interest, and any other charges (assuming payment in full of all scheduled installments coming due between the date of the notice and the date when the balloon payment is due). (4) A description of the trustor’s right, if any, to refinance the balloon payment, including a summary of the actual terms of the refinancing or an estimate or approximation thereof, to the extent known. If the due date of the balloon payment of a note subject to this subdivision is extended prior to the time notice is otherwise required under this subdivision, this notice requirement shall apply only to the due date as extended (or as subsequently extended). (b) Failure to provide notice as required by subdivision (a) does not extinguish any obligation of payment by the trustor, except that the due date for any balloon payment shall be the date specified in the note, or 90 days from the date the delivery or mailing of the notice, or the date specified in the notice, whichever date is later. If the operation of this section acts to extend the term of any such note, interest shall continue to accrue for the extended term at the contract rate and payments shall continue to be due at any periodic interval and on any scheduled payment schedule specified in the note and shall be credited to principal or interest under terms of the note. Default in any extended periodic payment shall be considered a default under terms of the note or security instrument. (c) Any failure to comply with the provisions of this section shall not affect the validity of a sale in favor of a bona fide purchaser or the rights of an encumbrancer for value and without notice. (d) Every note subject to the provisions of this section shall include the following statement: “This note is subject to Section 2966 of the Civil Code, which provides that the holder of this note shall give written notice to the trustor, or his successor in interest, of prescribed information at least 90 and not more than 150 days before any balloon payment is due.” Failure to include this notice shall not invalidate the note. (e) The provisions of this section shall apply to any note executed on or after July 1, 1983. (Amended by Stats. 1986, Ch. 1360, Sec. 3.)
  84. 2967.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 3. Disclosures on Purchase Money Liens on Residential Property [2956 - 2967] ( Article 3 added by Stats. 1982, Ch. 968, Sec. 1. )

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    Actions under this article must be brought within two years, usually from when liability arises; if a material disclosure was materially and willfully misrepresented, the two-year period runs from discovery of the misrepresentation.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 3. Disclosures on Purchase Money Liens on Residential Property [2956 - 2967] ( Article 3 added by Stats. 1982, Ch. 968, Sec. 1. ) ## 2967. Any action arising under this article may be brought within two years from the date on which the liability arises, except that where any material disclosure under this article has been materially and willfully misrepresented, the action may be brought within two years of discovery of the misrepresentation. (Added by Stats. 1982, Ch. 968, Sec. 1. Operative July 1, 1983, by Sec. 2 of Ch. 968.)
  85. 2968.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 4. State of Emergency [2968- 2968.] ( Article 4 added by Stats. 2023, Ch. 873, Sec. 1. )

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    This section requires a transferor mortgage servicer to pass certain written borrower records to the transferee servicer after a mortgage transfer in a proclaimed emergency area, and bars the transferee from rejecting a prior repair agreement covered by the provision.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2. Mortgage [2920 - 2968] ( Chapter 2 enacted 1872. ) ## ARTICLE 4. State of Emergency [2968- 2968.] ( Article 4 added by Stats. 2023, Ch. 873, Sec. 1. ) ## 2968. (a) For purposes of this article, the following definitions apply: (1) “Mortgage servicer” has the same meaning as defined in subdivision (a) of Section 2920.5. (2) “Property” means residential real property that is improved by four or fewer residential dwelling units, affixed mobilehomes, and manufactured homes. (3) “State of emergency” and “local emergency” have the same meanings as defined in subdivisions (b) and (c), respectively, of Section 8558 of the Government Code. (b) A transferor mortgage servicer servicing a mortgage secured by property within the geographic limits of a proclaimed state of emergency or local emergency shall deliver to a transferee mortgage servicer any material written records between the borrower and the mortgage servicer relating to the borrower’s election to use insurance proceeds to repair or replace property damaged by a disaster for which the state of emergency or local emergency was proclaimed. (c) A transferee mortgage servicer pursuant to subdivision (b) shall not dishonor a previous written agreement to repair property made prior to the transfer between the transferor mortgage servicer and the borrower and approved by the owner of the promissory note. (d) This article shall not be interpreted to prohibit a mortgage servicer from delivering to a transferee mortgage servicer any material written records relating to a borrower’s election to use insurance proceeds to repair or replace damaged property that was not caused by a disaster for which a state of emergency or local emergency was proclaimed. (Added by Stats. 2023, Ch. 873, Sec. 1. (SB 455) Effective January 1, 2024.)
  86. 2970.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2a. Home Equity Loan Disclosure Act [2970 - 2971] ( Chapter 2a added by Stats. 1988, Ch. 1315, Sec. 1. )

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    This chapter defines “home equity loan” as an open-end consumer credit plan with a consensual security interest against the consumer’s dwelling.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2a. Home Equity Loan Disclosure Act [2970 - 2971] ( Chapter 2a added by Stats. 1988, Ch. 1315, Sec. 1. ) ## 2970. For purposes of this chapter “home equity loan” means any open end consumer credit plan in which a consensual security interest is created or retained against the consumer’s dwelling. (Added by Stats. 1988, Ch. 1315, Sec. 1.)
  87. 2971.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2a. Home Equity Loan Disclosure Act [2970 - 2971] ( Chapter 2a added by Stats. 1988, Ch. 1315, Sec. 1. )

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    A creditor must give a home equity loan disclosure when a customer applies, immediately for in-person applications or within three business days for mail or telephone applications.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2a. Home Equity Loan Disclosure Act [2970 - 2971] ( Chapter 2a added by Stats. 1988, Ch. 1315, Sec. 1. ) ## 2971. (a) At the time that a customer makes an initial application to a creditor for a home equity loan in person, or within three business days if the customer applies by mail or telephone, the creditor shall provide the applicant with a disclosure in either of the following forms: (1) The statement: “This home equity loan that you are applying for will be secured by your home and your failure to repay the loan for any reason could cause you to lose your home!” (2) A statement to the effect that a home equity loan is secured by a lien against the home of the consumer and in the event of any default the consumer risks the loss of the home. (b) The disclosure required in subdivision (a) shall be made by either of the following means: (1) A separate and specific document attached to or accompanying the application. (2) A clear and conspicuous statement on the application. (c) If a creditor is required by federal statute or regulation to make a substantially similar disclosure to that required by subdivision (a), and the creditor complies with that federal statute or regulation, the creditor shall be deemed to have complied with the requirements of this chapter. (Added by Stats. 1988, Ch. 1315, Sec. 1.)
  88. 2981.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. )

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    This section defines terms used in the Automobile Sales Finance Act chapter for motor vehicle conditional sale contracts.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. ) ## 2981. As used in this chapter, unless the context otherwise requires: (a) “Conditional sale contract” means: (1) A contract for the sale of a motor vehicle between a buyer and a seller, with or without accessories, under which possession is delivered to the buyer and either of the following: (A) The title vests in the buyer thereafter only upon the payment of all or a part of the price, or the performance of any other condition. (B) A lien on the property is to vest in the seller as security for the payment of part or all of the price, or for the performance of any other condition. (2) A contract for the bailment of a motor vehicle between a buyer and a seller, with or without accessories, by which the bailee or lessee agrees to pay as compensation for use a sum substantially equivalent to or in excess of the aggregate value of the vehicle and its accessories, if any, at the time the contract is executed, and by which it is agreed that the bailee or lessee will become, or for no other or for a nominal consideration has the option of becoming, the owner of the vehicle upon full compliance with the terms of the contract. (b) “Seller” means a person engaged in the business of selling or leasing motor vehicles under conditional sale contracts. (c) “Buyer” means the person who buys or hires a motor vehicle under a conditional sale contract. (d) “Person” includes an individual, company, firm, association, partnership, trust, corporation, limited liability company, or other legal entity. (e) “Holder” means the person entitled to enforce the conditional sale contract against the buyer at the time. (f) “Cash price” means the amount for which the seller would sell and transfer to the buyer unqualified title to the motor vehicle described in the conditional sale contract, if the property were sold for cash at the seller’s place of business on the date the contract is executed, and shall include taxes to the extent imposed on the cash sale and the cash price of accessories or services related to the sale, including, but not limited to, delivery, installation, alterations, modifications, improvements, document preparation fees, a service contract, a vehicle contract cancellation option agreement, and payment of a prior credit or lease balance remaining on property being traded in. (g) “Downpayment” means a payment that the buyer pays or agrees to pay to the seller in cash or property value or money’s worth at or prior to delivery by the seller to the buyer of the motor vehicle described in the conditional sale contract. The term shall also include the amount of any portion of the downpayment the payment of which is deferred until not later than the due date of the second otherwise scheduled payment, if the amount of the deferred downpayment is not subject to a finance charge. The term does not include any administrative finance charge charged, received, or collected by the seller as provided in this chapter. (h) “Amount financed” means the amount required to be disclosed pursuant to paragraph (8) of subdivision (a) of Section 2982. (i) “Unpaid balance” means the difference between subdivisions (f) and (g), plus all insurance premiums (except for credit life or disability insurance when the amount thereof is included in the finance charge), which are included in the contract balance, and the total amount paid or to be paid as follows: (1) To a public officer in connection with the transaction. (2) For license, certificate of title, and registration fees imposed by law, and the amount of the state fee for issuance of a certificate of compliance or certificate of waiver pursuant to Section 9889.56 of the Business and Professions Code. (j) “Finance charge” has the meaning set forth for that term in Section 226.4 of Regulation Z. The term shall not include delinquency charges or collection costs and fees as provided by subdivision (k) of Section 2982, extension or deferral agreement charges as provided by Section 2982.3, or amounts for insurance, repairs to or preservation of the motor vehicle, or preservation of the security interest therein advanced by the holder under the terms of the contract. (k) “Total of payments” means the amount required to be disclosed pursuant to subdivision (h) of Section 226.18 of Regulation Z. The term includes any portion of the downpayment that is deferred until not later than the second otherwise scheduled payment and that is not subject to a finance charge. The term shall not include amounts for which the buyer may later become obligated under the terms of the contract in connection with insurance, repairs to or preservation of the motor vehicle, preservation of the security interest therein, or otherwise. (l) “Motor vehicle” means a vehicle required to be registered under the Vehicle Code that is bought for use primarily for personal or family purposes, and does not mean any vehicle that is bought for use primarily for business or commercial purposes or a mobilehome, as defined in Section 18008 of the Health and Safety Code that is sold on or after July 1, 1981. “Motor vehicle” does not include any trailer that is sold in conjunction with a vessel and that comes within the definition of “goods” under Section 1802.1. (m) “Purchase order” means a sales order, car reservation, statement of transaction, or any other such instrument used in the conditional sale of a motor vehicle pending execution of a conditional sale contract. The purchase order shall conform to the disclosure requirements of subdivision (a) of Section 2982 and Section 2984.1, and subdivision (m) of Section 2982 shall apply. (n) “Regulation Z” means a rule, regulation, or interpretation promulgated by the Board of Governors of the Federal Reserve System (“Board”) under the federal Truth in Lending Act, as amended (15 U.S.C. Sec. 1601, et seq.), and an interpretation or approval issued by an official or employee of the Federal Reserve System duly authorized by the board under the Truth in Lending Act, as amended, to issue the interpretations or approvals. (o) “Simple-interest basis” means the determination of a finance charge, other than an administrative finance charge, by applying a constant rate to the unpaid balance as it changes from time to time either: (1) Calculated on the basis of a 365-day year and actual days elapsed (although the seller may, but need not, adjust its calculations to account for leap years); reference in this chapter to the “365-day basis” shall mean this method of determining the finance charge, or (2) For contracts entered into prior to January 1, 1988, calculated on the basis of a 360-day year consisting of 12 months of 30 days each and on the assumption that all payments will be received by the seller on their respective due dates; reference in this chapter to the “360-day basis” shall mean this method of determining the finance charge. (p) “Precomputed basis” means the determination of a finance charge by multiplying the original unpaid balance of the contract by a rate and multiplying that product by the number of payment periods elapsing between the date of the contract and the date of the last scheduled payment. (q) “Service contract” means “vehicle service contract” as defined in subdivision (c) of Section 12800 of the Insurance Code. (r) “Surface protection product” means the following products installed by the seller after the motor vehicle is sold: (1) Undercoating. (2) Rustproofing. (3) Chemical or film paint sealant or protectant. (4) Chemical sealant or stain inhibitor for carpet and fabric. (s) “Theft deterrent device” means the following devices installed by the seller after the motor vehicle is sold: (1) A vehicle alarm system. (2) A window etch product. (3) A body part marking product. (4) A steering lock. (5) A pedal or ignition lock. (6) A fuel or ignition kill switch. (t) “Guaranteed asset protection waiver” means an optional contractual obligation under which a seller agrees, for additional consideration, to cancel or waive all or part of amounts due on the buyer’s conditional sale contract subject to this chapter in the event of a total loss or unrecovered theft of the motor vehicle specified in the conditional sale contract. (Amended by Stats. 2022, Ch. 283, Sec. 1. (AB 2311) Effective January 1, 2023.)
  89. 2981.5.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. )

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    A motor-vehicle bailment or lease with a liability cap based on vehicle value is not treated as a purchase-option contract for this chapter.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. ) ## 2981.5. A contract for the bailment or leasing of a motor vehicle, with or without accessories, which establishes the maximum for which a bailee or lessee could be held liable at the end of the lease or bailment period, or upon an earlier termination, by reference to the value of the vehicle at such time, is not a contract by which the bailee or lessee will become or for no other or for a nominal consideration has the option of becoming the owner of the vehicle, for the purposes of paragraph (2) of subdivision (a) of Section 2981 or any other provision of this chapter. (Added by Stats. 1973, Ch. 696.)
  90. 2981.7.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. )

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    Certain buyer-seller contracts must use simple-interest calculation for the specified finance charge when the final installment is due more than 62 months after the contract date.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. ) ## 2981.7. All contracts entered into between a buyer and a seller on or after January 1, 1983, shall provide for the calculation of the finance charge contemplated by item (A) of paragraph (1) of subdivision (j) of Section 2982 on the simple-interest basis, if the date on which the final installment is due, according to the original terms of the contract, is more than 62 months after the date of the contract. (Amended by Stats. 1983, Ch. 142, Sec. 3.)
  91. 2981.8.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. )

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    A contract may not provide a finance charge that is partly based on the precomputed basis and partly on the simple-interest basis, unless the charge is permitted by Section 2982.8(a) and (c).

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. ) ## 2981.8. No contract shall provide for a finance charge which is determined in part by the precomputed basis and in part by the simple-interest basis except for any finance charge permitted by subdivisions (a) and (c) of Section 2982.8. (Amended by Stats. 1980, Ch. 1380, Sec. 20. Effective October 1, 1980.)
  92. 2981.9.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. )

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    Conditional sale contracts for motor vehicles must be written, include all buyer-seller payment terms in one document, be signed by both parties or their representatives, and the seller must give the buyer a copy before delivery of the vehicle.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. ) ## 2981.9. Every conditional sale contract subject to this chapter shall be in writing and, if printed, shall be printed in type no smaller than 6-point, and shall contain in a single document all of the agreements of the buyer and seller with respect to the total cost and the terms of payment for the motor vehicle, including any promissory notes or any other evidences of indebtedness. The conditional sale contract or a purchase order shall be signed by the buyer or his or her authorized representative and by the seller or its authorized representative. An exact copy of the contract or purchase order shall be furnished to the buyer by the seller at the time the buyer and the seller have signed it. No motor vehicle shall be delivered pursuant to a contract subject to this chapter until the seller delivers to the buyer a fully executed copy of the conditional sale contract or purchase order and any vehicle purchase proposal and any credit statement which the seller has required or requested the buyer to sign and which he or she has signed during the contract negotiations. The seller shall not obtain the signature of the buyer to a contract when it contains blank spaces to be filled in after it has been signed. (Added by Stats. 1981, Ch. 1075, Sec. 13. Operative October 1, 1982, or sooner, by Sec. 25 of Ch. 1075, as amended by Stats. 1982, Ch. 129, Sec. 12.)
  93. 2982.1.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. )

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    A seller may not induce or try to induce someone to enter a contract covered by this chapter using a rebate, discount, commission, or other contingent consideration tied to the buyer’s later sale or information/assistance.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. ) ## 2982.1. It shall be unlawful for any seller to induce or attempt to induce any person to enter into a contract subject to this chapter by offering a rebate, discount, commission, or other consideration, contingent upon the happening of a future event, on the condition that the buyer either sells, or gives information or assistance for the purpose of leading to a sale by the seller of, the same or related goods. (Added by Stats. 1968, Ch. 452.)
  94. 2982.10.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. )

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    A seller assigning a conditional sale contract generally may not take extra payment or credit from the assignee as a finance charge above the stated cap.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. ) ## 2982.10. (a) In consideration of the assignment of a conditional sale contract, the seller shall not receive or accept from the assignee any payment or credit based upon any amount collected or received, or to be collected or received, under the contract as a finance charge except to the extent the payment or credit does not exceed the amount that would be calculated in accordance with Regulation Z, whether or not Regulation Z applies to the contract, as the contract’s finance charge using, for the purposes of the calculation, an annual percentage rate equal to 2.5 percent for a contract having an original scheduled term of 60 monthly payments or less or 2 percent for a contract having an original scheduled term of more than 60 monthly payments. (b) Subdivision (a) does not apply in the following circumstances: (1) An assignment that is with full recourse or under other terms requiring the seller to bear the entire risk of financial performance of the buyer. (2) An assignment that is more than six months following the date of the conditional sale contract. (3) Isolated instances resulting from bona fide errors that would otherwise constitute a violation of subdivision (a) if the seller maintains reasonable procedures to guard against any errors and promptly, upon notice of the error, remits to the assignee any consideration received in excess of that permitted by subdivision (a). (4) The assignment of a conditional sale contract involving the sale of a motorcycle, as defined in Section 400 of the Vehicle Code. (5) The assignment of a conditional sale contract involving the sale of an off-highway motor vehicle that is subject to identification under Section 38010 of the Vehicle Code. (Added by Stats. 2005, Ch. 128, Sec. 5. Effective January 1, 2006. Operative July 1, 2006, by Sec. 12 of Ch. 128.)
  95. 2982.11.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. )

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    Before a conditional sale contract with an electric vehicle charging station charge is signed, the seller must give the buyer a written disclosure and get the buyer’s signature.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. ) ## 2982.11. (a) Prior to the execution of a conditional sale contract that includes a charge for an electric vehicle charging station, the seller shall provide the buyer with, and obtain the buyer’s signature on, a written disclosure that includes a description and price of each of the following: (1) The electric vehicle charging station device. (2) Any materials and wiring. (3) Any installation services included in the total charge. (b) The disclosures required under this section shall be in at least 12-point type and shall be contained in a document that is separate from the conditional sale contract or purchase order. (c) This section shall become operative July 1, 2013. (Added by Stats. 2012, Ch. 675, Sec. 3. (AB 2502) Effective September 27, 2012. Section operative July 1, 2013, by its own provisions.)
  96. 2982.12.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. )

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    This section regulates guaranteed asset protection (GAP) waivers sold with conditional sale contracts for vehicles.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. ) ## 2982.12. (a) (1) A guaranteed asset protection waiver may be offered, sold, or provided to a buyer, or administered, in connection with a conditional sale contract subject to this chapter only in compliance with this chapter and paragraph (2) of subdivision (h) of Section 1758.992 of the Insurance Code. (2) A guaranteed asset protection waiver, which may be titled as an addendum, forms part of the conditional sale contract and remains a part of the conditional sale contract upon the assignment, sale, or transfer of that conditional sale contract. (3) Neither the extension of credit, the term of credit, nor the terms of a conditional sale contract may be conditioned upon the purchase of a guaranteed asset protection waiver. (4) (A) The terms and conditions of the guaranteed asset protection waiver, including those terms required by subdivision (b), shall appear on a document separate from the conditional sale contract and a buyer or potential buyer shall separately sign the document setting forth the guaranteed asset protection waiver’s terms and conditions in addition to the conditional sale contract. (B) The separate document displaying the guaranteed asset protection waiver’s terms and conditions shall do the following: (i) Conspicuously state that the guaranteed asset protection waiver is an optional addition to the conditional sale contract, and that the holder of the conditional sale contract is the contracting party to the guaranteed asset protection waiver, and state the name and mailing address of the seller. If the conditional sale contract is assigned, written notice of the assignment of both the conditional sale contract and guaranteed asset protection waiver, and the assignee’s name and mailing address, shall be provided to the buyer in person or by mail, or by a means of notice that the buyer previously agreed to with the seller or holder in connection with the conditional sale contract within 30 days of the assignment. (ii) Conspicuously disclose the name and mailing address of any administrator known as of the date of the sale. In this section, “administrator” means any person, other than an insurer, that performs administrative or operational functions in connection with the guaranteed asset protection waiver. An administrator is deemed to be an agent of the contemporaneous holder with respect to performance of the holder’s obligations under the guaranteed asset protection waiver and this section. (iii) Contain a notice with a heading in at least 12-point bold type and the text in at least 10-point bold type, circumscribed by a line, immediately above the contract signature line, that reads as follows: STOP AND READ: YOU CANNOT BE REQUIRED TO BUY A GAP WAIVER OR ANY OTHER OPTIONAL ADD-ON PRODUCTS OR SERVICES. IT IS OPTIONAL. NO ONE CAN MAKE YOU BUY A GAP WAIVER OR ANY OTHER OPTIONAL ADD-ON PRODUCTS OR SERVICES TO GET FINANCING, TO GET CERTAIN FINANCING TERMS, OR TO GET CERTAIN TERMS FOR THE SALE OF A VEHICLE. IT IS UNLAWFUL TO REQUIRE OR ATTEMPT TO REQUIRE THE PURCHASE OF THIS GAP WAIVER OR ANY OTHER OPTIONAL ADD-ON PRODUCTS OR SERVICES. (5) A person that sells a guaranteed asset protection waiver subject to this chapter shall not do either of the following: (A) Charge more for the guaranteed asset protection waiver than 4 percent of the amount the buyer finances under a conditional sale contract. (B) Sell a guaranteed asset protection waiver if one of the following applies: (i) The amount financed through the conditional sale contract exceeds a maximum dollar amount covered by the guaranteed asset protection waiver. (ii) The conditional sale contract’s loan-to-value ratio at the contracting date exceeds the maximum loan-to-value ratio covered by the guaranteed asset protection waiver, unless the terms of the guaranteed asset protection waiver conspicuously disclose the maximum loan-to-value ratio limitation, including the method by which the limitation is applied, and the buyer is informed in a writing, acknowledged by the buyer, that the amount financed in the buyer’s conditional sale contract exceeds the waiver’s maximum loan-to-value limitation and therefore the waiver will not cover the total amount owed on the conditional sale contract. As used in this subclause, “loan-to-value ratio” means the total amount financed through a conditional sale contract as a percentage of the manufacturer suggested retail price for a new motor vehicle or the average retail value for a used motor vehicle, as determined by a nationally recognized pricing guide, as defined in paragraph (2) of subdivision (c) of Section 11950 of the Vehicle Code. (iii) The amount financed through a conditional sale contract is less than 70 percent of the manufacturer suggested retail price for a new motor vehicle or the average retail value for a used motor vehicle, as determined by a nationally recognized pricing guide, as defined in paragraph (2) of subdivision (c) of Section 11950 of the Vehicle Code. (6) Notwithstanding any provision in any conditional sale contract for the sale of a motor vehicle to the contrary, when communicating in writing an itemized contract balance to the buyer, including a payoff letter, payoff quote, or any written notice required under subdivision (a) of Section 2983.2 of this code or subdivision (b) of Section 22328 of the Financial Code, the holder of a conditional sale contract that includes a guaranteed asset protection waiver shall do either of the following: (A) Individually identify as a credit or refund available to the buyer the unearned portion of all guaranteed asset protection waiver charges paid by the buyer as of the date of the communication on a pro rata basis. (B) Conspicuously state that a buyer who purchased a guaranteed asset protection waiver is generally entitled to a refund of the unearned portion of the guaranteed asset protection waiver charges on a pro rata basis upon early termination of their conditional sale contract or cancellation of the guaranteed asset protection waiver, and that the buyer should contact the administrator identified in the buyer’s guaranteed asset protection waiver, or any other appropriate person designated by the holder, for identification of the amount of such a refund available to the buyer at that time. (b) (1) A guaranteed asset protection waiver terminates no later than the earliest of the following events: (A) Cancellation of the guaranteed asset protection waiver by the buyer, as provided by paragraph (4). (B) Payment in full by the buyer of the conditional sale contract. (C) Expiration of any redemption and reinstatement periods after a repossession or surrender of the motor vehicle specified in the conditional sale contract pursuant to subdivision (a) of Section 2983.2. (D) Upon total loss or unrecovered theft of the motor vehicle specified in the conditional sale contract, after the holder has applied all applicable benefits required under the guaranteed asset protection waiver. (E) Upon any other event that occurs earlier than the events listed in subparagraphs (A) to (D), inclusive, as specified in the guaranteed asset protection waiver. (2) Subject to paragraph (3), upon termination of a guaranteed asset protection waiver, the buyer is entitled to a refund as follows: (A) If the termination occurs within 30 days after the date the buyer purchased the guaranteed asset protection waiver, the buyer is entitled to a full refund of the guaranteed asset protection waiver charges plus all finance charges attributable to the guaranteed asset protection waiver. (B) (i) If the termination occurs later than 30 days after the date the buyer purchased the guaranteed asset protection waiver, the buyer is entitled to a refund of the unearned guaranteed asset protection waiver charges, which shall be calculated on a pro rata basis. (ii) For the purposes of this subparagraph, “calculating a refund on a pro rata basis” shall require multiplying the total dollar amount of guaranteed asset protection waiver charges by the quotient of the number of calendar days from the termination date to the conditional sale contract’s original full term date, including the termination date as a full calendar day, divided by the total number of calendar days in the conditional sale contract’s original term. (iii) Notwithstanding clause (ii), if the original full term of the conditional sale contract exceeded the original full term of the guaranteed asset protection waiver as of the date the buyer purchased the guaranteed asset protection waiver, “calculating a refund on a pro rata basis” shall require multiplying the total dollar amount of guaranteed asset protection waiver charges by the quotient of the number of calendar days from the termination date to the guaranteed asset protection waiver’s original full term date, including the termination date as a full calendar day, divided by the total number of calendar days in the guaranteed asset protection waiver’s original term. (C) No refund is required upon termination if there has been a total loss or unrecovered theft of the motor vehicle specified in the conditional sale contract and the buyer has or will receive the benefit of the guaranteed asset protection waiver. (3) Within 60 business days from the termination of a guaranteed asset protection waiver, the holder shall tender the refund required under paragraph (2) or shall cause to be made the refund under paragraph (2) by instructing in writing the administrator or any other appropriate party to make the refund. (A) A refund owed under this section may be applied by the holder as a reduction of the amount owed under the conditional sale contract unless the conditional sale contract has been paid in full. (B) Refunds owed under this section are not exclusive and shall be in addition to any other refunds provided for in this chapter. (4) A guaranteed asset protection waiver may be canceled by the buyer at any time without penalty. (5) A cancellation fee, termination fee, or similar fee shall not be assessed in connection with the termination of a guaranteed asset protection waiver. (6) In addition to the requirements of Section 2984.5, the holder shall maintain records identifying any refund made and tendered under paragraphs (2) and (3) of this subdivision, including those refunds the holder instructed the administrator or other appropriate party to make, and provide electronic access to those records, in response to any subpoena or other administratively or judicially enforceable request, until four years after the date the refund was tendered. (c) Any waiver of a provision of this section is contrary to public policy and is void and unenforceable. (Amended by Stats. 2024, Ch. 853, Sec. 16. (AB 3281) Effective January 1, 2025.)
  97. 2982.2.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. )

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    Before a conditional sale contract is signed, the seller must give the buyer a written disclosure and get the buyer’s signature on it.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. ) ## 2982.2. (a) Prior to the execution of a conditional sale contract, the seller shall provide to a buyer, and obtain the buyer’s signature on, a written disclosure that sets forth the following information: (1) (A) A description and the price of each item sold if the contract includes a charge for the item. (B) Subparagraph (A) applies to each item in the following categories: (i) A service contract. (ii) An insurance product. (iii) A debt cancellation agreement or guaranteed asset protection waiver agreement. (iv) A theft deterrent device. (v) A surface protection product. (vi) A vehicle contract cancellation option agreement. (2) The sum of all of the charges disclosed under subdivision (a), labeled “total.” (3) The amount that would be calculated under the contract as the regular installment payment if charges for the items disclosed pursuant to subdivision (a) are not included in the contract. The amount disclosed pursuant to this subdivision shall be labeled “Installment Payment EXCLUDING Listed Items.” (4) The amount that would be calculated under the contract as the regular installment payment if charges for the items disclosed under subdivision (a) are included in the contract. The amount disclosed pursuant to this subdivision shall be labeled “Installment Payment INCLUDING Listed Items.” (b) The disclosures required under this section shall be in at least 10-point type and shall be contained in a document that is separate from the conditional sale contract and a purchase order. (c) This section does not apply to the sale of a motorcycle, as defined in Section 400 of the Vehicle Code, or an off-highway vehicle subject to identification under Section 38010 of the Vehicle Code. (Amended by Stats. 2022, Ch. 283, Sec. 3. (AB 2311) Effective January 1, 2023.)
  98. 2982.3.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. )

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    The holder of a conditional sale contract may extend or defer payments if the buyer agrees, and certain charges are allowed within stated limits.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. ) ## 2982.3. (a) The holder of a conditional sale contract may, upon agreement with the buyer, extend the scheduled due date or defer the scheduled payment of all or of any part of any installment or installments payable thereunder. No charge shall be made for any such extension or deferment unless the agreement for such extension or deferment is in writing and signed by the parties thereto. However, the seller or holder may, as an adjunct to or to assist in efforts to collect one or more delinquent installments on the contract, advise one or more obligors on the contract, either in writing or orally, that the due date for one or more installments under the contract shall be extended, with no charge being made for such extension other than any applicable late charge provided for in the contract. (b) Where the contract includes a finance charge determined on the precomputed basis, the holder may charge and contract for the payment of an extension or deferral agreement charge by the buyer and collect and receive the same, but such charge may not exceed an amount equal to 1 percent per month simple interest on the amount of the installment or installments, or part thereof, extended or deferred for the period of extension or deferral. Such period shall not exceed the period from the date when such extended or deferred installment or installments, or part thereof, would have been payable in the absence of such extension or deferral to the date when such installment or installments, or part thereof, are made payable under the agreement of extension or deferment; except that a minimum charge of one dollar ($1) for the period of extension or deferral may be made in any case where the extension or deferral agreement charge, when computed at such rate, amounts to less than one dollar ($1). (c) Where the contract includes a finance charge determined on the simple-interest basis, the holder may charge and contract for the payment of an extension or deferral agreement charge by the buyer and collect and receive the same, but the charge for the extension or deferral agreement may not exceed the lesser of twenty-five dollars ($25) or 10 percent of the then outstanding principal balance of the contract. Such charge shall be in addition to any finance charges which accrue because such extended or deferred payments are received at a time other than as originally scheduled. (Amended by Stats. 1987, Ch. 448, Sec. 2.)
  99. 2982.5.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. )

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    This section limits when the Automobile Sales Finance Act affects vehicle-related loans and sets required disclosures and no-fee rules when a seller helps the buyer obtain financing.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. ) ## 2982.5. (a) This chapter may not be deemed to affect a loan, or the security therefor, between a purchaser of a motor vehicle and a supervised financial organization, other than the seller of the motor vehicle, all or a portion of which loan is used in connection with the purchase of a motor vehicle. As used in this chapter, “supervised financial organization” means a person organized, chartered, or holding a license or authorization certificate under a law of this state or the United States to make loans and subject to supervision by an official or agency of this state or the United States. (b) This chapter may not be deemed to prohibit the seller’s assisting the buyer in obtaining a loan upon any security from any third party to be used as a part or all of the downpayment or any other payment on a conditional sale contract or purchase order; provided that the conditional sale contract sets forth on its face the amount of the loan, the finance charge, the total thereof, the number of installments scheduled to repay the loan and the amount of each installment, that the buyer may be required to pledge security for the loan, which security shall be mutually agreed to by the buyer and the lender and notice to the buyer in at least 8-point type that he or she is obligated for the installment payments on both the conditional sale contract and the loan. The seller may not provide any security or other guarantee of payment on the loan, nor shall the seller receive any commission or other remuneration for assisting the buyer to obtain the loan. If the buyer obligates himself or herself to purchase, or receives possession of, the motor vehicle prior to securing the loan, and if the buyer upon appropriate application for the loan is unable to secure the loan, on the conditions stated in the conditional sale contract, the conditional sale contract or purchase order shall be deemed rescinded and all consideration thereupon shall be returned by the respective parties without demand. (c) The proceeds of any loan payable to the seller after the date of the contract but prior to the due date of the second payment otherwise scheduled thereunder may not be subject to a finance charge and the amount thereof shall be disclosed pursuant to subparagraph (D) of paragraph (6) of subdivision (a) of Section 2982. (d) This chapter may not be deemed to prohibit the seller’s assisting the buyer in obtaining a loan from any third party to be used to pay for the full purchase price, or any part thereof, of a motor vehicle, if each of the following provisions applies: (1) The loan may be upon any security, but except as provided in paragraph (2), the loan may not be secured in whole or in part by a lien on real property. Any lien on real property taken in violation of this section shall be void and unenforceable. (2) A lien on real property may be taken to secure a loan of seven thousand five hundred dollars ($7,500) or more used to pay the full purchase price, or any part thereof, of a recreational vehicle, as defined in Section 18010 of the Health and Safety Code, which is not less than 20 feet in length. (3) The provisions of Sections 2983.2, 2983.3, and 2984.4 shall apply to the loan, but may not authorize the lender or the lender’s successor in interest to charge for any costs, fees, or expenses or to obtain any other benefit which the lender is prohibited from charging or obtaining under any regulatory law applicable to the lender. Notwithstanding this paragraph, the provisions of Sections 2983.2 and 2983.3 may not apply to a loan made by a lender licensed under Division 9 (commencing with Section 22000) or Division 10 (commencing with Section 24000) of the Financial Code. (4) The lender or the lender’s successor in interest shall be subject to all claims and defenses which the buyer could assert against the seller, but liability may not exceed the amount of the loan. (5) If the buyer becomes obligated to purchase, or receives possession of, the motor vehicle prior to obtaining the loan, the agreement between the buyer and the seller shall set forth on its face the amount of the loan, the finance charge, the total thereof, the number of installments scheduled to repay the loan and the amount of each installment, that the buyer may be required to pledge security for the loan, which security must be mutually agreed to by the buyer and the lender, and notice to the buyer in at least 8-point type that the buyer is obligated for the installment payments on the loan and for any payments which may be due on the agreement between the buyer and the seller. The seller may not provide any security or other guarantee of payment on the loan, and the seller may not receive any commission or other remuneration for assisting the buyer to obtain the loan. If the buyer upon proper application for the loan is unable to obtain the loan, on the condition stated in the agreement between the buyer and the seller, the agreement shall be deemed rescinded and all consideration thereupon shall be returned by the respective parties without demand. (6) Any waiver by the buyer of the provisions of this section shall be void and unenforceable. This subdivision does not apply to state or federally chartered banks and savings and loan associations and may not be construed to affect existing law regarding a seller’s assisting a buyer to obtain a loan from a bank or savings and loan association or any loan obtained by the buyer from those lenders. (Amended by Stats. 2003, Ch. 37, Sec. 2. Effective January 1, 2004.)
  100. 2982.7.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. )

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    If a conditional sale contract is not executed, the seller must refund any buyer payment. If the seller breaches and keeps the buyer’s motor vehicle left as downpayment, the buyer may recover the greater of fair market value or contract value, and the recovery must be tendered within five business days.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. ) ## 2982.7. (a) Any payment made by a buyer to a seller pending execution of a conditional sale contract shall be refunded to the buyer in the event the conditional sale contract is not executed. (b) In the event of breach by the seller of a conditional sale contract or purchase order where the buyer leaves his motor vehicle with the seller as downpayment and such motor vehicle is not returned by the seller to the buyer for whatever reason, the buyer may recover from the seller either the fair market value of the motor vehicle left as a downpayment or its value as stated in the contract or purchase order, whichever is greater. The recovery shall be tendered to the buyer within five business days after the breach. (c) The remedies of the buyer provided for in subdivision (b) are nonexclusive and cumulative and shall not preclude the buyer from pursuing any other remedy which he may have under any other provision of law. (Amended by Stats. 1976, Ch. 1285.)
  101. 2982.8.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. )

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    The holder may charge finance charges on certain amounts advanced for insurance, repairs, or preservation, but must give the buyer written notice of repayment options and itemized charge details.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. ) ## 2982.8. (a) If a buyer is obligated under the terms of the conditional sale contract to maintain insurance on the vehicle and subsequent to the execution of the contract the buyer either fails to maintain or requests the holder to procure the insurance, any amounts advanced by the holder to procure the insurance may be the subject of finance charges from the date of advance as provided in subdivision (e). (b) These amounts shall be secured as provided in the contract and permitted by Section 2984.2 if the holder notifies the buyer in writing of his or her option to repay those amounts in any one of the following ways: (1) Full payment within 10 days from the date of giving or mailing the notice. (2) Full amortization during the term of the insurance. (3) If offered by the holder, full amortization after the term of the conditional sale contract, to be payable in installments which do not exceed the average payment allocable to a monthly period under the contract. (4) If offered by the holder, a combination of the methods described in paragraphs (2) and (3), so that there is some amortization during the term of the insurance, with the remainder of the amortization being accomplished after the term of the conditional sale contract, to be payable in installments which do not exceed the average payment allocable to a monthly period under the original terms of the contract. (5) If offered by the holder, any other amortization plan. If the buyer neither pays in full the amounts advanced nor notifies the holder in writing of his or her choice regarding amortization options before the expiration of 10 days from the date of giving or mailing the notice by the holder, the holder may amortize the amounts advanced on a secured basis pursuant to paragraph (2) or, if offered by the holder as an option to the buyer, paragraph (3) or (4). (c) The written notification described in subdivision (b) shall also set forth the amounts advanced by the holder and, with respect to each amortization plan the amount of the additional finance charge, the sum of the amounts advanced and the additional finance charge, the number of installments required, the amount of each installment and the date for payment of the installments. In addition, the notice shall contain a statement in contrasting red print in at least 8-point bold type, which reads as follows: “WARNING—IT IS YOUR RESPONSIBILITY UNDER CALIFORNIA LAW TO OBTAIN LIABILITY INSURANCE OR BE SUBJECT TO PENALTIES FOR VIOLATING SECTION 16020 OF THE VEHICLE CODE, WHICH MAY INCLUDE LOSS OF LICENSE OR A FINE. THE INSURANCE ACQUIRED BY THE LIENHOLDER DOES NOT PROVIDE LIABILITY COVERAGE AND DOES NOT SATISFY YOUR RESPONSIBILITY UNDER CALIFORNIA LAW.” (d) If subsequent to the execution of the contract the holder advances amounts for repairs to or preservation of the motor vehicle or preservation of the holder’s security interest therein and such advances are occasioned by the buyer’s default under the contract, such advances may be the subject of finance charges from the date of advance as provided in subdivision (e) and shall be secured as provided in the contract and permitted by Section 2984.2. (e) The maximum rate of finance charge which may be imposed on amounts advanced by the holder subsequent to the execution of the contract for insurance, repairs to or preservation of the motor vehicle, or preservation of the holder’s security interest therein, shall not exceed the annual percentage rate disclosed pursuant to Section 2982. (Amended by Stats. 1988, Ch. 1092, Sec. 2.)
  102. 2982.9.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. )

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    If a buyer contracts to buy or take possession of a motor vehicle, the seller knows the buyer seeks outside financing, and the buyer cannot get that financing, the contract is treated as rescinded and both sides must return any consideration without demand.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. ) ## 2982.9. In the event a buyer obligates himself to purchase, or receive possession of, a motor vehicle pursuant to a contract or purchase order, and the seller knows that the buyer intends to obtain financing from a third party without the assistance of the seller, and the buyer is unable to obtain such financing, the contract or purchase order shall be deemed rescinded and all consideration thereupon shall be returned by the respective parties without demand. (Added by Stats. 1976, Ch. 1285.)
  103. 2983.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. )

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    If a seller violates certain auto sales finance rules, the contract may become unenforceable and the buyer may recover payments; for some 2012-or-later contracts, the buyer can also get actual damages.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. ) ## 2983. (a) Except as provided in subdivision (b), if the seller, except as the result of an accidental or bona fide error in computation, violates any provision of Section 2981.9, or of subdivision (a), (j), or (k) of Section 2982, the conditional sale contract shall not be enforceable, except by a bona fide purchaser, assignee, or pledgee for value, or until after the violation is corrected as provided in Section 2984, and, if the violation is not corrected, the buyer may recover from the seller the total amount paid, pursuant to the terms of the contract, by the buyer to the seller or his or her assignee. The amount recoverable for property traded in as all or part of the downpayment shall be equal to the agreed cash value of the property as the value appears on the conditional sale contract or the fair market value of the property as of the time the contract is made, whichever is greater. (b) A conditional sale contract executed or entered into on or after January 1, 2012, shall not be made unenforceable solely because of a violation by the seller of paragraph (2) or (5) of subdivision (a) of Section 2982. In addition to any other remedies that may be available, the buyer is entitled to any actual damages sustained as a result of a violation of those provisions. Nothing in this subdivision affects any legal rights, claims, or remedies otherwise available under law. (Amended by Stats. 2012, Ch. 162, Sec. 11. (SB 1171) Effective January 1, 2013.)
  104. 2983.1.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. )

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    This section lets a buyer recover extra amounts for certain seller or holder violations in a conditional sale contract, and gives the buyer specific options and damages remedies when the contract is not enforceable.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. ) ## 2983.1. (a) If the seller or holder of a conditional sale contract, except as the result of an accidental or bona fide error of computation, violates any provision of subdivision (l) of Section 2982, the buyer may recover from the person three times the amount of any finance charge paid to that person. (b) If a holder of a conditional sale contract that includes a guaranteed asset protection waiver, except as the result of an accidental or bona fide error of computation, violates any provision of subdivision (b) of Section 2982.12, the buyer may recover from the holder three times the amount of any guaranteed asset protection charges paid. (c) Except as provided in subdivision (f), if a holder acquires a conditional sale contract without actual knowledge of the violation by the seller of Section 2981.9, or of subdivision (a), (j), or (k) of Section 2982, the contract shall be valid and enforceable by the holder except the buyer is excused from payment of the unpaid finance charge, unless the violation is corrected as provided in Section 2984. (d) Except as provided in subdivision (f), if a holder acquires a conditional sale contract with knowledge of a violation of Section 2981.9, or of subdivision (a), (j), or (k) of Section 2982, the conditional sale contract shall not be enforceable except by a bona fide purchaser, assignee, or pledgee for value, or unless the violation is corrected as provided in Section 2984, and, if the violation is not corrected, the buyer may recover the amounts specified in Section 2983 from the person to whom payment was made. (e) When a conditional sale contract is not enforceable under Section 2983 or this section, the buyer may elect to retain the motor vehicle and continue the contract in force, or may, with reasonable diligence, elect to rescind the contract and return the motor vehicle. The value of the motor vehicle returned shall be credited as restitution by the buyer without any decrease that results from the passage of time in the cash price of the motor vehicle as the price appears on the conditional sale contract. (f) A conditional sale contract executed or entered into on or after January 1, 2012, shall not be made unenforceable, and the buyer shall not be excused from payment of any finance charge, solely because of a violation by the seller of paragraph (2) or (5) of subdivision (a) of Section 2982. In addition to any other remedies that may be available, the buyer is entitled to any actual damages sustained as a result of a violation of those provisions. Nothing in this subdivision affects any legal rights, claims, or remedies otherwise available under law. (Amended by Stats. 2022, Ch. 283, Sec. 5. (AB 2311) Effective January 1, 2023.)
  105. 2983.2.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. )

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    After repossessing or taking back a motor vehicle, the seller or holder must give written notice before disposing of it and must provide specified redemption, reinstatement, and accounting information.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. ) ## 2983.2. (a) Except where the motor vehicle has been seized as described in paragraph (6) of subdivision (b) of Section 2983.3, any provision in any conditional sale contract for the sale of a motor vehicle to the contrary notwithstanding, at least 15 days’ written notice of intent to dispose of a repossessed or surrendered motor vehicle shall be given to all persons liable on the contract. The notice shall be personally served or shall be sent by certified mail, return receipt requested, or first-class mail, postage prepaid, directed to the last known address of the persons liable on the contract. If those persons are married to each other, and, according to the most recent records of the seller or holder of the contract, reside at the same address, one notice addressed to both persons at that address is sufficient. Except as otherwise provided in Section 2983.8, those persons shall be liable for any deficiency after disposition of the repossessed or surrendered motor vehicle only if the notice prescribed by this section is given within 60 days of repossession or surrender and does all of the following: (1) Sets forth that those persons shall have a right to redeem the motor vehicle by paying in full the indebtedness evidenced by the contract until the expiration of 15 days from the date of giving or mailing the notice and provides an itemization of the contract balance and of any delinquency, collection or repossession costs and fees and sets forth the computation or estimate of the amount of any credit for unearned finance charges or canceled insurance as of the date of the notice. (2) States either that there is a conditional right to reinstate the contract until the expiration of 15 days from the date of giving or mailing the notice and all the conditions precedent thereto or that there is no right of reinstatement and provides a statement of reasons therefor. (3) States that, upon written request, the seller or holder shall extend for an additional 10 days the redemption period or, if entitled to the conditional right of reinstatement, both the redemption and reinstatement periods. The seller or holder shall provide the proper form for applying for the extensions with the substance of the form being limited to the extension request, spaces for the requesting party to sign and date the form, and instructions that it must be personally served or sent by certified or registered mail, return receipt requested, to a person or office and address designated by the seller or holder and received before the expiration of the initial redemption and reinstatement periods. (4) Discloses the place at which the motor vehicle will be returned to those persons upon redemption or reinstatement. (5) Designates the name and address of the person or office to whom payment shall be made. (6) States the seller’s or holder’s intent to dispose of the motor vehicle upon the expiration of 15 days from the date of giving or mailing the notice, or if by mail and either the place of deposit in the mail or the place of address is outside of this state, the period shall be 20 days instead of 15 days, and further, that upon written request to extend the redemption period and any applicable reinstatement period for 10 days, the seller or holder shall without further notice extend the period accordingly. (7) Informs those persons that upon written request, the seller or holder will furnish a written accounting regarding the disposition of the motor vehicle as provided for in subdivision (b). The seller or holder shall advise them that this request must be personally served or sent first-class mail, postage prepaid, or certified mail, return receipt requested, to a person or office and address designated by the seller or holder. (8) Includes notice, in at least 10-point bold type if the notice is printed, reading as follows: “NOTICE. YOU MAY BE SUBJECT TO SUIT AND LIABILITY IF THE AMOUNT OBTAINED UPON DISPOSITION OF THE VEHICLE IS INSUFFICIENT TO PAY THE CONTRACT BALANCE AND ANY OTHER AMOUNTS DUE.” (9) Informs those persons that upon the disposition of the motor vehicle, they will be liable for the deficiency balance plus interest at the contract rate, or at the legal rate of interest pursuant to Section 3289 if there is no contract rate of interest, from the date of disposition of the motor vehicle to the date of entry of judgment. The notice prescribed by this section shall not affect the discretion of the court to strike out an unconscionable interest rate in the contract for which the notice is required, nor affect the court in its determination of whether the rate is unconscionable. (b) Unless automatically provided to the buyer within 45 days after the disposition of the motor vehicle, the seller or holder shall provide to any person liable on the contract within 45 days after their written request, if the request is made within one year after the disposition, a written accounting regarding the disposition. The accounting shall itemize: (1) The gross proceeds of the disposition. (2) The reasonable and necessary expenses incurred for retaking, holding, preparing for and conducting the sale and to the extent provided for in the agreement and not prohibited by law, reasonable attorney fees and legal expenses incurred by the seller or holder in retaking the motor vehicle from any person not a party to the contract. (3) The satisfaction of indebtedness secured by any subordinate lien or encumbrance on the motor vehicle if written notification of demand therefor is received before distribution of the proceeds is completed. If requested by the seller or holder, the holder of a subordinate lien or encumbrance must seasonably furnish reasonable proof of its interest, and unless it does so, the seller or holder need not comply with its demand. (c) In all sales which result in a surplus, the seller or holder shall furnish an accounting as provided in subdivision (b) whether or not requested by the buyer. Any surplus shall be returned to the buyer within 45 days after the sale is conducted. (d) This section does not apply to a loan made by a lender licensed under Division 9 (commencing with Section 22000) of the Financial Code. (Amended by Stats. 2019, Ch. 497, Sec. 28. (AB 991) Effective January 1, 2020.)
  106. 2983.3.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. )

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    The seller or holder generally cannot accelerate payment or repossess the motor vehicle when there is no buyer default, and bankruptcy alone cannot be treated as a default. After repossession or surrender following default, a liable person has a limited right to reinstate the contract, subject to stated exceptions and payment of required amounts.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. ) ## 2983.3. (a) (1) In the absence of default in the performance of any of the buyer’s obligations under the contract, the seller or holder may not accelerate the maturity of any part or all of the amount due thereunder or repossess the motor vehicle. (2) Neither the act of filing a petition commencing a case for bankruptcy under Title 11 of the United States Code by the buyer or other individual liable on the contract nor the status of either of those persons as a debtor in bankruptcy constitutes a default in the performance of any of the buyer’s obligations under the contract, and neither may be used as a basis for accelerating the maturity of any part or all of the amount due under the contract or for repossessing the motor vehicle. A provision of a contract that states that the act of filing a petition commencing a case for bankruptcy under Title 11 of the United States Code by the buyer or other individual liable on the contract or the status of either of those persons as a debtor in bankruptcy is a default is void and unenforceable. (b) If after default by the buyer, the seller or holder repossesses or voluntarily accepts surrender of the motor vehicle, any person liable on the contract shall have a right to reinstate the contract and the seller or holder shall not accelerate the maturity of any part or all of the contract prior to expiration of the right to reinstate, unless the seller or holder reasonably and in good faith determines that any of the following has occurred: (1) The buyer or any other person liable on the contract by omission or commission intentionally provided false or misleading information of material importance on the buyer’s or other person’s credit application. (2) The buyer, any other person liable on the contract, or any permissive user in possession of the motor vehicle, in order to avoid repossession has concealed the motor vehicle or removed it from the state. (3) The buyer, any other person liable on the contract, or any permissive user in possession of the motor vehicle, has committed or threatens to commit acts of destruction, or has failed to take care of the motor vehicle in a reasonable manner, so that the motor vehicle has become substantially impaired in value, or the buyer, any other person liable on the contract, or any nonoccasional permissive user in possession of the motor vehicle has failed to take care of the motor vehicle in a reasonable manner, so that the motor vehicle may become substantially impaired in value. (4) The buyer or any other person liable on the contract has committed, attempted to commit, or threatened to commit criminal acts of violence or bodily harm against an agent, employee, or officer of the seller or holder in connection with the seller’s or holder’s repossession of or attempt to repossess the motor vehicle. (5) The buyer has knowingly used the motor vehicle, or has knowingly permitted it to be used, in connection with the commission of a criminal offense, other than an infraction, as a consequence of which the motor vehicle has been seized by a federal, state, or local agency or authority pursuant to federal, state, or local law. (6) The motor vehicle has been seized by a federal, state, or local public agency or authority pursuant to (A) Section 1324 of Title 8 of the United States Code or Part 274 of Title 8 of the Code of Federal Regulations, (B) Section 881 of Title 21 of the United States Code or Part 9 of Title 28 of the Code of Federal Regulations, or (C) other federal, state, or local law, including regulations, and, pursuant to that other law, the seizing authority, as a precondition to the return of the motor vehicle to the seller or holder, prohibits the return of the motor vehicle to the buyer or other person liable on the contract or any third person claiming the motor vehicle by or through them or otherwise effects or requires the termination of the property rights in the motor vehicle of the buyer or other person liable on the contract or claimants by or through them. (c) Exercise of the right to reinstate the contract shall be limited to once in any 12-month period and twice during the term of the contract. (d) The provisions of this subdivision cover the method by which a contract shall be reinstated with respect to curing events of default which were a ground for repossession or occurred subsequent to repossession: (1) When the default is the result of the buyer’s failure to make any payment due under the contract, the buyer or any other person liable on the contract shall make the defaulted payments and pay any applicable delinquency charges. (2) When the default is the result of the buyer’s failure to keep and maintain the motor vehicle free from all encumbrances and liens of every kind, the buyer or any other person liable on the contract shall either satisfy all encumbrances and liens or, in the event the seller or holder satisfies the encumbrances and liens, the buyer or any other person liable on the contract shall reimburse the seller or holder for all reasonable costs and expenses incurred therefor. (3) When the default is the result of the buyer’s failure to keep and maintain insurance on the motor vehicle, the buyer or any other person liable on the contract shall either obtain the insurance or, in the event the seller or holder has obtained the insurance, the buyer or any other person liable on the contract shall reimburse the seller or holder for premiums paid and all reasonable costs and expenses, including, but not limited to, any finance charge in connection with the premiums permitted by Section 2982.8, incurred therefor. (4) When the default is the result of the buyer’s failure to perform any other obligation under the contract, unless the seller or holder has made a good faith determination that the default is so substantial as to be incurable, the buyer or any other person liable on the contract shall either cure the default or, if the seller or holder has performed the obligation, reimburse the seller or holder for all reasonable costs and expenses incurred in connection therewith. (5) Additionally, the buyer or any other person liable on the contract shall, in all cases, reimburse the seller or holder for all reasonable and necessary collection and repossession costs and fees actually paid by the seller or holder, including attorney’s fees and legal expenses expended in retaking and holding the vehicle. (e) If the seller or holder denies the right to reinstatement under subdivision (b) or paragraph (4) of subdivision (d), the seller or holder shall have the burden of proof that the denial was justified in that it was reasonable and made in good faith. If the seller or holder fails to sustain the burden of proof, the seller or holder shall not be entitled to a deficiency, but it shall not be presumed that the buyer is entitled to damages by reason of the failure of the seller or holder to sustain the burden of proof. (f) This section does not apply to a loan made by a lender licensed under Division 9 (commencing with Section 22000) of the Financial Code. (Amended by Stats. 2022, Ch. 716, Sec. 1. (SB 1099) Effective January 1, 2023.)
  107. 2983.35.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. )

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    Before repossessing a motor vehicle, a creditor or holder must give the cosigner written notice of delinquency when the cosigner was required for the credit, and noncompliance can bar recovery of repossession costs from the cosigner.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. ) ## 2983.35. (a) If a creditor has requested a cosigner as a condition of granting credit to any person for the purpose of acquisition of a motor vehicle, the creditor or holder shall give the cosigner a written notice of delinquency prior to the repossession of the motor vehicle if the motor vehicle is to be repossessed pursuant to the motor vehicle credit agreement. The written notice of delinquency shall be personally served or shall be sent by certified mail, return receipt requested, or first-class mail, postage prepaid, directed to the last known address of the cosigner. If the last known address of the buyer and the cosigner are the same, a single written notice of delinquency given to both the borrower and cosigner prior to repossession satisfies the cosigner notice requirement of this section. (b) A creditor or holder who fails to comply with this section may not recover any costs associated with the repossession of the vehicle from the cosigner. (c) This section applies to any motor vehicle credit agreement, notwithstanding Section 2982.5. (d) The following definitions govern the construction of this section. (1) “Cosigner” means a buyer who executes a motor vehicle credit agreement but does not in fact receive possession of the motor vehicle that is the subject of the agreement. (2) “Creditor” means a seller or lender described in paragraph (4). (3) “Holder” means any other person who is entitled to enforce the motor vehicle credit agreement. (4) “Motor vehicle credit agreement” means any conditional sales contract as defined in Section 2981 and any contract or agreement in which a lender gives value to enable a purchaser to acquire a motor vehicle and in which the lender obtains a security interest in the motor vehicle. (Added by Stats. 1996, Ch. 313, Sec. 2. Effective January 1, 1997.)
  108. 2983.37.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. )

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    Buy-here-pay-here dealers are restricted in using vehicle tracking and starter-interrupt technology, must give required written disclosures and warnings, and may not require in-person payments; violations are misdemeanors.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. ) ## 2983.37. (a) After a sale of a vehicle under this chapter, a buy-here-pay-here dealer, as defined in Section 241 of the Vehicle Code, shall not do any of the following: (1) Utilize electronic tracking technology to obtain or record the location of the vehicle, unless the buyer is expressly made aware of the existence and use of the tracking technology by the buy-here-pay-here dealer, the buyer’s written consent is obtained, and either subparagraph (A) or (B), or both, apply: (A) The electronic tracking technology is used solely to verify and maintain the operational status of the tracking technology, to repossess the vehicle, or to locate the vehicle to service the loan or keep the loan current. (B) The electronic tracking technology is used solely for any optional service to the buyer and both of the following conditions are met: (i) The agreement to utilize electronic tracking technology for the optional service is separate from the purchase and sale agreement, is not a condition of the purchase or sale agreement for the vehicle, and is executed after the completion of the purchase or sale agreement for the vehicle. (ii) The buyer is permitted to cancel the optional service at any point in the future without affecting the sale of the vehicle, and is informed of his or her ability to do so. (2) Disable the vehicle by using starter interrupt technology, unless the buy-here-pay-here dealer complies with all of the following provisions: (A) Notifies the buyer in writing at the time of the sale that the vehicle is equipped with starter interrupt technology, which the buy-here-pay-here dealer can use to shut down the vehicle remotely. (B) The written disclosure provided to the buyer at the time of sale informs the buyer that a warning will be provided five days before the use of the starter interrupt technology for all weekly payment term contracts and 10 days before the use of starter interrupt technology on all other contracts, and a final warning will be provided no less than 48 hours before the use of the starter interrupt technology to shut down the vehicle remotely and discloses the manner and method in which that warning will occur. The dealer shall offer the buyer a choice of warning methods, including warning from the device, telephone call, email, or text message, if available, provided that the warning method does not violate applicable state or federal law. (C) The written disclosure provided to the buyer at the time of sale informs the buyer that in the event of an emergency, the buyer will be provided with the ability to start a dealer-disabled vehicle for no less than 24 hours after the vehicle’s initial disablement. (b) A buy-here-pay-here dealer shall not require the buyer to make payments to the seller in person. For purposes of this subdivision, “payments” does not include the downpayment. If the buyer tenders timely payment of a deferred downpayment, the dealer shall not repossess the vehicle or impose any other charge or penalty on the grounds that the payment was not made in person. (c) Each violation of this section is a misdemeanor punishable by a fine not exceeding two thousand dollars ($2,000). (Amended by Stats. 2015, Ch. 179, Sec. 1. (AB 265) Effective January 1, 2016.)
  109. 2983.4.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. )

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    Prevailing parties in covered contract or purchase order actions are entitled to reasonable attorney’s fees and costs.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. ) ## 2983.4. Reasonable attorney’s fees and costs shall be awarded to the prevailing party in any action on a contract or purchase order subject to the provisions of this chapter regardless of whether the action is instituted by the seller, holder or buyer. Where the defendant alleges in his answer that he tendered to the plaintiff the full amount to which he was entitled, and thereupon deposits in court, for the plaintiff, the amount so tendered, and the allegation is found to be true, then the defendant is deemed to be a prevailing party within the meaning of this section. (Amended by Stats. 1976, Ch. 1285.)
  110. 2983.5.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. )

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    An assignee of the seller’s right takes the buyer’s defenses and equities, cannot have liability exceed the debt owed at assignment, and may seek recourse against the seller.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. ) ## 2983.5. (a) An assignee of the seller’s right is subject to all equities and defenses of the buyer against the seller, notwithstanding an agreement to the contrary, but the assignee’s liability may not exceed the amount of the debt owing to the assignee at the time of the assignment. (b) The assignee shall have recourse against the seller to the extent of any liability incurred by the assignee pursuant to this section regardless of whether the assignment was with or without recourse. (Amended by Stats. 1975, Ch. 66.)
  111. 2983.6.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. )

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    A person who willfully violates any provision of this chapter commits a misdemeanor.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. ) ## 2983.6. Any person who shall willfully violate any provision of this chapter shall be guilty of a misdemeanor. (Added by Stats. 1968, Ch. 1338.)
  112. 2983.7.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. )

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    Conditional sale contracts may not include clauses that waive the buyer’s defenses, authorize confessions of judgment, waive claims for illegal collection or repossession acts, shift liability away from the seller, or let the seller sue in the wrong county.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. ) ## 2983.7. No conditional sale contract shall contain any provision by which: (a) The buyer agrees not to assert against the seller a claim or defense arising out of the sale or agrees not to assert against an assignee such a claim or defense. (b) A power of attorney is given to confess judgment in this state, or an assignment of wages is given; provided, that nothing herein contained shall prohibit the giving of an assignment of wages contained in a separate instrument pursuant to Section 300 of the Labor Code. (c) The buyer waives any right of action against the seller or holder of the contract or other person acting on his behalf, for any illegal act committed in the collection of payments under the contract or in the repossession of the motor vehicle. (d) The buyer executes a power of attorney appointing the seller or holder of the contract, or other person acting on his behalf, as the buyer’s agent in the collection of payments under the contract or in the repossession of the motor vehicle. (e) The buyer relieves the seller from liability for any legal remedies which the buyer may have against the seller under the contract or any separate instrument executed in connection therewith. (f) The seller or holder of the contract is given the right to commence action on a contract under the provisions of this chapter in a county other than the county in which the contract was in fact signed by the buyer, the county in which the buyer resides at the commencement of the action, the county in which the buyer resided at the time the contract was entered into, or in the county in which the motor vehicle purchased pursuant to such contract is permanently garaged. (Added by Stats. 1968, Ch. 1288.)
  113. 2983.8.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. )

    Verify source ↗

    This section bars deficiency judgments after certain mobilehome and motor vehicle sales or dispositions.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. ) ## 2983.8. Notwithstanding Section 2983.2 or any other provision of law, no deficiency judgment shall lie in any event in any of the following instances: (a) After any sale of any mobilehome for which a permit is required pursuant to Section 35780 or 35790 of the Vehicle Code for failure of the purchaser to complete his or her conditional sale contract given to the seller to secure payment of the balance of the purchase price of such mobilehome. The provisions of this subdivision shall not apply in the event there is substantial damage to the mobilehome other than wear and tear from normal usage. This subdivision shall apply only to contracts entered into on or after the effective date of the act that enacted this subdivision and before July 1, 1981. (b) After any sale or other disposition of a motor vehicle unless the court has determined that the sale or other disposition was in conformity with the provisions of this chapter and the relevant provisions of Division 9 (commencing with Section 9101) of the Commercial Code, including Sections 9610, 9611, 9612, 9613, 9614, 9615, and 9626. The determination may be made upon an affidavit unless the court requires a hearing in the particular case. (Amended by Stats. 1999, Ch. 991, Sec. 8. Effective January 1, 2000. Operative July 1, 2001, by Sec. 75 of Ch. 991.)
  114. 2984.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. )

    Verify source ↗

    The holder may correct noncompliance in a covered contract, but some corrections have time limits and buyer consent rules.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. ) ## 2984. Any failure to comply with any provision of this chapter (commencing with Section 2981) may be corrected by the holder, provided, however, that a willful violation may not be corrected unless it is a violation appearing on the face of the contract and is corrected within 30 days of the execution of the contract or within 20 days of its sale, assignment or pledge, whichever is later, provided that the 20-day period shall commence with the initial sale, assignment or pledge of the contract, and provided that any other violation appearing on the face of the contract may be corrected only within such time periods. A correction which will increase the amount of the contract balance or the amount of any installment as such amounts appear on the conditional sale contract shall not be effective unless the buyer concurs in writing to the correction. If notified in writing by the buyer of such a failure to comply with any provision of this chapter, the correction shall be made within 10 days of notice. Where any provision of a conditional sale contract fails to comply with any provision of this chapter, the correction shall be made by mailing or delivering a corrected copy of the contract to the buyer. Any amount improperly collected by the holder from the buyer shall be credited against the indebtedness evidenced by the contract or returned to the buyer. A violation corrected as provided in this section shall not be the basis of any recovery by the buyer or affect the enforceability of the contract by the holder and shall not be deemed to be a substantive change in the agreement of the parties. (Amended by Stats. 1963, Ch. 838.)
  115. 2984.1.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. )

    Verify source ↗

    Conditional sale contracts must include a specified red-print disclosure, and the buyer must sign or initial it; no person may print a sales contract form that does not comply.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. ) ## 2984.1. Every conditional sale contract shall contain a statement in contrasting red print in at least 8-point bold type which shall satisfy the requirements of Section 5604 of the Vehicle Code and be signed or initialed by the buyer, as follows: THE MINIMUM PUBLIC LIABILITY INSURANCE LIMITS PROVIDED IN LAW MUST BE MET BY EVERY PERSON WHO PURCHASES A VEHICLE. IF YOU ARE UNSURE WHETHER OR NOT YOUR CURRENT INSURANCE POLICY WILL COVER YOUR NEWLY ACQUIRED VEHICLE IN THE EVENT OF AN ACCIDENT, YOU SHOULD CONTACT YOUR INSURANCE AGENT. WARNING: YOUR PRESENT POLICY MAY NOT COVER COLLISION DAMAGE OR MAY NOT PROVIDE FOR FULL REPLACEMENT COSTS FOR THE VEHICLE BEING PURCHASED. IF YOU DO NOT HAVE FULL COVERAGE, SUPPLEMENTAL COVERAGE FOR COLLISION DAMAGE MAY BE AVAILABLE TO YOU THROUGH YOUR INSURANCE AGENT OR THROUGH THE SELLING DEALER. HOWEVER, UNLESS OTHERWISE SPECIFIED, THE COVERAGE YOU OBTAIN THROUGH THE DEALER PROTECTS ONLY THE DEALER, USUALLY UP TO THE AMOUNT OF THE UNPAID BALANCE REMAINING AFTER THE VEHICLE HAS BEEN REPOSSESSED AND SOLD. FOR ADVICE ON FULL COVERAGE THAT WILL PROTECT YOU IN THE EVENT OF LOSS OR DAMAGE TO YOUR VEHICLE, YOU SHOULD CONTACT YOUR INSURANCE AGENT. THE BUYER SHALL SIGN TO ACKNOWLEDGE THAT HE/SHE UNDERSTANDS THESE PUBLIC LIABILITY TERMS AND CONDITIONS. s/s ____________. No person shall print for use as a sales contract form, any form which does not comply with this section. (Amended by Stats. 1988, Ch. 177, Sec. 1.)
  116. 2984.2.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. )

    Verify source ↗

    Conditional sale contracts cannot secure unrelated property with title or a lien, except for specified vehicle- and insurance-related items and a few stated exceptions.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. ) ## 2984.2. (a) No conditional sale contract, and no agreement between a seller and a buyer made in connection with a conditional sale contract, may provide for the inclusion of title to or a lien upon any property other than the following: (1) The motor vehicle which is the subject matter of the sale, including any replacement of that motor vehicle, or accessories, accessions, or replacement of those accessories or accessions, or proceeds thereof. (2) The proceeds of any insurance policies covering the motor vehicle which are required by the seller or the returned premiums of any such policies if the premiums for such policies are included in the amount financed. (3) The proceeds of any credit insurance policies which the buyer purchases in connection with the motor vehicle conditional sale contract or the returned premiums of any such policies if the premiums for such policies are included in the amount financed. (4) The proceeds and returned price of any service contract if the cost of such contract is included in the amount financed. (b) Subdivision (a) shall not apply to any agreement which meets the requirements of subdivision (b) of Section 2982.5 and otherwise complies with this chapter, nor, with respect to a mobilehome sold prior to July 1, 1981, to any agreement whereby a security interest is taken in real property on which the mobilehome is installed on a foundation system pursuant to Section 18551 of the Health and Safety Code. (c) A provision in violation of this section shall be void. (Amended by Stats. 1987, Ch. 1043, Sec. 1.)
  117. 2984.3.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. )

    Verify source ↗

    The buyer must tell the third party in writing within 30 days if the documents were not furnished.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. ) ## 2984.3. Any acknowledgment by the buyer of delivery of a copy of a conditional sale contract or purchase order and any vehicle purchase proposal and any credit statement that the seller has required or requested the buyer to sign, and that he or she has signed, during the contract negotiations, shall be printed or written in size equal to at least 10-point boldface type and, if contained in the contract, shall appear directly above the space reserved for the buyer’s signature or adjacent to any other notices required by law to be placed immediately above the signature space. The buyer’s written acknowledgment, conforming to the requirements of this section, of delivery of a completely filled-in copy of the contract, and a copy of the other documents shall be a rebuttable presumption of delivery in any action or proceeding by or against a third party without knowledge to the contrary when he or she acquired his or her interest in the contract. If the third party furnishes the buyer a copy of the documents, or a notice containing the disclosures identified in subdivision (a) of Section 2982, and stating that the buyer shall notify the third party in writing within 30 days if a copy of the documents was not furnished, and that notification is not given, it shall be conclusively presumed in favor of the third party that copies of the documents were furnished as required by this chapter. (Amended by Stats. 1994, Ch. 146, Sec. 15. Effective January 1, 1995.)
  118. 2984.4.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. )

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    This section requires certain actions on contracts or purchase orders under this chapter to be tried in specified superior courts, and it requires the plaintiff to file an affidavit showing proper venue when the complaint is filed.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. ) ## 2984.4. (a) An action on a contract or purchase order under this chapter shall be tried in the superior court in the county where the contract or purchase order was in fact signed by the buyer, where the buyer resided at the time the contract or purchase order was entered into, where the buyer resides at the commencement of the action, or where the motor vehicle purchased pursuant to the contract or purchase order is permanently garaged. In any action involving multiple claims, or causes of action, venue shall lie in those courts if there is at least one claim or cause of action arising from a contract subject to this chapter. (b) In the superior court designated as the proper court in subdivision (a), the proper court location for trial of an action under this chapter is the location where the court tries that type of action that is nearest or most accessible to where the contract, conditional sale contract, or purchase order was in fact signed by the buyer, where the buyer resided at the time the contract, conditional sale contract, or purchase order was entered into, where the buyer resides at the commencement of the action, or where the motor vehicle purchased pursuant to the contract is permanently garaged. Otherwise, any location of the superior court designated as the proper superior court in subdivision (a) is the proper court location for the trial of the action. The court may specify by local rule the nearest or most accessible court location where the court tries that type of case. (c) In any action subject to this section, concurrently with the filing of the complaint, the plaintiff shall file an affidavit stating facts showing that the action has been commenced in a superior court and court location described in this section as a proper place for the trial of the action. Those facts may be stated in a verified complaint and shall not be stated on information or belief. When that affidavit is filed with the complaint, a copy shall be served with the summons. If a plaintiff fails to file the affidavit or state facts in a verified complaint required by this section, no further proceedings may occur, but the court shall, upon its own motion or upon motion of any party, dismiss the action without prejudice. The court may, on terms that are just, permit the affidavit to be filed subsequent to the filing of the complaint and a copy of the affidavit shall be served on the defendant. The time to answer or otherwise plead shall date from that service. (Amended by Stats. 2002, Ch. 806, Sec. 2. Effective January 1, 2003.)
  119. 2984.5.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. )

    Verify source ↗

    A seller must keep specified sales and credit-related documents for the longer of seven years or the contract term.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. ) ## 2984.5. (a) A seller shall maintain the following documents for at least seven years or the length of the conditional sales contract, whichever is longer: (1) A copy of each buyer’s conditional sales contract. (2) Any documents relied upon by the seller to determine a buyer’s creditworthiness, including, but not limited to, any consumer credit report, as defined in Section 1785.3, or any other document containing a buyer’s credit score, as defined in Section 1785.15.1. (3) If the conditional sales contract is sold, assigned, or otherwise transferred, a copy of the terms of that sale, assignment, or transfer. (b) A seller that unlawfully fails to comply with a court order to produce the documents described in subdivision (a) shall be liable in an action brought by the Attorney General for a civil penalty of five thousand dollars ($5,000) per violation. The penalties provided by this section are in addition to all rights and remedies that are otherwise available under law. (Added by Stats. 2003, Ch. 59, Sec. 1. Effective January 1, 2004.)
  120. 2984.6.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. )

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    A holder or the holder’s agent who has received the required notice must not make a later assignment for skip tracing, locating, or repossessing a vehicle unless the assignee is told the notice information at the same time and in the same way as the assignment.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6] ( Chapter 2b added by Stats. 1961, Ch. 1626. ) ## 2984.6. A holder of a conditional sales contract, purchase order, or security interest, or the agent of a holder, who has received a notice pursuant to Section 7507.6 of the Business and Professions Code, shall not make a subsequent assignment to skip trace, locate, or repossess the vehicle without simultaneously, and in the same manner by which the assignment is given, advising the assignee of the assignment of the information contained in the notice. As used in this section, “assignment” has the same meaning set forth in Section 7500.1 of the Business and Professions Code. (Added by Stats. 2007, Ch. 192, Sec. 4. Effective September 7, 2007.)
  121. 2985.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2c. Real Property Sales Contracts [2985 - 2985.6] ( Chapter 2c added by Stats. 1961, Ch. 886. )

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    This section defines a real property sales contract and excludes certain condominium purchase contracts from that definition.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2c. Real Property Sales Contracts [2985 - 2985.6] ( Chapter 2c added by Stats. 1961, Ch. 886. ) ## 2985. (a) A real property sales contract is an agreement in which one party agrees to convey title to real property to another party upon the satisfaction of specified conditions set forth in the contract and that does not require conveyance of title within one year from the date of formation of the contract. (b) For purposes of this chapter only, a real property sales contract does not include a contract for purchase of an attached residential condominium unit entered into pursuant to a conditional public report issued by the Bureau of Real Estate pursuant to Section 11018.12 of the Business and Professions Code. (Amended by Stats. 2013, Ch. 352, Sec. 53. (AB 1317) Effective September 26, 2013. Operative July 1, 2013, by Sec. 543 of Ch. 352.)
  122. 2985.1.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2c. Real Property Sales Contracts [2985 - 2985.6] ( Chapter 2c added by Stats. 1961, Ch. 886. )

    Verify source ↗

    A fee owner generally cannot transfer a real property sales contract unless the real property is transferred too, and cannot transfer the real property unless the contract is assigned too.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2c. Real Property Sales Contracts [2985 - 2985.6] ( Chapter 2c added by Stats. 1961, Ch. 886. ) ## 2985.1. A real property sales contract may not be transferred by the fee owner of the real property unless accompanied by a transfer of the real property which is the subject of the contract, and real property may not be transferred by the fee owner thereof unless accompanied by an assignment of the contract. Nothing herein shall be deemed to prohibit the assignment or pledge of a real property sales contract, as security or for the purpose of effecting collection thereon, to the holder of a first lien on the real property which is the subject of the contract without a transfer of the real property or the transfer of a fee title in trust without the concurrent assignment of the sales contract. (Amended by Stats. 1963, Ch. 71.)
  123. 2985.2.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2c. Real Property Sales Contracts [2985 - 2985.6] ( Chapter 2c added by Stats. 1961, Ch. 886. )

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    A person who sells land under an unrecorded sales contract must not later place certain unauthorized encumbrances on the property above specified payment limits.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2c. Real Property Sales Contracts [2985 - 2985.6] ( Chapter 2c added by Stats. 1961, Ch. 886. ) ## 2985.2. Any person, or the assignee of such person, who sells a parcel of land under a sales contract which is not recorded and who thereafter causes an encumbrance or encumbrances not consented to in writing by the parties upon such property in an amount which, together with existing encumbrances thereon exceeds the amount then due under the contract, or under which the aggregate amount of any periodic payments exceeds the periodic payments due on the contract, excluding any pro rata amount for insurance and taxes, shall be guilty of a public offense punishable by a fine not exceeding ten thousand dollars ($10,000), or by imprisonment pursuant to subdivision (h) of Section 1170 of the Penal Code, or in a county jail not exceeding one year, or by both that fine and imprisonment. (Amended by Stats. 2011, Ch. 15, Sec. 36. (AB 109) Effective April 4, 2011. Operative October 1, 2011, by Sec. 636 of Ch. 15, as amended by Stats. 2011, Ch. 39, Sec. 68.)
  124. 2985.3.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2c. Real Property Sales Contracts [2985 - 2985.6] ( Chapter 2c added by Stats. 1961, Ch. 886. )

    Verify source ↗

    A seller or assignee under a real property sales contract must not knowingly take a buyer’s installment payment and use it for something other than paying the amount then due on the seller’s secured obligation, except for any amount above what is due.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2c. Real Property Sales Contracts [2985 - 2985.6] ( Chapter 2c added by Stats. 1961, Ch. 886. ) ## 2985.3. Every seller of improved or unimproved real property under a real property sales contract, or his assignee, who knowingly receives an installment payment from the buyer under a real property sales contract at a time when there is then due any payment by the seller, or his assignee, on an obligation secured by an encumbrance on the property subject to the real property sales contract, and who appropriates such payment received from the buyer to a use other than payment of the amount then due on the seller’s or assignee’s obligation, except to the extent the payment received from the buyer exceeds the amount due from the seller or assignee, is guilty of a public offense punishable by a fine not exceeding ten thousand dollars ($10,000), or by imprisonment pursuant to subdivision (h) of Section 1170 of the Penal Code, or in a county jail not exceeding one year, or by both that fine and imprisonment. (Amended by Stats. 2011, Ch. 15, Sec. 37. (AB 109) Effective April 4, 2011. Operative October 1, 2011, by Sec. 636 of Ch. 15, as amended by Stats. 2011, Ch. 39, Sec. 68.)
  125. 2985.4.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2c. Real Property Sales Contracts [2985 - 2985.6] ( Chapter 2c added by Stats. 1961, Ch. 886. )

    Verify source ↗

    A seller who receives insurance and tax payments under a real property sales contract must hold them in trust and cannot use them for another purpose without required consent.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2c. Real Property Sales Contracts [2985 - 2985.6] ( Chapter 2c added by Stats. 1961, Ch. 886. ) ## 2985.4. Every seller of improved or unimproved real property under a real property sales contract who receives pro rata payments for insurance and taxes shall hold these amounts in trust for the purpose designated. These amounts shall not be disbursed for any other purpose without the consent of the payor and any person or corporation holding an encumbrance on the property. This section shall not apply to a state- or federal-supervised assignee of a seller who as agent for the seller receives and disburses payments. (Added by Stats. 1963, Ch. 560.)
  126. 2985.5.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2c. Real Property Sales Contracts [2985 - 2985.6] ( Chapter 2c added by Stats. 1961, Ch. 886. )

    Verify source ↗

    Real property sales contracts entered into after January 1, 1966 must include a statement of the years needed to complete payment and the basis for the tax estimate.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2c. Real Property Sales Contracts [2985 - 2985.6] ( Chapter 2c added by Stats. 1961, Ch. 886. ) ## 2985.5. Every real property sales contract entered into after January 1, 1966, shall contain a statement of: (a) The number of years required to complete payment in accordance with the terms of the contract. (b) The basis upon which the tax estimate is made. (Added by Stats. 1965, Ch. 1214.)
  127. 2985.51.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2c. Real Property Sales Contracts [2985 - 2985.6] ( Chapter 2c added by Stats. 1961, Ch. 886. )

    Verify source ↗

    Certain real property sales contracts must include disclosure statements or supporting documents about subdivision compliance, exemptions, waivers, or required improvements.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2c. Real Property Sales Contracts [2985 - 2985.6] ( Chapter 2c added by Stats. 1961, Ch. 886. ) ## 2985.51. (a) Every real property sales contract entered into on and after January 1, 1978, where the real property that is the subject of such contract resulted from a division of real property occurring on or after January 1, 1978, shall contain or have attached thereto a statement indicating the fact that the division creating the parcel or parcels to be conveyed: (1) Was made in compliance with the provisions of the Subdivision Map Act, Division 2 (commencing with Section 66410) of Title 7 of the Government Code and local ordinances adopted pursuant thereto, and in such event the statement shall expressly refer to the location, in the records of the county recorder for the county in which the real property is located, of a previously recorded certificate of compliance or conditional certificate of compliance issued pursuant to Section 66499.35 of the Government Code with respect to the real property being sold, or the statement shall describe the real property to be conveyed as an entire lot or parcel by referencing the recorded final or parcel map creating the parcel or parcels to be conveyed and such description shall constitute a certificate of compliance as set forth in subdivision (d) of Section 66499.35 of the Government Code. Provided, however, where reference is made to a recorded parcel map and the approval of such map was conditioned upon the construction of specified offsite and onsite improvements as a precondition to the issuance of a permit or grant of approval for the development of such parcel and the construction of the improvements has not been completed as of the date of execution of the real property sales contract, then the statement shall expressly set forth all such required offsite and onsite improvements; or (2) Was exempt from the provisions of the Subdivision Map Act and local ordinances adopted pursuant thereto, and in such event the statement shall expressly set forth the basis for such exemption; or (3) Was the subject of a waiver of the provisions of the Subdivision Map Act and local ordinances adopted pursuant thereto, and in such event the contract shall have attached thereto a copy of the document issued by the local agency granting the waiver. Provided, however, where the granting of the waiver was conditioned upon the construction of specified offsite and onsite improvements as a precondition to the issuance of a permit or grant of approval for the development of the parcel and the construction of the improvements has not been completed as of the date of execution of the real property sales contract, then such statement shall expressly set forth all such required offsite and onsite improvements; or (4) Was not subject to the provisions of the Subdivision Map Act and local ordinances adopted pursuant thereto, and in such event the statement shall expressly set forth the basis for the nonapplicability of the Subdivision Map Act to the division. (b) Every real property sales contract entered into after January 1, 1978, where the real property that is the subject of such contract resulted from a division of real property occurring prior to January 1, 1978, shall: (1) Contain or have attached thereto a signed statement by the vendor that the parcel or parcels which are the subject of the contract have been created in compliance with, or a waiver has been granted with respect to, the provisions of the Subdivision Map Act, Division 2 (commencing with Section 66410) of Title 7 of the Government Code and local ordinances adopted pursuant thereto, or any prior law regulating the division of land, or, were exempt from or not otherwise subject to any such law at the time of their creation. Provided, however, where the division creating the parcel or parcels being conveyed was by means of a parcel map, or in the event that a waiver of the provisions of the Subdivision Map Act has been granted, and the approval of the parcel map or the granting of the waiver was conditioned upon the construction of specified offsite and onsite improvements as a precondition to the issuance of a permit or grant of approval for the development of such parcel and the construction of the improvements has not been completed as of the date of execution of the real property sales contract, then such contract shall expressly set forth all such required offsite and onsite improvements. (2) In lieu of the above, the vendor may include in the real property sales contract a description of the real property being conveyed as an entire lot or parcel by referencing the recorded final or parcel map creating the parcel or parcels being conveyed and such description shall constitute a certificate of compliance as set forth in subdivision (d) of Section 66499.35 of the Government Code. Provided, however, where reference is made to a recorded parcel map, or in the event that a waiver of the provisions of the Subdivision Map Act has been granted, and the approval of the parcel map or the granting of the waiver was conditioned upon the construction of specified offsite and onsite improvements as a precondition to the issuance of a permit or grant of approval for the development of such parcel and the construction of the improvements has not been completed as of the date of execution of the real property sales contract, then such contract shall expressly set forth all such required offsite and onsite improvements. (3) Notwithstanding paragraphs (1) and (2), in the event that the parcel or parcels which are the subject of the real property sales contract were not created in compliance with the provisions of the Subdivision Map Act, Division 2 (commencing with Section 66410) of Title 7 of the Government Code and local ordinances adopted pursuant thereto, or any other prior law regulating the division of land, and were not exempt from, or were otherwise subject to any such law at the time of their creation, the real property sales contract shall contain a statement signed by the vendor and vendee acknowledging such fact. In addition, the vendor shall attach to the real property sales contract a conditional certificate of compliance issued pursuant to Section 66499.35 of the Government Code. (c) In the event that the parcel or parcels which are the subject of the real property sales contract are found not to have been created in compliance with, or a waiver has not been granted with respect to, the provisions of the Subdivision Map Act, Division 2 (commencing with Section 66410) of Title 7 of the Government Code, or any other prior law regulating the division of land nor to be exempt from, or otherwise subject to such laws and the vendee has reasonably relied upon the statement of such compliance or exemption made by the vendor, or in the event that the vendor has failed to provide the conditional certificate of compliance as required by paragraph (3) of subdivision (b), and the vendor knew or should have known of the fact of such noncompliance, or lack of exemption, or the failure to provide the conditional certificate of compliance, the vendee, or his successor in interest, shall be entitled to: (1) recover from the vendor or his assigns the amount of all costs incurred by the vendee or his successor in interest in complying with all conditions imposed pursuant to Section 66499.35 of the Government Code; or, (2) the real property sales contract, at the sole option of the vendee, or his successor in interest, shall be voidable and in such event the vendee or his successor in interest shall be entitled to damages from the vendor or his assigns. For purposes of this section, damages shall mean all amounts paid under the real estate sales contract with interest thereon at the rate of 9 percent per annum, and in addition thereto a civil penalty in the amount of five hundred dollars ($500) plus attorney’s fees and costs. Any action to enforce the rights of a vendee or his successor in interest shall be commenced within one year of the date of discovery of the failure to comply with the provisions of this section. (d) Any vendor who willfully violates the provisions of subdivision (a) of this section by knowingly providing a vendee with a false statement of compliance with, exemption from, waiver of, or nonapplicability of, the provisions of the Subdivision Map Act, with respect to the real property that is the subject of the real property sales contract, shall be guilty of a misdemeanor punishable by a fine of not to exceed one thousand dollars ($1,000), or imprisonment for not to exceed six months, or both such fine and imprisonment. (e) For purposes of this section a real property sales contract is an agreement wherein one party agrees to convey title to unimproved real property to another party upon the satisfaction of specified conditions set forth in the contract and which does not require conveyance of title within one year from the date of formation of the contract. Unimproved real property means real property upon which no permanent structure intended for human occupancy or commercial use is located. (f) The provisions of this section shall not apply to a real property sales contract which, by its terms, requires either a good faith downpayment and a single payment of the balance of the purchase price or a single payment of the purchase price upon completion of the contract, and the provisions of such contract do not require periodic payment of principal or interest. (Added by Stats. 1977, Ch. 1228.)
  128. 2985.6.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2c. Real Property Sales Contracts [2985 - 2985.6] ( Chapter 2c added by Stats. 1961, Ch. 886. )

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    A buyer may prepay all or part of the balance due on a covered real property sales contract, unless the seller and buyer agree in writing to block prepayment for up to 12 months after the sale.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2c. Real Property Sales Contracts [2985 - 2985.6] ( Chapter 2c added by Stats. 1961, Ch. 886. ) ## 2985.6. (a) A buyer shall be entitled to prepay all or any part of the balance due on any real property sales contract with respect to the sale of land which has been subdivided into a residential lot or lots which contain a dwelling for not more than four families entered into on or after January 1, 1969; provided, however, that the seller, by an agreement in writing with the buyer, may prohibit prepayment for up to a 12-month period following the sale. (b) Any waiver by the buyer of the provisions of this section shall be deemed contrary to public policy and shall be unenforceable and void; provided, however, that any such waiver shall in no way affect the validity of the remainder of the contract. (Amended by Stats. 1978, Ch. 565.)
  129. 2985.7.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2d. Vehicle Leasing Act [2985.7 - 2993] ( Chapter 2d repealed and added by Stats. 1976, Ch. 1284. )

    Verify source ↗

    This section defines key terms used in the Vehicle Leasing Act, including motor vehicle, lessor, lessee, lease contract, Regulation M, and the constant yield method.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2d. Vehicle Leasing Act [2985.7 - 2993] ( Chapter 2d repealed and added by Stats. 1976, Ch. 1284. ) ## 2985.7. (a) “Motor vehicle” means any vehicle required to be registered under the Vehicle Code. Motor vehicle does not include any trailer which is sold in conjunction with a vessel. (b) “Lessor” includes “bailor” and is a person who is engaged in the business of leasing, offering to lease or arranging the lease of a motor vehicle under a lease contract. For the purpose of this subdivision, “person” means an individual, partnership, corporation, limited liability company, estate, trust, cooperative, association or any other legal entity. (c) “Lessee” includes “bailee” and is a natural person who leases, offers to lease or is offered the lease of a motor vehicle under a lease contract. (d) “Lease contract” means any contract for or in contemplation of the lease or bailment for the use of a motor vehicle, and the purchase of services incidental thereto, by a natural person for a term exceeding four months, primarily for personal, family or household purposes, whether or not it is agreed that the lessee bear the risk of the motor vehicle’s depreciation. Lease contract does not include a lease for agricultural, business or commercial purposes, or to a government or governmental agency or instrumentality. (e) “Regulation M” means any rule, regulation, or interpretation promulgated by the Board of Governors of the Federal Reserve System under the federal Consumer Leasing Act (15 U.S.C. Secs. 1667-1667e), and any interpretation or approval issued by an official or employee of the Federal Reserve System duly authorized by the board to issue such interpretations or approvals. (f) “Constant yield method” means the following: (1) In the case of a periodic payment lease, the method of determining the rent charge portion of each base payment in which the rent charge for each computational period is earned in advance by multiplying the constant rate implicit in the lease contract times the balance subject to rent charge as it declines during the scheduled lease term. At any time during the scheduled term of a periodic payment lease, the balance subject to rent charge is the difference between the adjusted capitalized cost and the sum of (A) all depreciation and other amortized amounts accrued during the preceding computational periods and (B) the first base periodic payment. (2) In the case of a single payment lease, the method of determining the periodic earning of rent charges in which the rent charge for each computational period is earned in advance by multiplying the constant rate implicit in the lease contract times the balance subject to rent charge as it increases during the scheduled lease term. At any time during the scheduled term of a single payment lease, the balance subject to rent charge is determined by subtracting from the residual value the total rent charge scheduled to be earned over the term of the lease contract and adding to the difference all rent charges accrued during the preceding computational periods. (3) Periodic rent charge calculations are based on the assumption that the lessor will receive the lease payments on their exact due dates and that the lease does not end before its scheduled termination date. (Amended by Stats. 1997, Ch. 800, Sec. 3. Effective January 1, 1998.)
  130. 2985.71.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2d. Vehicle Leasing Act [2985.7 - 2993] ( Chapter 2d repealed and added by Stats. 1976, Ch. 1284. )

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    Lease solicitations that include certain items must disclose specified information, and solicitations cannot claim a specific vehicle lease is available unless the lessor usually offers it on those terms.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2d. Vehicle Leasing Act [2985.7 - 2993] ( Chapter 2d repealed and added by Stats. 1976, Ch. 1284. ) ## 2985.71. (a) Any solicitation to enter into a lease contract that includes any of the following items shall contain the disclosures described in subdivision (b): (1) The amount of any payment. (2) A statement of any capitalized cost reduction or other payment required prior to or at consummation or by delivery, if delivery occurs after consummation. (3) A statement that no capitalized cost reduction or other payment is required prior to or at consummation or by delivery, if delivery occurs after consummation. (b) A solicitation to enter into a lease contract that includes any item listed in subdivision (a) shall also clearly and conspicuously state all of the following items: (1) All of the disclosures prescribed by Regulation M set forth in the manner required or permitted by Regulation M, whether or not Regulation M applies to the transaction. (2) The mileage limit after which mileage charges may accrue and the charge per mile for mileage in excess of the stated mileage limit. (3) The statement “Plus tax and license” or a substantially similar statement, if amounts due for use tax, license fees, and registration fees are not included in the payments. (c) No solicitation to aid, promote, or assist directly or indirectly any lease contract may state that a specific lease of any motor vehicle at specific amounts or terms is available unless the lessor usually and customarily leases or will lease that motor vehicle at those amounts or terms. (d) A failure to comply with the provisions of this section shall not affect the validity of the leasing contract. No owner or employee of any entity, other than the lessor, that serves as a medium in which a lease solicitation appears or through which a lease solicitation is disseminated, shall be liable under this section. (e) A lessor is not in violation of paragraph (29) of subdivision (a) of Section 1770 because it excludes from the advertised, displayed, or offered lease payment a fee or charge in accordance with paragraph (3) of subdivision (b). (f) This section shall become operative on July 1, 2024. (Repealed (in Sec. 5) and added by Stats. 2023, Ch. 400, Sec. 6. (SB 478) Effective January 1, 2024. Operative July 1, 2024, by its own provisions.)
  131. 2985.9.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2d. Vehicle Leasing Act [2985.7 - 2993] ( Chapter 2d repealed and added by Stats. 1976, Ch. 1284. )

    Verify source ↗

    A lease contract does not have to include certain listed documents and agreements.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2d. Vehicle Leasing Act [2985.7 - 2993] ( Chapter 2d repealed and added by Stats. 1976, Ch. 1284. ) ## 2985.9. The following documents and agreements are not required to be contained in a lease contract: (a) An “express warranty,” as that term is defined in paragraph (1) of subdivision (a) of Section 1791.2, whether it relates to the sale or lease of a consumer good. (b) Titling and transfer documents utilized to register, title, or transfer ownership of vehicles described in the lease contract with government registration authorities. (c) Insurance policies, service contracts, and optional debt cancellation agreements. (d) Documents that memorialize the sale or lease of goods or services, relating to the leased vehicle, between the provider of those goods or services and lessee that are included in the gross capitalized cost of the lease and separately itemized in the “Itemization of Gross Capitalized Cost.” (Added by Stats. 2001, Ch. 287, Sec. 3. Effective January 1, 2002.)
  132. 2986.10.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2d. Vehicle Leasing Act [2985.7 - 2993] ( Chapter 2d repealed and added by Stats. 1976, Ch. 1284. )

    Verify source ↗

    An assignee of the lessor’s rights is bound by the lessee’s defenses and equities, and the assignee’s liability is capped at the amount owed at assignment.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2d. Vehicle Leasing Act [2985.7 - 2993] ( Chapter 2d repealed and added by Stats. 1976, Ch. 1284. ) ## 2986.10. (a) An assignee of the lessor’s rights is subject to all equities and defenses of the lessee against the lessor, notwithstanding an agreement to the contrary, but the assignee’s liability may not exceed the amount of the obligation owing to the assignee at the time of the assignment. (b) The assignee shall have recourse against the lessor to the extent of any liability incurred by the assignee pursuant to this section regardless of whether the assignment was with or without recourse. (Added by Stats. 1976, Ch. 1284.)
  133. 2986.12.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2d. Vehicle Leasing Act [2985.7 - 2993] ( Chapter 2d repealed and added by Stats. 1976, Ch. 1284. )

    Verify source ↗

    A lessor must not诱ce or try to induce a person to enter a contract covered by this chapter by offering a rebate, discount, commission, or other consideration tied to the lessee giving information or assistance to help the lessor lease or sell a motor vehicle to someone else.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2d. Vehicle Leasing Act [2985.7 - 2993] ( Chapter 2d repealed and added by Stats. 1976, Ch. 1284. ) ## 2986.12. It shall be unlawful for any lessor to induce or attempt to induce any person to enter into a contract subject to this chapter by offering a rebate, discount, commission or other consideration, on the condition that the lessee gives information or assistance for the purpose of enabling a lessor to either lease or sell a motor vehicle to another. (Added by Stats. 1976, Ch. 1284.)
  134. 2986.13.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2d. Vehicle Leasing Act [2985.7 - 2993] ( Chapter 2d repealed and added by Stats. 1976, Ch. 1284. )

    Verify source ↗

    If a lease is not executed, the lessor must refund any payment made by the lessee. If the lessor breaches the lease and keeps a trade-in vehicle, the lessee may recover the greater of the vehicle’s fair market value or its lease-contract value, and the recovery must be tendered within five business days.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2d. Vehicle Leasing Act [2985.7 - 2993] ( Chapter 2d repealed and added by Stats. 1976, Ch. 1284. ) ## 2986.13. (a) Any payment made by a lessee to a lessor pending the execution of a lease contract shall be refunded to the lessee in the event the lease contract is not executed. (b) In the event of breach by the lessor of a lease contract where the lessee leaves his or her motor vehicle with the lessor as a trade-in downpayment and the motor vehicle is not returned by the lessor to the lessee for whatever reason, the lessee may recover from the lessor either the fair market value of the motor vehicle left as a downpayment or its value as stated in the lease contract, whichever is greater. The recovery shall be tendered to the lessee within five business days after the breach. (c) The remedies of the buyer provided for in subdivision (b) are nonexclusive and cumulative and shall not preclude the lessee from pursuing any other remedy which he or she may have under any other provision of law. (Amended by Stats. 1997, Ch. 800, Sec. 11. Effective January 1, 1998.)
  135. 2986.3.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2d. Vehicle Leasing Act [2985.7 - 2993] ( Chapter 2d repealed and added by Stats. 1976, Ch. 1284. )

    Verify source ↗

    Lease contracts may not include certain clauses, including confession-of-judgment, wage-assignment, waiver-of-claims, liability-waiver, or improper venue provisions.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2d. Vehicle Leasing Act [2985.7 - 2993] ( Chapter 2d repealed and added by Stats. 1976, Ch. 1284. ) ## 2986.3. No lease contract shall contain any provision by which: (a) A power of attorney is given to confess judgment in this state, or an assignment of wages is given; provided that nothing herein contained shall prohibit the giving of an assignment of wages contained in a separate instrument pursuant to Section 300 of the Labor Code. (b) The lessee waives any right of action against the lessor or holder of the contract or other person acting on his or her behalf for any illegal act committed in the collection of payments under the contract or in the repossession of the motor vehicle. (c) The lessee relieves the lessor from liability for any legal remedies which the lessee may have against the lessor under the contract or any separate instruments executed in connection therewith. (d) The lessor or holder of the contract is given the right to commence action on a contract under the provisions of this chapter in a county other than the county in which the contract was in fact signed by the lessee, the county in which the lessee resides at the commencement of the action, the county in which the lessee resided at the time the contract was entered into or in the county in which the motor vehicle leased pursuant to such contract is permanently garaged. (Amended by Stats. 1997, Ch. 800, Sec. 9. Effective January 1, 1998.)
  136. 2986.4.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2d. Vehicle Leasing Act [2985.7 - 2993] ( Chapter 2d repealed and added by Stats. 1976, Ch. 1284. )

    Verify source ↗

    A lessee’s acknowledgment of delivery must be in 10-point bold type and, if in the contract, placed directly above the lessee’s signature space. A signed acknowledgment can create a rebuttable presumption of delivery, and a third party can obtain a conclusive presumption if the lessee does not give written notice within 30 days after receiving the specified copy or notice.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2d. Vehicle Leasing Act [2985.7 - 2993] ( Chapter 2d repealed and added by Stats. 1976, Ch. 1284. ) ## 2986.4. Any acknowledgment by the lessee of delivery of a copy of a lease contract or purchase order and any vehicle lease proposal and any credit statement which the lessor has required or requested the lessee to sign, and which the lessee has signed, during the contract negotiations, shall be printed or written in size equal to at least 10-point bold type and, if contained in the contract, shall appear directly above the space reserved for the lessee’s signature. The lessee’s written acknowledgment, conforming to the requirements of this section, of delivery of a completely filled in copy of the contract, and a copy of such other documents shall be a rebuttable presumption of delivery in any action or proceeding by or against a third party without knowledge to the contrary when he or she acquired his or her interest in the contract. If such third party furnishes the lessee a copy of such documents, or a notice containing items set forth in subdivision (c) of Section 2985.8, and stating that the lessee shall notify such third party in writing within 30 days if he or she was not furnished a copy of such documents, and no such notification is given, it shall be conclusively presumed in favor of such a third party that copies of the documents were furnished as required by this chapter. (Amended by Stats. 1997, Ch. 800, Sec. 10. Effective January 1, 1998.)
  137. 2986.5.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2d. Vehicle Leasing Act [2985.7 - 2993] ( Chapter 2d repealed and added by Stats. 1976, Ch. 1284. )

    Verify source ↗

    A person may not lease a used motor vehicle for use on California highways unless it meets the Vehicle Code equipment requirements. A lessor must refund any excess title or licensing money paid by the lessee.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2d. Vehicle Leasing Act [2985.7 - 2993] ( Chapter 2d repealed and added by Stats. 1976, Ch. 1284. ) ## 2986.5. (a) No person shall lease a used motor vehicle for operation on California highways if such vehicle does not meet all of the equipment requirements of Division 12 (commencing with Section 24000) of the Vehicle Code. This subdivision does not apply to an extension or a subsequent lease of the same motor vehicle to the same lessee. (b) If a lessee of a vehicle pays to the lessor an amount for the licensing or transfer of title of the vehicle which amount is in excess of the actual fees due for such licensing or transfer, or which amount is in excess of the amount which has been paid, prior to the sale, by the lessor to the state in order to avoid penalties that would have accrued because of late payment of such fees, the lessor shall return such excess amount to the lessee, whether or not such lessee requests the return of the excess amount. (Added by Stats. 1976, Ch. 1284.)
  138. 2986.6.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2d. Vehicle Leasing Act [2985.7 - 2993] ( Chapter 2d repealed and added by Stats. 1976, Ch. 1284. )

    Verify source ↗

    A lease-related agreement cannot enforce a title or lien on property other than the leased motor vehicle and related equipment as security for the contract debt.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2d. Vehicle Leasing Act [2985.7 - 2993] ( Chapter 2d repealed and added by Stats. 1976, Ch. 1284. ) ## 2986.6. No agreement in connection with a lease contract which provides for the inclusion of title to or a lien upon any personal or real property, other than the motor vehicle which is the subject matter of the lease contract, or accessories therefor, or special and auxiliary equipment used in connection therewith, as security for the payment of the contract obligations, shall be enforceable. This section does not apply to a security deposit, advance payment of rent or other cash prepayment. (Added by Stats. 1976, Ch. 1284.)
  139. 2987.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2d. Vehicle Leasing Act [2985.7 - 2993] ( Chapter 2d repealed and added by Stats. 1976, Ch. 1284. )

    Verify source ↗

    This section lets a lessee end a lease early, limits the lessee’s liability, requires notice and good-faith vehicle disposition rules, and prohibits using the Rule of 78 to calculate accrued rent charges.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2d. Vehicle Leasing Act [2985.7 - 2993] ( Chapter 2d repealed and added by Stats. 1976, Ch. 1284. ) ## 2987. (a) A lessee has the right to terminate a lease contract at any time prior to the scheduled expiration date specified in the lease contract. Except as provided in subdivision (f), all of the following subdivisions of this section apply in the event of an early termination. (b) The lessee’s liability shall not exceed the sum of the following: (1) All unpaid periodic lease payments that have accrued up to the date of termination. (2) All other amounts due and unpaid by the lessee under the lease contract, other than excess wear and mileage charges and unpaid periodic lease payments. (3) Any charges, however denominated, that the lessor or holder of the lease contract may assess in connection with termination not to exceed in the aggregate the amount of a reasonable disposition fee, if any, disclosed in the lease contract and assessed upon termination of the lease contract. (4) In the event of the lessee’s default, reasonable fees paid by the lessor or holder for reconditioning of the leased vehicle and reasonable and necessary fees paid by the lessor or holder, if any, in connection with the repossession and storage of the leased vehicle. (5) The difference, if any, between the adjusted capitalized cost disclosed in the lease contract and the sum of (A) all depreciation and other amortized amounts accrued through the date of early termination, calculated in accordance with the constant yield or other generally accepted actuarial method, and (B) the realized value of the vehicle as provided in subdivision (c). (c) Subject to subdivision (d), the realized value of the vehicle used to calculate the lessee’s liability under paragraph (5) of subdivision (b) shall be (1) if the lessee maintains insurance on the leased vehicle as required in the lease contract and the vehicle is a total loss as a result of theft or damage, the amount of any applicable insurance deductible owed by the lessee and the proceeds of the settlement of the insurance claim, unless a higher amount is agreed to by the holder of the lease contract, (2) if the lessee elects to have an appraisal conducted as provided in Regulation M, the value determined on appraisal, (3) if the holder of the lease contract or lessor elects to retain ownership of the vehicle for use or to lease to a subsequent lessee, the wholesale value of the vehicle as specified in the current edition of a recognized used vehicle value guide customarily used by California motor vehicle dealers to value vehicles in this state, including, but not limited to, the Kelley Blue Book Auto Market Report and the N.A.D.A. Official Used Car Guide, or (4) under all other circumstances, the higher of (A) the price paid for the vehicle upon disposition, or (B) any other amount established by the lessor or the lease contract. (d) (1) The lessor or holder of the lease contract shall act in good faith and in a commercially reasonable manner in connection with the disposition of the vehicle. (2) In addition to the requirements of paragraph (1), any disposition of the vehicle shall be preceded by a notice complying with both of the following: (A) The notice shall be in writing and given by the holder of the contract to each lessee and guarantor at least 10 days in advance of any disposition or the date by which the value of the vehicle will be determined pursuant to paragraph (3) of subdivision (c). The notice shall be personally served or shall be sent by certified mail, return receipt requested, or first-class mail, postage prepaid, directed to the last known address of each lessee and guarantor. One notice is sufficient if those persons are married to each other and the most recent records of the holder of the lease contract indicate that they reside at the same address. The last known address of each lessee and guarantor shall be presumed to be the address stated in the lease contract or guaranty for each lessee and guarantor unless the lessee or guarantor notifies the holder of the lease contract of a change of address. (B) The notice shall set forth (i) the time and place of any public sale, the time on or after which a private sale or other intended disposition is to be made, or the date by which the value of the vehicle will be determined pursuant to paragraph (3) of subdivision (c), (ii) an itemization of all amounts claimed under paragraphs (1) to (4), inclusive, of subdivision (b), (iii) the amount of the difference between the adjusted capitalized cost and the sum of all depreciation and other amortized amounts paid through the date of early termination as provided in paragraph (5) of subdivision (b), (iv) the total of these amounts identified as the “Gross Early Termination Amount,” and (v) one of the following statements, whichever is applicable: [To be inserted when the realized value will be determined pursuant to paragraph (3) of subdivision (c)] “The amount you owe for early termination will be no more than the difference between the Gross Early Termination Amount stated above and (1) the appraised value of the vehicle or (2) if there is no appraisal, the wholesale value specified in a recognized used vehicle value guide. You have the right to get a professional appraisal to establish the value of the vehicle for the purpose of figuring how much you owe on the lease. If you want an appraisal, you will have to arrange for it to be completed at least three days before the scheduled valuation date. The appraiser has to be an independent person acceptable to the holder of the lease. You will have to pay for the appraiser. The appraised value will be considered final and binding on you and the holder of the lease.” [To be inserted in all other circumstances] “The amount you owe for early termination will be no more than the difference between the Gross Early Termination Amount stated above and (1) the appraised value of the vehicle or (2) if there is no appraisal, either the price received for the vehicle upon disposition or a greater amount established by the lessor or the lease contract. You have the right to get a professional appraisal to establish the value of the vehicle for the purpose of figuring how much you owe on the lease. If you want an appraisal, you will have to arrange for it to be completed at least three days before the scheduled sale date of the vehicle. The appraiser has to be an independent person acceptable to the holder of the lease. You will have to pay for the appraiser. The appraised value will be considered final and binding on you and the holder of the lease.” (3) The lessee shall have no liability under subdivision (b) if the lessor or holder of the lease contract does not comply with this subdivision. This paragraph does not apply under all the following conditions: (A) Noncompliance was the result of a bona fide error in stating an amount required to be disclosed pursuant to clause (ii), (iii), or (iv) of subparagraph (B) of paragraph (2). (B) The holder of the lease gives the lessee written notice of the error within 30 days after discovering the error and before (i) an action is filed to recover the amount claimed to be owed or (ii) written notice of the error is received by the holder of the lease from the lessee. (C) The lessee is liable for the lesser of the originally claimed amount or the correct amount. (D) The holder of the lease refunds any amount collected in excess of the amount described in subparagraph (C) within 10 days after notice of the error is given. “Bona fide error,” as used in this paragraph, means an error that was not intentional and occurred notwithstanding the maintenance of procedures reasonably adapted to avoid that error. Examples of a bona fide error include clerical errors, calculation errors, errors due to unintentionally improper computer programming or data entry, and printing errors, but does not include an error of legal judgment with respect to a lessor’s or lease contractholder’s obligations under this section. (4) This subdivision does not apply when the lessee maintains insurance on the leased vehicle as required in the lease contract and the vehicle is declared a total loss by the insurer as a result of theft or damage. (e) The lessor or holder of the lease contract shall credit any security deposit or advance rental payment held by the lessor or holder of the lease contract against the lessee’s liability under the lease contract as limited by this section. The portion of a security deposit or advance rental payment, if any, remaining after the lessee’s liability under the lease contract as limited by this section has been satisfied shall be returned to the lessee within 30 days of the satisfaction of the obligation. (f) Subdivisions (b) to (d), inclusive, do not apply if, prior to the scheduled expiration date specified in the lease contract, the lessee terminates the lease and purchases the vehicle or trades in the vehicle in connection with the purchase or lease of another vehicle. In such an event, the selling price of the leased vehicle, exclusive of taxes and other charges incidental to the sale, shall not exceed the sum of the following and shall relieve the lessee of any further liability under the lease contract: (1) All unpaid periodic lease payments that have accrued up to the date of termination. (2) All other amounts due and unpaid by the lessee under the lease contract, other than excess wear and mileage charges and unpaid periodic lease payments. (3) Any charges, however denominated, that the lessor or holder of the lease contract may assess in connection with termination of the lease contract and the acquisition of the vehicle, not to exceed in the aggregate the amount of a reasonable purchase option fee, if any, disclosed in the lease contract and assessed upon the scheduled termination of the lease contract. (4) The adjusted capitalized cost disclosed in the lease contract less all depreciation and other amortized amounts accrued through the date of early termination, calculated in accordance with the constant yield or other generally accepted actuarial method. (g) If the lessee terminates a lease contract, voluntarily returns possession of the vehicle to the lessor, and timely pays all sums required under the lease contract as limited by this section, the lessor or holder shall not provide any adverse information concerning the early termination to any consumer credit reporting agency. (h) The Rule of 78 shall not be used to calculate accrued rent charges. (i) This section shall only apply to lease contracts entered into on and after January 1, 1998. (Added by Stats. 1997, Ch. 800, Sec. 12. Effective January 1, 1998.)
  140. 2988.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2d. Vehicle Leasing Act [2985.7 - 2993] ( Chapter 2d repealed and added by Stats. 1976, Ch. 1284. )

    Verify source ↗

    A lessor must act in good faith and provide competent evidence for the residual value used in a consumer vehicle lease when the lessee bears depreciation risk.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2d. Vehicle Leasing Act [2985.7 - 2993] ( Chapter 2d repealed and added by Stats. 1976, Ch. 1284. ) ## 2988. (a) The Legislature finds that it is necessary to provide some protection for consumers who enter into lease contracts in which the lessee will bear the risk of the motor vehicle’s depreciation. This section is intended to provide relief to the consumer when an ostensibly inexpensive lease contract establishes an excessively low level of periodic payment which results, conversely, in an excessively high liability being imposed on the lessee at the expiration of the lease term because the lessor has failed to act in good faith in either estimating a residual value of the motor vehicle or establishing a level of periodic payment which bears no reasonable relation to the motor vehicle’s reasonably expected depreciation during the lease term. Therefore, the lessor will have the obligation to act in good faith and to come forward with competent evidence showing that the estimated residual value was so determined given the circumstances existing at the inception of the lease contract. (b) Where the lessee is to bear the risk of the motor vehicle’s depreciation and the lessee’s liability on expiration of a consumer lease is based on the estimated residual value of the motor vehicle such estimated residual value shall be a reasonable approximation of the anticipated actual fair market value of the motor vehicle on lease expiration. There shall be a rebuttable presumption that the estimated residual value is unreasonable to the extent that the estimated residual value exceeds the actual residual value by more than three times the average payment allocable to a monthly period under the lease. The presumption stated in the preceding sentence shall not apply to the extent the excess of estimated over actual residual value is due to physical damage to the motor vehicle beyond reasonable wear and use, or to excessive use, and the lease may set standards for such wear and use if such standards are not unreasonable. (c) For the purposes of this chapter, “fair market value” means the value the motor vehicle would have when sold in a commercially reasonable manner in the customary market for such motor vehicle. (Added by Stats. 1976, Ch. 1284.)
  141. 2988.5.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2d. Vehicle Leasing Act [2985.7 - 2993] ( Chapter 2d repealed and added by Stats. 1976, Ch. 1284. )

    Verify source ↗

    A lessor who fails to comply with certain lease-disclosure requirements can be liable for damages, a percentage of monthly payments, costs, and attorney’s fees, subject to several exceptions and limits.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2d. Vehicle Leasing Act [2985.7 - 2993] ( Chapter 2d repealed and added by Stats. 1976, Ch. 1284. ) ## 2988.5. (a) Except as otherwise provided by this section, any lessor who fails to comply with any requirement imposed under Section 2985.8 or 2988 for which no specific relief is provided with respect to any person shall be liable to such person in an amount equal to the sum of: (1) Any actual damages sustained by such person as a result of the failure. (2) In the case of an individual action, 25 percent of the total amount of monthly payments under the lease except that liability under this subparagraph shall not be less than one hundred dollars ($100) nor greater than one thousand dollars ($1,000); or in the case of a class action, such amount as the court may allow, except that as to each member of the class no minimum recovery shall be applicable, and the total recovery in such action shall not be more than the lesser of five hundred thousand dollars ($500,000) or 1 percent of the net worth of the lessor. (3) The costs of the action, together with a reasonable attorney’s fee as determined by the court. (b) In determining the amount of award in any class action, the court shall consider, among other relevant factors, the amount of any actual damages sustained, the frequency and persistence of failure of compliance by the lessor, the resources of the lessor, the number of persons adversely affected, and the extent to which the lessor’s failure of compliance was intentional. (c) A lessor shall not be liable under this section if within 15 days after discovery of an error, and prior to the institution of an action under this section or the receipt of written notice of the error, the lessor notifies the person concerned of the error and makes whatever adjustments in the appropriate account are necessary to insure that the person will not be required to pay any amount in excess of the amount that should correctly have been disclosed. (d) A lessor may not be held liable in any action brought under this section for a violation of this chapter if the lessor shows by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adopted to avoid any such error. (e) Except as otherwise specifically provided in this chapter, any civil action for a violation of this chapter which may be brought against the original lessor in any lease transaction may be maintained against any subsequent assignee of the original lessor where the violation from which the alleged liability arose is apparent on the face of the instrument assigned unless the assignment is involuntary. (f) A person may not take any action to offset any amount for which a lessor is potentially liable to such person under paragraph (2) of subdivision (a) against any amount owing to such lessor by such person, unless the amount of the lessor’s liability to such person has been determined by judgment of a court of competent jurisdiction in an action to which such person was a party. (g) No provision of this section imposing any liability shall apply to any act done or omitted in good faith conformity with any rule, regulation or interpretation of federal law, notwithstanding that after such act or omission has occurred, such rule, regulation or interpretation is amended, rescinded or determined by judicial or other authority to be invalid for any reason. (h) The multiple failure to disclose any information required under this chapter to be disclosed in connection with a single lease transaction shall entitle the person to a single recovery under this section, but continued failure to disclose after a recovery has been granted shall give rise to rights to additional recoveries. (i) Actions alleging a failure to disclose or otherwise comply with the requirements of this chapter shall be brought within one year of the termination of the lease contract. (Added by Stats. 1976, Ch. 1284.)
  142. 2988.7.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2d. Vehicle Leasing Act [2985.7 - 2993] ( Chapter 2d repealed and added by Stats. 1976, Ch. 1284. )

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    A lessee may rescind a vehicle lease contract if the lessor fails to comply with Section 2985.8 and the failure is willful, or if correcting it would increase the contract balance, unless the lessor waives that increased amount.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2d. Vehicle Leasing Act [2985.7 - 2993] ( Chapter 2d repealed and added by Stats. 1976, Ch. 1284. ) ## 2988.7. If the lessor fails to comply with Section 2985.8, as an alternative to an action under Section 2988.5, the lessee may rescind the contract if the failure to comply was willful, or if correction will increase the amount of the contract balance, unless the lessor waives the collection of the increased amount. (Added by Stats. 1976, Ch. 1284.)
  143. 2988.9.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2d. Vehicle Leasing Act [2985.7 - 2993] ( Chapter 2d repealed and added by Stats. 1976, Ch. 1284. )

    Verify source ↗

    The prevailing party in a lease-contract action under this chapter is entitled to reasonable attorney’s fees and costs.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2d. Vehicle Leasing Act [2985.7 - 2993] ( Chapter 2d repealed and added by Stats. 1976, Ch. 1284. ) ## 2988.9. Reasonable attorney’s fees and costs shall be awarded to the prevailing party in any action on a lease contract subject to the provisions of this chapter regardless of whether the action is instituted by the lessor, assignee, or lessee. Where the defendant alleges in his or her answer that he or she tendered to the plaintiff the full amount to which he or she was entitled, and thereupon deposits in court, for the plaintiff, the amount so tendered, and the allegation is found to be true, then the defendant is deemed to be the prevailing party within the meaning of this section. (Amended by Stats. 2004, Ch. 183, Sec. 42. Effective January 1, 2005.)
  144. 2989.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2d. Vehicle Leasing Act [2985.7 - 2993] ( Chapter 2d repealed and added by Stats. 1976, Ch. 1284. )

    Verify source ↗

    A civil action may not be filed against a lessor under this chapter if a similar federal civil action was already filed first.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2d. Vehicle Leasing Act [2985.7 - 2993] ( Chapter 2d repealed and added by Stats. 1976, Ch. 1284. ) ## 2989. No civil action shall be filed against a lessor under the authority of this chapter if a federal civil action has previously been filed based on facts that give rise to a similar cause of action under this chapter. (Added by Stats. 1976, Ch. 1284.)
  145. 2989.2.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2d. Vehicle Leasing Act [2985.7 - 2993] ( Chapter 2d repealed and added by Stats. 1976, Ch. 1284. )

    Verify source ↗

    If the lessee bears depreciation risk at lease end, the lessor must act reasonably when valuing or selling the vehicle, and the contract holder must give at least 10 days’ written notice before sale, with specific delivery and content requirements.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2d. Vehicle Leasing Act [2985.7 - 2993] ( Chapter 2d repealed and added by Stats. 1976, Ch. 1284. ) ## 2989.2. Where the lessee is to bear the risk of the motor vehicle’s depreciation upon the scheduled expiration of the lease contract, the following applies: (a) When disposing of a vehicle or obtaining cash bids for the purpose of setting the fair market value of a vehicle, the lessor shall act in a commercially reasonable manner in the customary market for such vehicle. (b) Any provision in a lease contract to the contrary notwithstanding, at least 10 days written notice of intent to sell such motor vehicle shall be given by the holder of the contract to each lessee and guarantor, unless the lessor and lessee have agreed in writing to the amount of the lessee’s liability under the lease contract after the lessee returns the motor vehicle to the lessor, or the lessee has satisfied the lease contract obligations by payment to the lessor. The notice shall be personally served or shall be sent by certified mail, return receipt requested, directed to the address of the lessee shown on the contract, unless the lessee has notified the holder in writing of a different address. The notice shall set forth separately any charges or sums due and state that the lessee will be liable for the difference between the amount of liability imposed on the lessee at the expiration of the lease term and the actual cash value of the motor vehicle when it is sold. The notice shall also state that the lessee has the right to submit a cash bid for the purchase of the vehicle. (Amended by Stats. 1997, Ch. 800, Sec. 13. Effective January 1, 1998.)
  146. 2989.4.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2d. Vehicle Leasing Act [2985.7 - 2993] ( Chapter 2d repealed and added by Stats. 1976, Ch. 1284. )

    Verify source ↗

    A lessor must register leased vehicles, identify any specific leased vehicle in ads by VIN or license number, and not refuse to lease a vehicle to a creditworthy person at the advertised total price.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2d. Vehicle Leasing Act [2985.7 - 2993] ( Chapter 2d repealed and added by Stats. 1976, Ch. 1284. ) ## 2989.4. (a) A lessor shall not: (1) Fail to register the leased vehicle pursuant to the lease contract. (2) Advertise any specific vehicle in the inventory of the lessor for lease without identifying such vehicle by either its vehicle identification number or license number. (3) Refuse to lease a vehicle to any creditworthy person at the advertised total price, exclusive of sales tax, vehicle registration fees and finance charges. (b) Notwithstanding Section 2988.5, a lessor shall not suffer civil liability for a violation of this section. (Added by Stats. 1976, Ch. 1284.)
  147. 2989.5.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2d. Vehicle Leasing Act [2985.7 - 2993] ( Chapter 2d repealed and added by Stats. 1976, Ch. 1284. )

    Verify source ↗

    A lessor must give DMV investigators the relevant transaction records when presented with the required affidavit, and in some cases must provide records for similar transactions too.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2d. Vehicle Leasing Act [2985.7 - 2993] ( Chapter 2d repealed and added by Stats. 1976, Ch. 1284. ) ## 2989.5. (a) Except as provided in subdivision (c), a lessor shall make available to investigators of the Department of Motor Vehicles, upon presentation of an affidavit that the department has a consumer complaint within its jurisdiction, the records relevant to the transaction complained of. If the affidavit states that the department has reasonable cause to believe there is a pattern of conduct or common scheme in similar transactions, the records relevant to all such similar transactions shall be made available. (b) Except as provided in subdivision (c), on petition of the department alleging the receipt of a consumer complaint within its jurisdiction and alleging that the lessor refuses to make available his records as required, the court shall order the lessor to make available such records or show cause why such records should not be produced. The department shall be awarded reasonable attorney’s fees and costs if it prevails in such action. (c) (1) In the case of a financial institution, or a subsidiary or affiliated corporation of such institution, the Director of Motor Vehicles shall report in writing an apparent violation, or failure to comply with this chapter, evidenced by a consumer complaint, to the agency or department of the state or federal government responsible for supervising the leasing activities of such institution. (2) Within 20 days, such agency or department shall advise the director of the action taken with respect to such report. (3) If such agency or department fails to so advise the director, the director may commence an action to compel the agency or department to cause the production of the records relevant to the consumer complaint. (Added by Stats. 1976, Ch. 1284.)
  148. 2989.6.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2d. Vehicle Leasing Act [2985.7 - 2993] ( Chapter 2d repealed and added by Stats. 1976, Ch. 1284. )

    Verify source ↗

    The Director of Motor Vehicles may adopt and enforce rules and regulations needed to carry out this chapter.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2d. Vehicle Leasing Act [2985.7 - 2993] ( Chapter 2d repealed and added by Stats. 1976, Ch. 1284. ) ## 2989.6. The Director of Motor Vehicles may adopt and enforce rules and regulations as may be necessary to carry out or implement the provisions of this chapter. Rules and regulations shall be adopted, amended or repealed in accordance with Chapter 4.5 (commencing with Section 11370) of Part 1 of Division 3 of Title 2 of the Government Code. (Added by Stats. 1976, Ch. 1284.)
  149. 2989.8.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2d. Vehicle Leasing Act [2985.7 - 2993] ( Chapter 2d repealed and added by Stats. 1976, Ch. 1284. )

    Verify source ↗

    A person who knowingly and willfully violates any provision of this chapter commits a misdemeanor.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2d. Vehicle Leasing Act [2985.7 - 2993] ( Chapter 2d repealed and added by Stats. 1976, Ch. 1284. ) ## 2989.8. Any person who shall knowingly and willfully violate any provision of this chapter shall be guilty of a misdemeanor. (Added by Stats. 1976, Ch. 1284.)
  150. 2990.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2d. Vehicle Leasing Act [2985.7 - 2993] ( Chapter 2d repealed and added by Stats. 1976, Ch. 1284. )

    Verify source ↗

    This chapter does not apply to transactions regulated by Chapter 2b, starting with Section 2981.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2d. Vehicle Leasing Act [2985.7 - 2993] ( Chapter 2d repealed and added by Stats. 1976, Ch. 1284. ) ## 2990. This chapter shall not apply to any transaction which is regulated by Chapter 2b (commencing with Section 2981) of this title. (Added by Stats. 1976, Ch. 1284.)
  151. 2991.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2d. Vehicle Leasing Act [2985.7 - 2993] ( Chapter 2d repealed and added by Stats. 1976, Ch. 1284. )

    Verify source ↗

    A prospective assignee who gives a lessor a preprinted lease form must provide a Spanish translation if the lessor requests it.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2d. Vehicle Leasing Act [2985.7 - 2993] ( Chapter 2d repealed and added by Stats. 1976, Ch. 1284. ) ## 2991. Any prospective assignee that provides a lessor under a lease contract with any preprinted form for use as a lease contract shall, upon the request of a lessor, provide the lessor with a Spanish language translation of the preprinted form. (Added by Stats. 1999, Ch. 235, Sec. 1. Effective January 1, 2000. Operative January 1, 2001, by Sec. 2 of Ch. 235.)
  152. 2992.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2d. Vehicle Leasing Act [2985.7 - 2993] ( Chapter 2d repealed and added by Stats. 1976, Ch. 1284. )

    Verify source ↗

    A prospective assignee that gives a lessor a preprinted lease form must design it to leave enough space for required disclosures and itemizations, plus a separate blank area of at least 7.5 square inches for memorializing individualized agreements.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2d. Vehicle Leasing Act [2985.7 - 2993] ( Chapter 2d repealed and added by Stats. 1976, Ch. 1284. ) ## 2992. A prospective assignee that provides a lessor under a lease contract with a preprinted form for use as a lease contract shall design the form in such a manner so as to provide on its face sufficient space for the lessor to include all disclosures and itemizations required pursuant to Section 2985.8 and shall also contain on its face a separate blank space no smaller than seven and one-half square inches for the lessor and lessee to memorialize trade-in, turn-in, and other individualized agreements. (Added by Stats. 2001, Ch. 287, Sec. 4. Effective January 1, 2002.)
  153. 2993.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2d. Vehicle Leasing Act [2985.7 - 2993] ( Chapter 2d repealed and added by Stats. 1976, Ch. 1284. )

    Verify source ↗

    A lease contract holder or the holder’s agent who has received a specified notice must not make a later assignment to skip trace, locate, or repossess the vehicle unless the assignee is told the notice information at the same time and in the same way as the assignment.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2d. Vehicle Leasing Act [2985.7 - 2993] ( Chapter 2d repealed and added by Stats. 1976, Ch. 1284. ) ## 2993. A holder of a lease contract, or the agent of a holder, who has received a notice pursuant to Section 7507.6 of the Business and Professions Code, shall not make a subsequent assignment to skip trace, locate, or repossess the vehicle without simultaneously, and in the same manner by which the assignment is given, advising the assignee of the assignment of the information contained in the notice. As used in this section, “assignment” has the same meaning set forth in Section 7500.1 of the Business and Professions Code. (Added by Stats. 2007, Ch. 192, Sec. 5. Effective September 7, 2007.)
  154. 2995.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2e. Controlled Escrows [2995- 2995.] ( Chapter 2e added by Stats. 1978, Ch. 552. )

    Verify source ↗

    A real estate developer may not require affiliated escrow services as a condition of transferring a single-family residential property.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 2e. Controlled Escrows [2995- 2995.] ( Chapter 2e added by Stats. 1978, Ch. 552. ) ## 2995. No real estate developer shall require as a condition precedent to the transfer of real property containing a single family residential dwelling that escrow services effectuating such transfer shall be provided by an escrow entity in which the real estate developer has a financial interest. A real estate developer who violates the provisions of this section shall be liable to the purchaser of the real property in the amount of three times the amount charged for the escrow services, but in no event less than two hundred fifty dollars ($250), plus reasonable attorney’s fees and costs. For purposes of this section “financial interest” means ownership or control of 5 percent or more of an escrow entity. For purposes of this section “real estate developer” means a person or entity having an ownership interest in real property which is improved by such person or entity with single family residential dwellings which are offered for sale to the public. For purposes of this section “escrow entity” includes a person, firm or corporation. Any waiver of the prohibition contained in this section shall be against public policy and void. (Added by Stats. 1978, Ch. 552.)
  155. 3040.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 3.5. Health Care Liens [3040- 3040.] ( Chapter 3.5 added by Stats. 2000, Ch. 848, Sec. 1. )

    Verify source ↗

    This section limits how much certain health care liens may recover and excludes some liens from its coverage.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 3.5. Health Care Liens [3040- 3040.] ( Chapter 3.5 added by Stats. 2000, Ch. 848, Sec. 1. ) ## 3040. (a) No lien asserted by a licensee of the Department of Managed Care or the Department of Insurance, and no lien of a medical group or an independent practice association, to the extent that it asserts or enforces a lien, for the recovery of money paid or payable to or on behalf of an enrollee or insured for health care services provided under a health care service plan contract or a disability insurance policy, when the right of the licensee, medical group, or independent practice association to assert that lien is granted in a plan contract subject to the Knox-Keene Health Care Service Plan Act of 1975 (Chapter 2.2 (commencing with Section 1340) of Division 2 of the Health and Safety Code) or a disability insurance policy subject to the Insurance Code, may exceed the sum of the reasonable costs actually paid by the licensee, medical group, or independent practice association to perfect the lien and one of the following: (1) For health care services not provided on a capitated basis, the amount actually paid by the licensee, medical group, or independent practice association pursuant to that contract or policy to any treating medical provider. (2) For health care services provided on a capitated basis, the amount equal to 80 percent of the usual and customary charge for the same services by medical providers that provide health care services on a noncapitated basis in the geographic region in which the services were rendered. (b) If an enrollee or insured received health care services on a capitated basis and on a noncapitated basis, and the licensee, medical group, or independent practice association that provided the health care services on the capitated basis paid for the health care services the enrollee received on the noncapitated basis, then a lien that is subject to subdivision (a) may not exceed the sum of the reasonable costs actually paid to perfect the lien, and the amounts determined pursuant to both paragraphs (1) and (2) of subdivision (a). (c) If the enrollee or insured engaged an attorney, then the lien subject to subdivision (a) may not exceed the lesser of the following amounts: (1) The maximum amount determined pursuant to subdivision (a) or (b), whichever is applicable. (2) One-third of the moneys due to the enrollee or insured under any final judgment, compromise, or settlement agreement. (d) If the enrollee or insured did not engage an attorney, then the lien subject to subdivision (a) may not exceed the lesser of the following amounts: (1) The maximum amount determined pursuant to subdivision (a) or (b), whichever is applicable. (2) One-half of the moneys due to the enrollee or insured under any final judgment, compromise, or settlement agreement. (e) Where a final judgment includes a special finding by a judge, jury, or arbitrator, that the enrollee or insured was partially at fault, the lien subject to subdivision (a) or (b) shall be reduced by the same comparative fault percentage by which the enrollee or insured’s recovery was reduced. (f) A lien subject to subdivision (a) or (b) is subject to pro rata reduction, commensurate with the enrollee’s or insured’s reasonable attorney’s fees and costs, in accordance with the common fund doctrine. (g) This section is not applicable to any of the following: (1) A lien made against a workers’ compensation claim. (2) A lien for Medi-Cal benefits pursuant to Article 3.5 (commencing with Section 14124.70) of Chapter 7 of Part 3 of Division 9 of the Welfare and Institutions Code. (3) A lien for hospital services pursuant to Chapter 4 (commencing with Section 3045.1). (h) This section does not create any lien right that does not exist at law, and does not make a lien that arises out of an employee benefit plan or fund enforceable if preempted by federal law. (i) The provisions of this section may not be admitted into evidence nor given in any instruction in any civil action or proceeding between an enrollee or insured and a third party. (Added by Stats. 2000, Ch. 848, Sec. 1. Effective January 1, 2001.)
  156. 3045.1.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 4. Hospital Liens [3045.1 - 3045.6] ( Chapter 4 added by Stats. 1961, Ch. 2080. )

    Verify source ↗

    Hospitals that qualify under this section may place a lien on an injured person's damages recovery for reasonable and necessary hospital charges.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 4. Hospital Liens [3045.1 - 3045.6] ( Chapter 4 added by Stats. 1961, Ch. 2080. ) ## 3045.1. Every person, partnership, association, corporation, public entity, or other institution or body maintaining a hospital licensed under the laws of this state which furnishes emergency and ongoing medical or other services to any person injured by reason of an accident or negligent or other wrongful act not covered by Division 4 (commencing with Section 3201) or Division 4.5 (commencing with Section 6100) of the Labor Code, shall, if the person has a claim against another for damages on account of his or her injuries, have a lien upon the damages recovered, or to be recovered, by the person, or by his or her heirs or personal representative in case of his or her death to the extent of the amount of the reasonable and necessary charges of the hospital and any hospital affiliated health facility, as defined in Section 1250 of the Health and Safety Code, in which services are provided for the treatment, care, and maintenance of the person in the hospital or health facility affiliated with the hospital resulting from that accident or negligent or other wrongful act. (Amended by Stats. 1992, Ch. 302, Sec. 1. Effective January 1, 1993.)
  157. 3045.2.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 4. Hospital Liens [3045.1 - 3045.6] ( Chapter 4 added by Stats. 1961, Ch. 2080. )

    Verify source ↗

    A hospital lien applies whether the damages are recovered, or will be recovered, through judgment, settlement, or compromise.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 4. Hospital Liens [3045.1 - 3045.6] ( Chapter 4 added by Stats. 1961, Ch. 2080. ) ## 3045.2. The lien shall apply whether the damages are recovered, or are to be recovered, by judgment, settlement, or compromise. (Added by Stats. 1961, Ch. 2080.)
  158. 3045.3.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 4. Hospital Liens [3045.1 - 3045.6] ( Chapter 4 added by Stats. 1961, Ch. 2080. )

    Verify source ↗

    A hospital lien is not effective unless the hospital gives written notice with specified details to liable parties before payment is made, and the hospital must also send a copy to any known insurance carrier.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 4. Hospital Liens [3045.1 - 3045.6] ( Chapter 4 added by Stats. 1961, Ch. 2080. ) ## 3045.3. A lien shall not be effective, however, unless a written notice containing the name and address of the injured person, the date of the accident, the name and location of the hospital, the amount claimed as reasonable and necessary charges, and the name of each person, firm, or corporation known to the hospital and alleged to be liable to the injured person for the injuries received, is delivered or is mailed by registered mail, return receipt requested, postage prepaid, to each person, firm, or corporation known to the hospital and alleged to be liable to the injured person for the injuries sustained prior to the payment of any moneys to the injured person, his attorney, or legal representative as compensation for the injuries. The hospital shall, also, deliver or mail by registered mail, return receipt requested, postage prepaid, a copy of the notice to any insurance carrier known to the hospital which has insured the person, firm, or corporation alleged to be liable to the injured person against the liability. The person, firm, or corporation alleged to be liable to the injured person shall, upon request of the hospital, disclose to the hospital the name of the insurance carrier which has insured it against the liability. (Amended by Stats. 1992, Ch. 302, Sec. 2. Effective January 1, 1993.)
  159. 3045.4.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 4. Hospital Liens [3045.1 - 3045.6] ( Chapter 4 added by Stats. 1961, Ch. 2080. )

    Verify source ↗

    After notice under Section 3045.3, a payer must pay the hospital lien amount before paying the injured person or related recipients, or it can be liable for that lien amount.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 4. Hospital Liens [3045.1 - 3045.6] ( Chapter 4 added by Stats. 1961, Ch. 2080. ) ## 3045.4. Any person, firm, or corporation, including, but not limited to, an insurance carrier, making any payment to the injured person, or to his or her attorney, heirs, or legal representative, for the injuries he or she sustained, after the receipt of the notice as provided by Section 3045.3, without paying to the association, corporation, public entity, or other institution or body maintaining the hospital the amount of its lien claimed in the notice, or so much thereof as can be satisfied out of 50 percent of the moneys due under any final judgment, compromise, or settlement agreement after paying any prior liens shall be liable to the person, partnership, association, corporation, public entity, or other institution or body maintaining the hospital for the amount of its lien claimed in the notice which the hospital was entitled to receive as payment for the medical care and services rendered to the injured person. (Amended by Stats. 1992, Ch. 302, Sec. 3. Effective January 1, 1993.)
  160. 3045.5.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 4. Hospital Liens [3045.1 - 3045.6] ( Chapter 4 added by Stats. 1961, Ch. 2080. )

    Verify source ↗

    A hospital operator may enforce its lien by filing a court action within one year after payment is made to the injured person or related recipient.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 4. Hospital Liens [3045.1 - 3045.6] ( Chapter 4 added by Stats. 1961, Ch. 2080. ) ## 3045.5. The person, partnership, association, corporation or other institution or body maintaining the hospital may, at any time within one year after the date of the payment to the injured person, or to his heirs, attorney, or legal representative, enforce its lien by filing an action at law against the person, firm, or corporation making the payment and to whom such notice was given as herein provided. (Added by Stats. 1961, Ch. 2080.)
  161. 3045.6.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 4. Hospital Liens [3045.1 - 3045.6] ( Chapter 4 added by Stats. 1961, Ch. 2080. )

    Verify source ↗

    This chapter does not apply to claims or causes of action against a common carrier regulated by the Public Utilities Commission or the Interstate Commerce Commission.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 4. Hospital Liens [3045.1 - 3045.6] ( Chapter 4 added by Stats. 1961, Ch. 2080. ) ## 3045.6. The provisions of this chapter shall not apply to any claim or cause of action against a common carrier subject to the jurisdiction of the Public Utilities Commission or the Interstate Commerce Commission. (Added by Stats. 1961, Ch. 2080.)
  162. 3046.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. )

    Verify source ↗

    A seller of real property has a vendor’s lien on the property for any unpaid part of the price that is not otherwise secured.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. ) ## 3046. One who sells real property has a vendor’s lien thereon, independent of possession, for so much of the price as remains unpaid and unsecured otherwise than by the personal obligation of the buyer. (Enacted 1872.)
  163. 3047.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. )

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    If a buyer of real property gives the seller a written contract for part or all of the price, the seller’s absolute transfer of that contract waives the seller’s lien to the extent of the amount payable under the contract. A transfer of the contract in trust to pay debts and return any surplus does not waive the lien.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. ) ## 3047. Where a buyer of real property gives to the seller a written contract for payment of all or part of the price, an absolute transfer of such contract by the seller waives his lien to the extent of the sum payable under the contract, but a transfer of such contract in trust to pay debts, and return the surplus, is not a waiver of the lien. (Enacted 1872.)
  164. 3048.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. )

    Verify source ↗

    Liens under Sections 3046 and 3050 are valid against people claiming under the debtor, except a good-faith purchaser or incumbrancer for value.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. ) ## 3048. The liens defined in Sections 3046 and 3050 are valid against every one claiming under the debtor, except a purchaser or incumbrancer in good faith and for value. (Enacted 1872.)
  165. 3050.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. )

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    A person who pays part of the purchase price for real property under a sales agreement gets a special lien on the property if the consideration fails.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. ) ## 3050. One who pays to the owner any part of the price of real property, under an agreement for the sale thereof, has a special lien upon the property, independent of possession, for such part of the amount paid as he may be entitled to recover back, in case of a failure of consideration. (Enacted 1872.)
  166. 3051.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. )

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    This section gives certain service providers liens on personal property they possess, and lets some of them keep the property until charges are paid.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. ) ## 3051. Every person who, while lawfully in possession of an article of personal property, renders any service to the owner thereof, by labor or skill, employed for the protection, improvement, safekeeping, or carriage thereof, has a special lien thereon, dependent on possession, for the compensation, if any, which is due to him from the owner for such service; a person who makes, alters, or repairs any article of personal property, at the request of the owner, or legal possessor of the property, has a lien on the same for his reasonable charges for the balance due for such work done and materials furnished, and may retain possession of the same until the charges are paid; and foundry proprietors and persons conducting a foundry business, have a lien, dependent on possession, upon all patterns in their hands belonging to a customer, for the balance due them from such customers for foundry work; and plastic fabricators and persons conducting a plastic fabricating business, have a lien, dependent on possession, upon all patterns and molds in their hands belonging to a customer, for the balance due them from such customer for plastic fabrication work; and laundry proprietors and persons conducting a laundry business, and drycleaning establishment proprietors and persons conducting a drycleaning establishment, have a general lien, dependent on possession, upon all personal property in their hands belonging to a customer, for the balance due them from such customer for laundry work, and for the balance due them from such customers for drycleaning work, but nothing in this section shall be construed to confer a lien in favor of a wholesale drycleaner on materials received from a drycleaning establishment proprietor or a person conducting a drycleaning establishment; and veterinary proprietors and veterinary surgeons shall have a lien dependent on possession, for their compensation in caring for, boarding, feeding, and medical treatment of animals. This section shall have no application to any vessel, as defined in Section 21 of the Harbors and Navigation Code, to any vehicle, as defined in Section 670 of the Vehicle Code, which is subject to registration pursuant to that code, to any manufactured home, as defined in Section 18007 of the Health and Safety Code, to any mobilehome, as defined in Section 18008 of the Health and Safety Code, or to any commercial coach, as defined in Section 18001.8 of the Health and Safety Code, whether or not the manufactured home, mobilehome, or commercial coach is subject to registration under the Health and Safety Code. (Amended by Stats. 1983, Ch. 1124, Sec. 6.)
  167. 3051.5.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. )

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    A carrier may claim a lien on freight it possesses for amounts owed, but the lien is subject to notice, timing, sale, and priority rules.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. ) ## 3051.5. (a) A carrier has a lien on freight in its possession for the total amount owed the carrier by the shipper for freightage, charges for services and advances due on freight previously delivered upon the promise of the shipper to pay freightage, charges and advances, as provided in this section. (b) The lien provided by this section shall not arise: (1) Unless the carrier has notified the shipper, in writing, that failure to pay billed charges may result in a lien on future shipments, including the cost of storage and appropriate security for the subsequent shipment held pursuant to this section. (2) As to any freight which consists of perishable goods. (c) Except as otherwise provided in this section, the notice and sale provisions of Section 3052 shall apply to the sale of property subject to a lien provided by this section. (d) No sale of property subject to a lien provided by this section may take place for at least 35 days from the date that possession of the property is delivered to the carrier but the notice period set forth in Section 3052 may run concurrently with the 35-day period provided by this subdivision. In addition to the notices required by Section 3052, the lienholder, at least 10 days prior to any sale of the property, shall notify the shipper and the consignee of the property, and each secured party having a perfected security interest in the property, of the date, time and place of the intended sale. This notice shall include the names of both the shipper and the consignee and shall describe the property to be sold. (e) Any perfected security interest in the property is prior to the lien provided by this section. No sale of the property may be concluded if the amount bid at the sale is not at least equal to the total amount of all outstanding obligations secured by a perfected security interest in the property. If the minimum bid required for the sale of property pursuant to this subdivision is not received, the lienholder shall promptly release the property to the legal owner upon payment of the current amount for freightage, charges for services and advances due for shipment of that property, not including amounts due on freight previously delivered. The proceeds of the sale shall be applied as follows: (1) First, to secured parties having a perfected security interest, in the amounts to which they are respectively entitled. (2) Second, to the discharge of the lien provided by this section and the costs of storage, appropriate security, and of the sale. (3) The remainder, if any, to the legal owner of the property. In the event of any violation by the lienholder of any provision of this subdivision the lienholder shall be liable to any secured party for all damages sustained by the secured party as a result thereof plus all expenses reasonably and necessarily incurred in the enforcement of the secured party’s rights, including reasonable attorney’s fees and costs of suit. (f) The shipper shall be liable to the consignee for any damage which results from the failure of the property to reach the consignee as scheduled due to the carrier’s proper exercise of its lien rights pursuant to this section. The measure of damages shall be determined as set forth in Section 2713 of the Commercial Code. (Added by Stats. 1984, Ch. 1375, Sec. 1.)
  168. 3051.6.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. )

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    A carrier may have a lien on freight it possesses, but the rule does not apply to certain freight types. If a lien sale happens, the lienholder must wait at least 35 days after possession is delivered and must give the shipper and consignee at least 10 days’ notice of the sale details.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. ) ## 3051.6. (a) Except as provided in subdivision (b), a carrier has a lien on freight in its possession for the total amount owed to the carrier by the owner or beneficial owner of the cargo being shipped for the aggregate amount of any fines, penalties, costs, expenses, or interest incurred by the carrier resulting from the inclusion of false or erroneous information as to gross cargo weight in a written or electronic certification provided by the owner, beneficial owner, or person responsible for making the certification pursuant to Section 508 of Title 49 of the United States Code. (b) This section does not apply to any of the following freight: (1) Perishable goods. (2) Freight shipped by a means involving other than intermodal transportation, as that term is defined by Section 508 of Title 49 of the United States Code. (3) Freight shipped by loaded containers or trailers having a gross projected cargo weight, including packing material and pallets, of less than 10,000 pounds. (c) Any sale to foreclose a lien specified in this section shall be conducted in accordance with Section 3052, except that (1) the lien sale shall not take place for at least 35 days from the date that possession of the property is delivered to the carrier, but the notice period specified in Section 3052 may run concurrently with this 35-day period and (2), in addition to the notices required by Section 3052, at least 10 days prior to the sale of the property the lienholder shall notify the shipper and consignee of the property of the date, time, and place of the intended sale. This notice shall contain the names of the shipper and consignee and shall generally describe the property to be sold. (Added by Stats. 1993, Ch. 757, Sec. 2. Effective January 1, 1994.)
  169. 3051a

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. )

    Verify source ↗

    A lien portion above certain dollar limits is invalid unless the lien claimant gives prior written notice to the legal title holder, if known.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. ) ## 3051a. That portion of any lien, as provided for in the next preceding section, in excess of three hundred dollars ($300) for any work, services, or care, or in excess of two hundred dollars ($200) for any safekeeping, rendered or performed at the request of any person other than the holder of the legal title, shall be invalid, unless prior to commencing any such work, service, care, or safekeeping, the person claiming such lien shall give actual notice in writing either by personal service or by registered letter addressed to the holder of the legal title to such property, if known. (Amended by Stats. 1978, Ch. 1005.)
  170. 3052.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. )

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    If a lien remains unpaid for 10 days after it is due, the lienholder may sell the property after giving the required notice. The legal owner may redeem the property within 20 days after the sale by paying the amount due, sale costs, and 12% annual interest.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. ) ## 3052. If the person entitled to the lien provided in Section 3051 is not paid the amount due, and for which such lien is given, within 10 days after the same shall have become due, then such lienholder may proceed to sell such property, or so much thereof as may be necessary to satisfy such lien and costs of sale at public auction, and by giving at least 10 days’ but not more than 20 days’ previous notice of such sale by advertising in some newspaper published in the county in which such property is situated; or if there be no newspaper printed in such county, then by posting notice of sale in three of the most public places in the town and at the place where such property is to be sold, for 10 days previous to the date of the sale; provided, however, that within 20 days after such sale, the legal owner may redeem any such property so sold to satisfy such lien upon the payment of the amount thereof, all costs and expenses of such sale, together with interest on such sum at the rate of 12 percent per annum from the due date thereof or the date when the same were advanced until the repayment. The proceeds of the sale must be applied to the discharge of the lien and the cost of keeping and selling the property; the remainder, if any, must be paid over to the legal owner thereof. (Amended by Stats. 1978, Ch. 1005.)
  171. 3052.5.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. )

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    A registered service dealer can use special disposal notice rules for unclaimed serviced products if the dealer reasonably believes the product has nominal value.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. ) ## 3052.5. (a) Sections 3052 and 3052b shall not apply to any service dealer registered with the Bureau of Repair Services pursuant to Chapter 20 (commencing with Section 9800) of Division 3 of the Business and Professions Code if the dealer reasonably believes that the serviced product is of nominal value. For purposes of this section, nominal value shall be ascertained as follows: the product is not readily salable for more than the legitimate charges against it, and either the original retail value of the product was under two hundred dollars ($200) and the product is over three years old, or the original retail value is over two hundred dollars ($200) and the product is over six years old. Service dealers may use any available materials or information, including, but not limited to, industry publications, code dates, sales records, or receipts to assist in determining value and age of the serviced product. (b) A service dealer may select one of the following alternative methods for the disposal of unclaimed serviced products determined to have a value as specified in subdivision (a): (1) The service dealer may provide the owner of the product with the following written notice to be mailed following completion of work on the serviced product: DATE BROUGHT IN DATE MAILED DATE PRODUCT TO BE SOLD IF NOT CLAIMED NOTICE: YOUR PRODUCT HAS BEEN DETERMINED BY THIS SERVICE DEALER TO BE ONE WHICH WAS EITHER ORIGINALLY SOLD FOR LESS THAN $200 AND IS NOW OVER THREE YEARS OLD OR ONE WHICH WAS ORIGINALLY SOLD FOR MORE THAN $200 AND WHICH IS NOW OVER SIX YEARS OLD AND THE CHARGES FOR SERVICING YOUR PRODUCT WILL EXCEED ITS CURRENT VALUE. UNDER CALIFORNIA CIVIL CODE SECTION 3052.5(a) IF YOU OR YOUR AGENT FAIL TO CLAIM YOUR PRODUCT WITHIN 90 DAYS AFTER THE DEALER MAILS A COPY OF THIS NOTICE TO YOU IT MAY BE SOLD OR OTHERWISE DISPOSED OF BY HIM OR HER. The notice shall be sent by certified mail, return receipt requested. A serviced product may be disposed of 90 days after the date of deliverance evidenced by the signature in the returned receipt. (2) The service dealer may publish public notice of the intended sale in a newspaper of general circulation. The notice shall contain a description of the serviced product, the name of the serviced product owner, and the time by which and place where the product may be redeemed. The notice shall be published for a minimum of five times. A serviced product may be disposed of 90 days after the last date of publication. (3) A service dealer may, upon receipt of any product to be serviced by him or her, provide the owner of the product with the following notice, written in at least 10-point boldface type: DATE BROUGHT IN DATE MAILED DATE PRODUCT TO BE SOLD IF NOT CLAIMED NOTICE: YOUR PRODUCT HAS BEEN DETERMINED BY THIS SERVICE DEALER TO BE ONE WHICH WAS EITHER ORIGINALLY SOLD FOR LESS THAN $200 AND IS NOW OVER THREE YEARS OLD OR ONE WHICH WAS ORIGINALLY SOLD FOR MORE THAN $200 AND WHICH IS NOW OVER SIX YEARS OLD AND THE CHARGES FOR SERVICING YOUR PRODUCT WILL EXCEED ITS CURRENT VALUE. UNDER CALIFORNIA CIVIL CODE SECTION 3052.5(a) IF YOU OR YOUR AGENT FAIL TO CLAIM YOUR PRODUCT WITHIN 90 DAYS AFTER THE DEALER MAILS A COPY OF THIS NOTICE TO YOU IT MAY BE SOLD OR OTHERWISE DISPOSED OF BY HIM OR HER. PRINT YOUR NAME AND MAILING ADDRESS WHERE NOTICE MAY BE SENT TO YOU IN THE SPACE PROVIDED BELOW AND SIGN WHERE INDICATED TO SHOW THAT YOU HAVE READ THIS NOTICE. (Print Name)(Street Address)(City, State and ZIP Code) IF YOU DO NOT AGREE WITH THE ABOVE DETERMINED VALUE OF YOUR ITEM, DO NOT SIGN THIS DOCUMENT. Signature:(Owner or Agent) This notice shall be signed, addressed, and dated by the owner, with a copy to be retained by both the owner and the service dealer. At the completion of service, the service dealer shall by first-class mail, mail a completed copy of the notice to the owner of the serviced product at the address given on the notice form. A serviced product may be disposed of 90 days after the date of mailing. (c) For purposes of this section, an owner is the person or agent who authorizes the original service or repair, or delivers the product to the service dealer. (Amended by Stats. 2006, Ch. 538, Sec. 57. Effective January 1, 2007.)
  172. 3052a

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. )

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    Repairers of watches, clocks, or jewelry for a price get a lien for unpaid work and materials; if the account stays unpaid for one year, the lienholder may sell the item after 30 days’ written notice.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. ) ## 3052a. Every person, firm, or corporation, engaged in performing work upon any watch, clock or jewelry, for a price, shall have a lien upon the watch, clock, or jewelry for the amount of any account that may be due for the work done thereon. The lien shall also include the value or agreed price, if any, of all materials furnished by the lienholder in connection with the work. If any account for work done or materials furnished shall remain unpaid for one year after completing the work, the lienholder may, upon 30 days notice in writing to the owner, specifying the amount due, and informing him that the payment of the amount due within 30 days will entitle him to redeem the property, sell any such article or articles at public or bona fide private sale to satisfy the account. The proceeds of the sale, after paying the expenses thereof, shall first be applied to liquidate the indebtedness secured by the lien and the balance, if any, shall be paid over to the owner. The notice may be served by registered mail with return receipt demanded, directed to the owner’s last known address, or, if the owner or his address be unknown, it may be posted in two public places in the town or city where the property is located. Nothing herein contained shall be construed as preventing the lienholder from waiving the lien herein provided for suing upon the amount if he elects to do so. (Added by Stats. 1937, Ch. 279.)
  173. 3052b

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. )

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    This section lets a lienholder use a special lien-sale process for certain small liens, but only after giving required notices and information to the property owner.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. ) ## 3052b. (a) The procedure in this section shall be an alternative to the lien-sale procedure provided in Section 3052, but applies only to liens under Section 3051 for charges not exceeding one hundred fifty dollars ($150), exclusive of additional charges and interest authorized by this section. As a condition precedent to using the procedure specified in this section, the lienholder shall have done all of the following: (1) Provided the property owner with an accurate written summary of the lien provisions of this section. (2) Obtained the property owner’s address and telephone number, together with a written declaration signed by the property owner stating that the property owner has read and understands the summary provided pursuant to paragraph (1), at the time of entering into the transaction from which the lien arose. (3) Posted, at the time of the transaction from which the lien arose, a notice which fully and fairly informs the public of the substance of this section. The notice shall be posted in a location clearly visible to the public in the lienholder’s business premises. (b) Any lienholder proceeding under this section shall notify the owner of the property subject to the lien upon completion of the work for which the lien is claimed. This notice shall be by first-class mail. (c) If a property owner who has actually received notice pursuant to subdivision (b) fails to pay the charges for which the lien is claimed for 30 days following receipt of the notice, the lienholder may thereafter charge two dollars ($2) per day for storing the property subject to the lien and these charges shall also be secured by the lien. (d) Not less than 30 days following the notice specified in subdivision (b), the lienholder shall notify the property owner by first-class mail that the property will be sold to satisfy the lien, unless the charges are paid within 30 days following the mailing of the notice. (e) If the lienholder has complied with the notice requirements of subdivisions (b) and (d), not less than 30 days have elapsed since the mailing of the notice required by subdivision (d), and the property owner has not fully paid the original charges for which the lien is claimed plus any additional charges authorized by subdivision (c), the lienholder may sell the property subject to the lien at a public or bona fide private sale to satisfy the sum of those obligations, all costs and expenses of the sale, and interest at the rate of 12 percent per annum from 30 days following receipt of the notice specified in subdivision (b) or the date the same were advanced until repayment. (f) However, the owner of the property sold pursuant to subdivision (e) may redeem the property sold to satisfy the lien, within 20 days following the sale, upon payment of all charges, costs and expenses, and interest specified in subdivision (e). (g) The proceeds of the sale shall first be applied to the discharge of the lien, the costs of sale, and interest specified in subdivision (e). The remainder, if any, shall be paid to the former owner of the property so sold. (Added by Stats. 1991, Ch. 606, Sec. 1.)
  174. 3053.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. )

    Verify source ↗

    A factor has a general lien on commercial-value articles entrusted by the same principal, if the factor has possession and the amount is due as such.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. ) ## 3053. A factor has a general lien, dependent on possession, for all that is due to him as such, upon all articles of commercial value that are intrusted to him by the same principal. (Enacted 1872.)
  175. 3054.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. )

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    A banker or savings and loan association has a general lien on a customer’s property in its possession for the customer’s balance due, and any exercise of that lien over deposit accounts must follow the specified Financial Code procedures.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. ) ## 3054. (a) A banker, or a savings and loan association, has a general lien, dependent on possession, upon all property in their hands belonging to a customer, for the balance due to the banker or savings and loan association from the customer in the course of the business. (b) The exercise of this lien with respect to deposit accounts shall be subject to the limitations and procedures set forth in Section 1411 or 6660 of the Financial Code. (Amended by Stats. 2019, Ch. 497, Sec. 30. (AB 991) Effective January 1, 2020.)
  176. 3059.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. )

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    Mechanics’ liens for materials and services on real property are governed by Chapter 4 of Title 2 of Part 6 of Division 4.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. ) ## 3059. The liens of mechanics, for materials and services upon real property, are regulated by Chapter 4 (commencing with Section 8400) of Title 2 of Part 6 of Division 4. (Amended by Stats. 2010, Ch. 697, Sec. 13. (SB 189) Effective January 1, 2011. Operative July 1, 2012, by Sec. 105 of Ch. 697.)
  177. 3060.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. )

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    People who do labor in a mine or supply materials for it get a lien on the mine and related works for the value of that labor or materials.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. ) ## 3060. (a) As used in this section, “mine” means a mining claim or real property worked on as a mine including, but not limited to, any quarry or pit, from which rock, gravel, sand, or any other mineral-containing property is extracted by any mining, or surface mining, operation. (b) Any person who performs labor in a mine, either in its development or in working on it by the subtractive process, or furnishes materials to be used or consumed in it, has a lien upon the mine and the works owned and used by the owners for milling or reducing the ores from the mine, for the value of the work or labor done or materials furnished by each, whether done or furnished at the instance of the owner of the mine, or the owner’s agent, and every contractor, subcontractor, superintendent, or other person having charge of any mining or work or labor performed in and about the mine, either as lessee or under a working bond or contract thereon, shall be held to be the agent of the owner for the purposes of this section. The liens provided for by this section shall be enforced in the same manner as those provided for by Part 6 (commencing with Section 8000) of Division 4. (c) This section shall become operative on July 1, 2012. (Amended (as amended by Stats. 2010, Ch. 697) by Stats. 2012, Ch. 263, Sec. 2. (AB 2654) Effective September 7, 2012. Amended version operative July 1, 2012, pursuant to its own provisions. Note: The earlier amendment by Stats. 2010, Ch. 697, became operative on July 1, 2012, by Sec. 105 of Ch. 697.)
  178. 3061.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. )

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    A person who works on certain threshing equipment or related appliances while crushing or threshing gets a lien for the value of that work.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. ) ## 3061. Every person performing work or labor in, with, about, or upon any barley crusher, threshing machine or engine, horsepower, wagon, or other appliance thereof, while engaged in crushing or threshing, has a lien thereon to the extent of the value of his services. Such lien extends for ten days after any such person ceases such work or labor; provided, within that time, an action is brought to recover the amount of the claim. If judgment is given in favor of the plaintiff in any such action, and it is further found that he is entitled to a lien under the provisions of this section, property subject thereto, or so much thereof as may be necessary, may be sold to satisfy such judgment; but if several judgment have been recovered against the same property for the enforcement of such liens, the proceeds of the sale must be divided pro rata among the judgment creditors. (Added by Stats. 1905, Ch. 461.)
  179. 3061.5.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. )

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    Some employees who harvest or transport harvested crops or farm products by their own labor get a lien on the crops, products, or sale proceeds, unless a qualifying bond is provided. The lien starts when work begins and can have priority over other claims, subject to stated limits.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. ) ## 3061.5. (a) Except as provided in subdivision (d), any person who as an employee shall, by their own labor, do or perform any work harvesting or transporting harvested crops or farm products as defined in Section 55403 of the Food and Agricultural Code have a lien upon any and all of the severed crops or severed farm products or proceeds from their sale for the value of the labor done up to a maximum of earnings for two weeks. The liens attach whether the work was done at the instance of the owner who is the grower or producer of severed crops or severed farm products or of any other person acting by or under the owner’s authority, directly or indirectly, as contractor or otherwise; and every contractor, subcontractor, or other person having charge of the harvesting or transporting of the severed crops or severed farm products shall be held to be the agent of the owner for the purposes of this section. (b) The liens provided for in this section attach from the date of the commencement of the work or labor, and are preferred liens, prior in dignity to all other liens, claims, or encumbrances. Except as provided in subdivisions (a) and (c) they shall not be limited as to amount by any contract price agreed upon between the owner who is the grower or producer of the severed crops or severed farm products and any contractor, but the several liens shall not in any case exceed in amount the reasonable value of the labor done, nor the price agreed upon for the labor between the claimant and their employer. In no event, if the claimant was employed by a contractor, or subcontractor, shall the lien extend to any labor not contemplated by, covered by, or reasonably necessary to the execution of, the original contract between the contractor and the owner who is the grower or producer of severed crops or severed farm products and of which contract, or modification thereof, the claimant had actual notice before the performance of the labor. (c) The maximum liability of severed crops, severed farm products or the proceeds from their sale subject to liens under this section is limited to the lesser of actual proved claims or 25 percent of the fair market value of the severed crops, severed farm products, or 25 percent of the proceeds after their sale. (d) No person has a lien if the owner who is the grower or producer of the severed crops, severed farm products, or their proceeds, who otherwise would be subject to a lien pursuant to subdivision (a), either gives directly, or requires a person or entity hired or used to furnish labor in connection with harvesting or transporting the severed crops, to give to the Labor Commissioner before the harvest and for 45 days after its completion, a bond executed by an admitted surety insurer in an amount and form acceptable to the Labor Commissioner, that is conditioned upon the payment of all wages found to be due and unpaid in connection with the operations under any provision of this code. (e) A buyer in the ordinary course of business, as defined in paragraph (9) of subdivision (b) of Section 1201 of the Commercial Code, shall take free of any security interest created by this section, notwithstanding the fact that the lien is perfected and the buyer knows of its existence. (Amended by Stats. 2025, Ch. 57, Sec. 1. (SB 846) Effective January 1, 2026.)
  180. 3061.6.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. )

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    This section says a lien continues for 45 days after the work stops unless the claimant files a claim with the Labor Commissioner or starts a foreclosure suit, and it sets procedures and deadlines for claims, attachment, and sale of perishable goods.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. ) ## 3061.6. (a) The lien created by Section 3061.5 shall continue in force for a period of 45 days from the time the person claiming such lien shall have ceased to do or perform the work for which such lien is claimed, and such lien shall cease at the expiration of the 45 days unless the claimant, his or her assignee or successor in interest, files a claim with the Labor Commissioner or brings suit to foreclose the lien in which case the lien continues in force until the claim filed with the Labor Commissioner or the lien foreclosure suit is finally determined and closed. If a claim is filed with the Labor Commissioner, the Labor Commissioner shall act upon and finally determine such claim within 180 days after filing. In case such proceedings are not prosecuted to trial within two years after the commencement thereof, the court may in its discretion dismiss the same for want of prosecution. (b) Upon filing a claim with the Labor Commissioner, the Labor Commissioner, if the owner who is the grower or producer has failed to satisfy the conditions of subdivision (d) of Section 3061.5, shall determine whether or not such owner of the severed crops, severed farm products, or their proceeds is capable financially of satisfying such claim. For purposes of this determination, it shall be proper for the Labor Commissioner after investigation to take into account the potential liability faced by such owner of such severed crops, severed farm products, or their proceeds. If the Labor Commissioner determines that a lien is necessary to protect the interest of claimants, the Labor Commissioner shall file such lien on the crop, the severed farm product, or their proceeds and notify, in writing, the owner and notify, in writing, all persons who have filed financing statements on the crop, the farm product, or their proceeds pursuant to the provisions of the Commercial Code. (c) The plaintiff in any such lien foreclosure suit, at the time of issuing the summons or at any time afterwards, may have the severed crops or severed farm products or proceeds from their sale upon which such lien subsists attached, as provided in this code and Title 6.5 (commencing with Section 488.010) of Part 2 of the Code of Civil Procedure, upon delivering to the clerk an affidavit, by or on behalf of the plaintiff, showing that: (1) the plaintiff, or his assignor or predecessor in interest, performed labor in harvesting or transporting the severed crops or severed farm products or both; (2) that such labor has not been paid for; (3) that the sum for which the attachment is asked does not exceed the lesser of the reasonable value of the services rendered or if earnings, does not exceed the lesser of two weeks unpaid earnings or reasonable value of actual services rendered, or 25 percent of the fair market value of the severed crop or severed farm product; and (4) that the attachment is not sought and the action is not brought to hinder, delay or defraud any creditor or creditors of any defendant. (d) Any number of persons claiming liens under this section and Section 3061.5 may join in the same action and when separate actions are commenced, the court may consolidate them. If after sale of the property subject to the liens provided for in this section and Section 3061.5, under the judgment or decree of foreclosure of such lien or liens, there is a deficiency of proceeds, the proceeds shall be divided pro rata among the lien claimants whose liens are established, regardless of the order in which the liens were created or the order in which the suits to foreclose same were commenced. Judgment for the deficiency may be docketed against the party personally liable therefor and his sureties. (e) Nothing contained in this section or Section 3061.5 shall be construed to impair or affect the right of any person to whom any debt may be due for work done, to maintain a personal action to recover such debt against the person liable therefor, or his sureties, either in connection with the lien suit or in a separate action. The person bringing such personal action may take out a separate attachment therefor, notwithstanding his or her lien, and in his or her affidavit to procure an attachment need not state that his or her demand is not secured by a lien, and the judgment, if any, obtained by the plaintiff in such personal action shall not be construed to impair or merge any lien held by the plaintiff under this section or Section 3061.5; provided that any money collected on the judgment shall be credited on the amount of such lien in any action brought to enforce the same, in accordance with the provisions of this section. (f) If the lien has attached to perishable goods, the lienholder may, during the period for which the lien is in effect and prior to the filing of a foreclosure suit, obtain a court order for the sale of such perishable goods pursuant to the provisions of Section 488.530 of the Code of Civil Procedure; provided, however, that in the event that such perishable crop is subject in whole or in part to a valid marketing agreement which is in force between the owner who is the grower or producer and an agricultural marketing cooperative organized under the Food and Agricultural Code or similar laws of other states, the agricultural marketing cooperative may purchase or otherwise take possession or custody of such crop or portion thereof according to the terms of the marketing agreement. Any moneys due and payable to such owner who is the grower or producer in return for such crop shall be paid by the agricultural marketing cooperative to the court. (Added by Stats. 1976, Ch. 1059.)
  181. 3062.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. )

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    The owner or person in charge of a breeding stallion, jack, or bull has a lien for the agreed price of the animal’s service on the mare or cow and its offspring, unless a willfully false statement about the animal’s breeding or pedigree was made or published.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. ) ## 3062. Every owner or person having in charge any stallion, jack, or bull, used for propagating purposes, has a lien for the agreed price of its service upon any mare or cow and upon the offspring of such service, unless some willfully false representation concerning the breeding or pedigree of such stallion, jack, or bull has been made or published by the owner or person in charge thereof, or by some other person, at the request or instigation of such owner or person in charge. (Added by Stats. 1905, Ch. 461.)
  182. 3063.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. )

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    A lien claimant must record a verified claim with specified details in the county recorder’s office within 90 days after the service.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. ) ## 3063. Every claimant of a lien provided for in the preceding section must, within 90 days after the service on account of which the lien is claimed, record in the office of the county recorder of the county where the mare or cow subject thereto is kept, a verified claim containing a particular description of the mare or cow, the date and place of service, the name of the owner or reputed owner of such mare or cow, a description by name, or otherwise, of the stallion, jack, or bull performing the service, the name of the owner or person in charge thereof, and the amount of the lien claimed. Such claim, so recorded, is notice to subsequent purchasers and encumbrancers of such mare or cow and of the offspring of such service for one year after such recording. (Amended by Stats. 1957, Ch. 815.)
  183. 3064.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. )

    Verify source ↗

    A plaintiff may bring a lien-enforcement action in any county where the property is located, and may obtain Section 3065 remedies if that section is complied with.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. ) ## 3064. An action to enforce any lien created under Section 3062 may be brought in any county wherein any of the property subject thereto may be found, and the plaintiff is entitled to the remedies provided in Section 3065 upon complying with such section, which is hereby made applicable to the proceedings in such action. (Amended by Stats. 1968, Ch. 48.)
  184. 3064.1.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. )

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    A person who willfully advertises certain domestic animals for breeding or profit as having a false pedigree forfeits the legal right to collect payment for the animal’s services.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. ) ## 3064.1. Every person who wilfully advertises any cattle, horse, sheep, swine, or other domestic animal for purposes of copulation or profit as having a pedigree other than the true pedigree of such animal shall forfeit all right by law to collect pay for the services of such animal. (Added by Stats. 1955, Ch. 60.)
  185. 3065.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. )

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    People who do qualifying logging or timber-product work, or provide livestock, machinery, or appliances for it, can get a lien on the logs and resulting timber products for the value of their labor or equipment use.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. ) ## 3065. Any person who shall, by his own labor, or by using his livestock, machinery or appliances, or both, do or perform any work or render any service in connection with felling, preparing or transporting any logs, or in manufacturing lumber or other timber products from such logs, including the production of tanbark, shall have a lien upon any and all of such logs and upon any and all of the lumber and other timber products manufactured therefrom, whether said work was done or service was rendered on the logs themselves, or any of them, or in manufacturing the lumber or other timber products from them, for the value of such labor done and for the value of the use of such livestock, machinery and appliances, or both, whether said work was done or service was rendered at the instance of the owner of such logs or timber products manufactured therefrom, or of any other person acting by his authority or under him, directly or indirectly, as contractor or otherwise; and every contractor, subcontractor or other person having charge of the felling, preparing or transporting of the said logs or of their manufacture into timber products shall be held to be the agent of the said owner for the purposes of this section. The liens provided for in this section shall attach from the date of the commencement of such work or labor, or the date of the commencement of the use of such livestock, machinery or appliances, as the case may be, and shall be preferred liens, prior in dignity to all other liens, claims or encumbrances, except the landowner’s claim for a reasonable stumpage in cases where the landowner himself is not the direct employer or contractor, as the case may be. They shall not be limited as to amount by any contract price agreed upon between the owner of said logs or timber products manufactured therefrom and any contractor, except as hereinafter provided, but said several liens shall not in any case exceed in amount the reasonable value of the labor done, or the reasonable value of the use of the livestock, machinery or appliances for which the lien is claimed, nor the price agreed upon for the same between the claimant and the person by whom he was employed or with whom the agreement to use livestock, machinery or appliances was made, nor in any case, where the claimant was employed by a contractor, or subcontractor, shall the lien extend to any labor or the use of any livestock, machinery or appliances not embraced within, contemplated by, covered by, or reasonably necessary to the execution of, the original contract between the contractor and the owner of such logs or timber products manufactured therefrom, or any modification thereof made by or with the consent of such owner, and of which said contract, or modification thereof, the claimant shall have had actual notice before the performance of such labor or the use of such livestock, machinery or appliances. The recording of such original contract, or modification thereof, in the office of the county recorder of the county in which the timberland on which the work is to be done is situated or in which the logs are to be manufactured into timber products, as the case may be, before the commencement of the work, shall be equivalent to the giving of such actual notice by the owner to all persons performing work or using livestock, machinery or appliances thereunder. In case said original contract shall, before the work is commenced, be so recorded, together with a bond of the contractor with good and sufficient sureties in an amount not less than fifty (50) percent of the contract price named in said contract, which bond shall in addition to any conditions for the performance of the contract, be also conditioned for the payment in full of the claims of all persons performing labor, or using livestock, machinery or appliances, in the execution of such contract and shall also by its terms be made to inure to the benefit of any and all persons who perform labor or use livestock, machinery or appliances in the execution of the work to be done under the contract so as to give such persons, and their assigns or successors in interest, a right of action to recover upon said bond in any suit brought to enforce the liens provided for in this section, or in a separate suit brought on said bond, then the court must, where it would be equitable so to do, restrict the recovery under such liens to an aggregate amount equal to the amount found to be due from the owner of the said logs or timber products manufactured therefrom to the contractor, and render judgment against the contractor and his sureties on said bond for any deficiency or difference there may remain between said amount so found to be due to the claimants for such labor and for the use of such livestock, machinery and appliances. It is the intent and purpose of this section to limit the owner’s liability, in all cases, to the measure of the contract price where he shall have filed or cause to be filed, in good faith, with his original contract a valid bond with good and sufficient sureties in the amount and upon the conditions herein provided. It shall be lawful for the owner of such logs and timber products to protect himself against any failure of the contractor to perform his contract and make full payment for all work done thereunder by exacting such bond or other security as he may deem satisfactory. (Amended by Stats. 1973, Ch. 665.)
  186. 3065a

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. )

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    A lien under the prior section lasts 30 days after the claimant stops the work or service, unless a foreclosure suit is filed, and a court may dismiss the suit if it is not tried within two years.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. ) ## 3065a. The lien created by the last preceding section shall continue in force for a period of 30 days from the time the person claiming such lien shall have ceased to do or perform the work or render the service for which said lien is claimed, while such logs, lumber or other manufactured timber products are in the county in which such labor was performed or service rendered, and said lien shall cease at the expiration of the said 30 days unless the claimant thereof, or his assignee or successor in interest, brings suit to foreclose the same, in which case the lien continues in force until the said lien foreclosure suit is finally determined and closed, and in case such proceeding be not prosecuted to trial within two years after the commencement thereof, the court may in its discretion dismiss the same for want of prosecution. If any part of the property on which the lien existed is removed from the said county, the lien continues on the balance remaining in the county to the full extent of the claim. The plaintiff in any such lien foreclosure suit may have the logs, lumber and other manufactured timber products upon which such lien subsists attached, as provided in this code and the Code of Civil Procedure. Any number of persons claiming liens under this and the next preceding section may join in the same action and when separate actions are commenced, the court may consolidate them. Whenever upon the sale of the property subject to the liens provided for in this and the next preceding section, under the judgment or decree of foreclosure of such lien or liens, there is a deficiency of proceeds, the proceeds shall be divided pro rata among the lien claimants whose liens are established, regardless of the order in which the liens were created or the order in which the suits to foreclose same were commenced, and judgment for the deficiency may be docketed against the party personally liable therefor and his sureties, in like manner and with like effect as in actions for the foreclosure of mortgages. Nothing contained in this or the next preceding section shall be construed to impair or affect the right of any person to whom any debt may be due for work done, or for the use of livestock, machinery or appliances, to maintain a personal action to recover said debt against the person liable therefor, or his sureties, either in connection with the lien suit or in a separate action, and the person bringing such personal action may take out a separate attachment therefor, notwithstanding his lien or the amount of his debt, and in his affidavit to procure an attachment he shall state that the attachment is made pursuant to this section, and the judgment, if any, obtained by the plaintiff in such personal action shall not be construed to impair or merge any lien held by said plaintiff under this or the next preceding section; provided, only, that any money collected on said judgment shall be credited on the amount of such lien in any action brought to enforce the same, in accordance with the provisions of this section. (Amended by Stats. 1974, Ch. 1516.)
  187. 3065b

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. )

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    The lien claimant, or an assignee or successor in interest, gets a full 30 days after final cessation of labor to bring a suit to foreclose the lien on the logs, lumber, or other manufactured timber products.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. ) ## 3065b. As used in the next preceding section the words “the time the person claiming such lien shall have ceased to do or perform the work or render the service for which said lien is claimed” shall be construed to mean the final date work was done or services were rendered on any of the logs, lumber or other manufactured timber products on which the lien is claimed, so as to give the lien claimant, or his assignee or successor in interest, a full thirty days after final cessation of labor to bring suit to foreclose his lien on any or all of the logs, lumber or other manufactured timber products in question. (Added by Stats. 1929, Ch. 157.)
  188. 3065c

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. )

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    Eligible workers may file an affidavit with the Labor Commissioner to trigger a stop notice, and the mill operator must withhold the stated unpaid wages for 15 days.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. ) ## 3065c. Whenever any faller, bucker, or millhand has a lien pursuant to Section 3065 and has not been paid for his labor by the contractor employing him, and money is owing to such contractor by a mill operator, any such faller, bucker, or millhand, or several of them acting jointly, may file with the Labor Commissioner an affidavit stating the amount of wages unpaid to him or them and describing the labor for which wages are owed and the period in which such labor was performed. If the Labor Commissioner finds the affidavit in order, he shall send to such mill operator a stop notice directing such mill operator to withhold funds in the amount of the unpaid wages from the contractor. The mill operator shall withhold such funds pursuant to the stop notice for 15 days from the date of service of the notice, subject to garnishment within that period by the faller, bucker, or millhand or any assignee thereof. (Added by Stats. 1957, Ch. 338.)
  189. 3066.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. )

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    Certain cleaners, repairers, and storage holders may sell unclaimed garments or household goods after notice and waiting periods.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6. Other Liens [3046 - 3066] ( Chapter 6 enacted 1872. ) ## 3066. (a) Any garment, clothing, wearing apparel or household goods remaining in the possession of a person, firm, partnership or corporation, on which cleaning, pressing, glazing or washing has been done or upon which alterations or repairs have been made, or on which materials or supplies have been used or furnished, for a period of 90 days or more after the completion of such work may be sold to pay the reasonable or agreed charges and the costs of notifying the owner or owners. Provided, however, that the person, firm, partnership, or corporation to whom such charges are payable and owing shall first notify the owner or owners of the time and place of such sale. Provided further, that property that is to be placed in storage after any of the services or labors mentioned herein, shall not be affected by the provisions of this section. (b) All garments, clothing, wearing apparel or household goods placed in storage, or on which any of the services or labors mentioned in the preceding section of this act have been performed and then placed in storage by agreement and remaining in the possession of a person, firm, partnership or corporation without the reasonable or agreed charges having been paid for a period of 12 months, may be sold to pay said charges. Provided that the person, firm, partnership or corporation to whom the charges are payable, shall first notify the owner or owners thereof of the time and place of sale. Provided, however, that the persons, firms, partnerships, or corporations operating as warehouses or warehousemen shall not be affected by this section. (c) The posting or mailing of a registered letter, with a return address marked thereon, addressed to the owner or owners, at their address given at the time of delivery of the article or articles to a person, firm, partnership or corporation to render any of the services or labors set out in this act, stating the time and place of sale, shall constitute notice. Said notice shall be posted or mailed at least 30 days before the date of sale. The cost of posting or mailing said letter shall be added to the charges. Where the address of an owner is unknown, a posting of notice, for a period of 30 days, at a prominent place in the receiving office of the person, firm, partnership or corporation required to give the notice is sufficient. (d) The person, firm, partnership or corporation to whom the charges are payable, shall, from the proceeds of the sale, deduct the charges due plus the costs of notifying the owner and shall hold the overplus, if any, subject to the order of the owner and shall immediately thereafter mail to the owner thereof at his address, if known, a notice of the sale, the amount of the overplus, if any, due him, and at any time within 12 months, upon demand by the owner, pay to the owner said sums or overplus in his hands. (e) All persons, firms, partnerships or corporations taking advantage of this act must keep posted in a prominent place in their receiving office or offices at all times one notice which shall read as follows: “All articles cleaned, pressed, glazed, laundered, washed, altered or repaired and not called for in 90 days shall be sold to pay charges.” “All articles stored by agreement and charges not having been paid for 12 months will be sold to pay charges.” (Amended by Stats. 1955, Ch. 665.)
  190. 3067.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6.5. Liens on Vehicles [3067 - 3074] ( Chapter 6.5 added by Stats. 1959, Ch. 3. )

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    Terms used in this chapter have the same meaning as the Vehicle Code when they are defined there.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6.5. Liens on Vehicles [3067 - 3074] ( Chapter 6.5 added by Stats. 1959, Ch. 3. ) ## 3067. Words used in this chapter which are defined in Division 1 of the Vehicle Code shall have the same meaning as in the Vehicle Code. (Added by Stats. 1959, Ch. 3.)
  191. 3067.1.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6.5. Liens on Vehicles [3067 - 3074] ( Chapter 6.5 added by Stats. 1959, Ch. 3. )

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    The Department of Motor Vehicles must prescribe all forms required under this chapter.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6.5. Liens on Vehicles [3067 - 3074] ( Chapter 6.5 added by Stats. 1959, Ch. 3. ) ## 3067.1. All forms required pursuant to the provisions of this chapter shall be prescribed by the Department of Motor Vehicles. The language used in the notices and declarations shall be simple and nontechnical. (Added by Stats. 1980, Ch. 1111, Sec. 1.)
  192. 3067.2.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6.5. Liens on Vehicles [3067 - 3074] ( Chapter 6.5 added by Stats. 1959, Ch. 3. )

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    This chapter does not apply to manufactured homes, mobilehomes, or commercial coaches.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6.5. Liens on Vehicles [3067 - 3074] ( Chapter 6.5 added by Stats. 1959, Ch. 3. ) ## 3067.2. This chapter shall not apply to any manufactured home, as defined in Section 18007 of the Health and Safety Code, to any mobilehome, as defined in Section 18008 of the Health and Safety Code, or to any commercial coach, as defined in Section 18001.8 of the Health and Safety Code, whether or not the manufactured home, mobilehome, or commercial coach is subject to registration under the Health and Safety Code. (Added by Stats. 1983, Ch. 1124, Sec. 7.)
  193. 3068.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6.5. Liens on Vehicles [3067 - 3074] ( Chapter 6.5 added by Stats. 1959, Ch. 3. )

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    This section gives possessory liens for vehicle-related work and storage, but limits when liens can be sold and caps some charges.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6.5. Liens on Vehicles [3067 - 3074] ( Chapter 6.5 added by Stats. 1959, Ch. 3. ) ## 3068. (a) Every person has a lien dependent upon possession for the compensation to which the person is legally entitled for making repairs or performing labor upon, and furnishing supplies or materials for, and for the storage, repair, or safekeeping of, and for the rental of parking space for, any vehicle of a type subject to registration under the Vehicle Code, subject to the limitations set forth in this chapter. The lien shall be deemed to arise at the time a written statement of charges for completed work or services is presented to the registered owner or 15 days after the work or services are completed, whichever occurs first. Upon completion of the work or services, the lienholder shall not dismantle, disengage, remove, or strip from the vehicle the parts used to complete the work or services. (b) (1) Any lien under this section that arises because work or services have been performed on a vehicle with the consent of the registered owner shall be extinguished and no lien sale shall be conducted unless either of the following occurs: (A) The lienholder applies for an authorization to conduct a lien sale within 30 days after the lien has arisen. (B) An action in court is filed within 30 days after the lien has arisen. (2) A person whose lien for work or services on a vehicle has been extinguished shall turn over possession of the vehicle, at the place where the work or services were performed, to the legal owner or the lessor upon demand of the legal owner or lessor, and upon tender by the legal owner or lessor, by cashier’s check or in cash, of only the amount for storage, safekeeping, or parking space rental for the vehicle to which the person is entitled by subdivision (c). (3) Any lien under this section that arises because work or services have been performed on a vehicle with the consent of the registered owner shall be extinguished, and no lien sale shall be conducted, if the lienholder, after written demand made by either personal service or certified mail with return receipt requested by the legal owner or the lessor to inspect the vehicle, fails to permit that inspection by the legal owner or lessor, or his or her agent, within a period of time not sooner than 24 hours nor later than 72 hours after the receipt of that written demand, during the normal business hours of the lienholder. (4) Any lien under this section that arises because work or services have been performed on a vehicle with the consent of the registered owner shall be extinguished, and no lien sale shall be conducted, if the lienholder, after written demand made by either personal service or certified mail with return receipt requested by the legal owner or the lessor to receive a written copy of the work order or invoice reflecting the services or repairs performed on the vehicle and the authorization from the registered owner requesting the lienholder to perform the services or repairs, fails to provide that copy to the legal owner or lessor, or his or her agent, within 10 days after the receipt of that written demand. (c) The lienholder shall not charge the legal owner or lessor any amount for release of the vehicle in excess of the amounts authorized by this subdivision. (1) That portion of the lien in excess of one thousand five hundred dollars ($1,500) for any work or services, or that amount, subject to the limitations contained in Section 10652.5 of the Vehicle Code, in excess of one thousand twenty-five dollars ($1,025) for any storage, safekeeping, or rental of parking space or, if an application for an authorization to conduct a lien sale has been filed pursuant to Section 3071 within 30 days after the commencement of the storage or safekeeping, in excess of one thousand two hundred fifty dollars ($1,250) for any storage or safekeeping, rendered or performed at the request of any person other than the legal owner or lessor, is invalid, unless prior to commencing any work, services, storage, safekeeping, or rental of parking space, the person claiming the lien gives actual notice in writing either by personal service or by registered letter addressed to the legal owner named in the registration certificate, and the written consent of that legal owner is obtained before any work, services, storage, safekeeping, or rental of parking space are performed. (2) Subject to the limitations contained in Section 10652.5 of the Vehicle Code, if any portion of a lien includes charges for the care, storage, or safekeeping of, or for the rental of parking space for, a vehicle for a period in excess of 60 days, the portion of the lien that accrued after the expiration of that period is invalid unless Sections 10650 and 10652 of the Vehicle Code have been complied with by the holder of the lien. (3) The charge for the care, storage, or safekeeping of a vehicle which may be charged to the legal owner or lessor shall not exceed that for one day of storage if, 24 hours or less after the vehicle is placed in storage, a request is made for the release of the vehicle. If the request is made more than 24 hours after the vehicle is placed in storage, charges may be imposed on a full, calendar-day basis for each day, or part thereof, that the vehicle is in storage. (d) In any action brought by or on behalf of the legal owner or lessor to recover a vehicle alleged to be wrongfully withheld by the person claiming a lien pursuant to this section, the prevailing party shall be entitled to reasonable attorney’s fees and costs, not to exceed one thousand seven hundred fifty dollars ($1,750). (Amended by Stats. 2007, Ch. 121, Sec. 1. Effective January 1, 2008.)
  194. 3068.1.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6.5. Liens on Vehicles [3067 - 3074] ( Chapter 6.5 added by Stats. 1959, Ch. 3. )

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    This section gives a possessory lien for towing, storage, or related recovery work on qualifying vehicles, and limits storage charges and lien-sale timing under specified conditions.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6.5. Liens on Vehicles [3067 - 3074] ( Chapter 6.5 added by Stats. 1959, Ch. 3. ) ## 3068.1. (a) (1) Every person has a lien dependent upon possession for the compensation to which the person is legally entitled for towing, storage, or labor associated with recovery or load salvage of any vehicle subject to registration that has been authorized to be removed by a public agency, a private property owner pursuant to Section 22658 of the Vehicle Code, or a lessee, operator, or registered owner of the vehicle. The lien is deemed to arise on the date of possession of the vehicle. Possession is deemed to arise when the vehicle is removed and is in transit, or when vehicle recovery operations or load salvage operations have begun. A person seeking to enforce a lien for the storage and safekeeping of a vehicle shall impose no charge exceeding that for one day of storage if, 24 hours or less after the vehicle is placed in storage, the vehicle is released. If the release is made more than 24 hours after the vehicle is placed in storage, charges may be imposed on a full-calendar-day basis for each day, or part thereof, that the vehicle is in storage. If a request to release the vehicle is made and the appropriate fees are tendered and documentation establishing that the person requesting release is entitled to possession of the vehicle, or is the owner’s insurance representative, is presented within the initial 24 hours of storage, and the storage facility fails to comply with the request to release the vehicle or is not open for business during normal business hours, then only one day’s charge may be required to be paid until after the first business day. A “business day” is any day in which the lienholder is open for business to the public for at least eight hours. If the request is made more than 24 hours after the vehicle is placed in storage, charges may be imposed on a full-calendar-day basis for each day, or part thereof, that the vehicle is in storage. (2) “Documentation” that would entitle a person to possession of the vehicle includes, but is not limited to, a certificate of ownership, vehicle registration, information in the possession of the lienholder including ownership information obtained from the Department of Motor Vehicles or a facially valid registration found within the vehicle, or a notarized letter or statement from the legal or registered owner providing authorization to release to a particular person with a government-issued photographic identification card. Documentation that establishes that a person is the owner’s insurance representative includes, but is not limited to, a faxed letter or other letter from the owner’s insurance company. A lienholder is not responsible for determining the authenticity of documentation specifically described in this subdivision that establishes either a person’s entitlement to possession or that a person is the owner’s insurance representative. (b) If the vehicle has been determined to have a value not exceeding four thousand dollars ($4,000), the lien shall be satisfied pursuant to Section 3072. Lien sale proceedings pursuant to Section 3072 shall commence within 15 days of the date the lien arises. No storage shall accrue beyond the 15-day period unless lien sale proceedings pursuant to Section 3072 have commenced. The storage lien may be for a period not exceeding 60 days if a completed notice of a pending lien sale form has been filed pursuant to Section 3072 within 15 days after the lien arises. Notwithstanding this 60-day limitation, the storage lien may be for a period not exceeding 120 days if any one of the following occurs: (1) A Declaration of Opposition form is filed with the department pursuant to Section 3072. (2) The vehicle has an out-of-state registration. (3) The vehicle identification number was altered or removed. (4) A person who has an interest in the vehicle becomes known to the lienholder after the lienholder has complied with subdivision (b) of Section 3072. (c) If the vehicle has been determined to have a value exceeding four thousand dollars ($4,000) pursuant to Section 22670 of the Vehicle Code, the lien shall be satisfied pursuant to Section 3071. The storage lien may be for a period not exceeding 120 days if an application for an authorization to conduct a lien sale has been filed pursuant to Section 3071. (d) (1) Any lien under this section shall be extinguished, and a lien sale shall not be conducted, if any one of the following occurs: (A) The lienholder, after written demand to inspect the vehicle made by either personal service or certified mail with return receipt requested by the legal owner or the lessor, fails to permit the inspection by the legal owner or lessor, or his or her agent, within a period of time of at least 24 hours, but not to exceed 72 hours, after the receipt of that written demand, during the normal business hours of the lienholder. The legal owner or lessor shall comply with inspection and vehicle release policies of the impounding public agency. (B) The amount claimed for storage exceeds the posted rates. (2) “Agent” includes, but is not limited to, any person designated to inspect the vehicle by the request of the legal owner or lessor, in writing or by telephone, to the lienholder. A lienholder is not responsible for determining the authenticity of documentation establishing a person’s agency for the purposes of inspection of a vehicle. (e) A lienholder shall not be liable for any claim or dispute directly arising out of the reliance on documentation specifically described in paragraph (2) of subdivision (a) for purposes of releasing a vehicle. (Amended by Stats. 2010, Ch. 566, Sec. 1. (AB 519) Effective January 1, 2011.)
  195. 3068.2.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6.5. Liens on Vehicles [3067 - 3074] ( Chapter 6.5 added by Stats. 1959, Ch. 3. )

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    A tow truck operator with a lien may claim a deficiency from the owner, lessee, or, in some cases, transferee or insurer, subject to the vehicle’s lease status and other conditions.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6.5. Liens on Vehicles [3067 - 3074] ( Chapter 6.5 added by Stats. 1959, Ch. 3. ) ## 3068.2. (a) A tow truck operator who has a lien on a vehicle pursuant to Section 3068.1 has a deficiency claim against the registered owner of the vehicle if the vehicle is not leased or leased with a driver for an amount equal to the towing and storage charges, not to exceed 120 days of storage, and the lien sale processing fee pursuant to Section 3074, less the amount received from the sale of the vehicle. (b) A tow truck operator who has a lien on a vehicle pursuant to Section 3068.1 has a deficiency claim against the lessee of the vehicle if the vehicle is leased without a driver for an amount equal to the towing and storage charge, not to exceed 120 days of storage, and the lien sale processing fee described in Section 3074, less the amount received from the sale of the vehicle. (c) Storage costs incurred after the sale shall not be included in calculating the amount received from the sale of the vehicle. (d) A registered owner who has sold or transferred the owner’s vehicle prior to the vehicle’s removal and who was not responsible for creating the circumstances leading to the removal of the vehicle is not liable for any deficiency under this section if that registered owner has fulfilled the requirements of Section 5602 of the Vehicle Code. The person identified as the transferee in the notice submitted to the Department of Motor Vehicles shall be liable for the amount of any deficiency only if that person received notice of the transfer and is responsible for the event leading to abandonment of the vehicle or requested the removal. (e) Except as provided in Section 22524.5 of the Vehicle Code, if the transferee is an insurer and the transferor is its insured or the transferor’s agent or representative, the insurer shall not be liable for any deficiency, unless the insurer agrees at the time of the transfer, to assume liability for the deficiency. (Amended by Stats. 2020, Ch. 50, Sec. 1. (AB 2319) Effective January 1, 2021.)
  196. 3069.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6.5. Liens on Vehicles [3067 - 3074] ( Chapter 6.5 added by Stats. 1959, Ch. 3. )

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    A lien under this chapter may be assigned by written instrument with delivery of the vehicle, and the assignee may use a lienholder’s rights. The assigning lienholder must give written notice of the assignment to the registered and legal owner at the time of assignment.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6.5. Liens on Vehicles [3067 - 3074] ( Chapter 6.5 added by Stats. 1959, Ch. 3. ) ## 3069. Any lien provided for in this chapter for labor or materials, or for storage or safekeeping of a vehicle when abandoned on private property may be assigned by written instrument accompanied by delivery of possession of the vehicle, subject to the lien, and the assignee may exercise the rights of a lienholder as provided in this chapter. Any lienholder assigning a lien as authorized herein shall at the time of assigning the lien give written notice either by personal delivery or by registered or certified mail, to the registered and legal owner of the assignment, including the name and address of the person to whom the lien is assigned. (Amended by Stats. 1969, Ch. 125.)
  197. 3070.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6.5. Liens on Vehicles [3067 - 3074] ( Chapter 6.5 added by Stats. 1959, Ch. 3. )

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    If a vehicle lien is lost through trick, fraud, or device, repossession by the lienholder revives it, but the revived lien stays junior to later good-faith interests for value. The section also makes certain vehicle-related conduct a misdemeanor and imposes forfeiture and liability for improper towing or removal.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6.5. Liens on Vehicles [3067 - 3074] ( Chapter 6.5 added by Stats. 1959, Ch. 3. ) ## 3070. (a) Whenever the possessory lien upon any vehicle is lost through trick, fraud, or device, the repossession of the vehicle by the lienholder revives the possessory lien but any lien so revived is subordinate to any right, title, or interest of any person under any sale, transfer, encumbrance, lien, or other interest acquired or secured in good faith and for value between the time of the loss of possession and the time of repossession. (b) It is a misdemeanor for any person to obtain possession of any vehicle or any part thereof subject to a lien pursuant to this chapter by trick, fraud, or device. (c) It is a misdemeanor for any person claiming a lien on a vehicle to knowingly violate this chapter. (d) (1) Any person who improperly causes a vehicle to be towed or removed in order to create or acquire a lienhold interest enforceable under this chapter, or who violates subdivision (c), shall forfeit all claims for towing, removal, or storage, and shall be liable to the owner or lessee of the vehicle for the cost of removal, transportation, and storage, damages resulting from the towing, removal, transportation, or storage of the vehicle, attorneys’ fees, and court costs. (2) For purposes of this subdivision, “improperly causes a vehicle to be towed or removed” includes, but is not limited to, engaging in any of the following acts, the consequence of which is the towing or removal of a vehicle: (A) Failure to comply with Section 10650, 10652.5, or 10655 of the Vehicle Code. (B) Misrepresentation of information described in subdivision (b) of Section 10650 of the Vehicle Code. (C) Failure to comply with Section 22658 of the Vehicle Code. (D) Failure, when obtaining authorization for the removal of a vehicle from a vehicle owner or operator where a law enforcement officer is not present at the scene of an accident, to present a form for signature that plainly identifies all applicable towing and storage fees and charges by type and amount, and identifies the name and address of the storage facility unless a different storage facility is specified by the vehicle owner or operator, and to furnish a copy of the signed form to the owner or operator. (E) Failure by the owner or operator of a facility used for the storage of towed vehicles to display, in plain view at all cashiers’ stations, a sign not less than 17 by 22 inches in size with lettering not less than one inch in height, disclosing all storage fees and charges in force, including the maximum daily storage rate. (F) Undertaking repairs or service on a vehicle which is being stored at a facility used for the storage of towed vehicles without first providing a written estimate to, and obtaining the express written consent of, the owner of the vehicle. (G) The promise to pay or the payment of money or other valuable consideration by any owner or operator of a towing service to the owner or operator of the premises from which the vehicle is towed or removed, for the privilege of towing or removing the vehicle. (Amended by Stats. 1994, Ch. 799, Sec. 3. Effective January 1, 1995.)
  198. 3071.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6.5. Liens on Vehicles [3067 - 3074] ( Chapter 6.5 added by Stats. 1959, Ch. 3. )

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    This section sets procedures for a lienholder to get authorization and conduct a lien sale of a vehicle, with notice, timing, and post-sale filing requirements.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6.5. Liens on Vehicles [3067 - 3074] ( Chapter 6.5 added by Stats. 1959, Ch. 3. ) ## 3071. (a) A lienholder shall apply to the department for the issuance of an authorization to conduct a lien sale pursuant to this section for any vehicle with a value determined to be over four thousand dollars ($4,000). A filing fee shall be charged by the department and may be recovered by the lienholder if a lien sale is conducted or if the vehicle is redeemed. The application shall be executed under penalty of perjury and shall include all of the following information: (1) A description of the vehicle, including make, year model, identification number, license number, and state of registration. For motorcycles, the engine number also shall be included. If the vehicle identification number is not available, the department shall request an inspection of the vehicle by a peace officer, licensed vehicle verifier, or departmental employee before accepting the application. (2) The names and addresses of the registered and legal owners of the vehicle, if ascertainable from the registration certificates within the vehicle, and the name and address of any person whom the lienholder knows, or reasonably should know, claims an interest in the vehicle. (3) A statement of the amount of the lien and the facts that give rise to the lien. (b) Upon receipt of an application made pursuant to subdivision (a), the department shall do all of the following: (1) Notify the vehicle registry agency of a foreign state of the pending lien sale, if the vehicle bears indicia of registration in that state. (2) By certified mail, send a notice, a copy of the application, and a return envelope preaddressed to the department to the registered and legal owners at their addresses of record with the department, and to any other person whose name and address is listed in the application. (c) The notice required pursuant to subdivision (b) shall include all of the following statements and information: (1) An application has been made with the department for authorization to conduct a lien sale. (2) The person has a right to a hearing in court. (3) If a hearing in court is desired, a Declaration of Opposition form, signed under penalty of perjury, shall be signed and returned to the department within 10 days of the date that the notice required pursuant to subdivision (b) was mailed. (4) If the Declaration of Opposition form is signed and returned to the department, the lienholder shall be allowed to sell the vehicle only if he or she obtains a court judgment, if he or she obtains a subsequent release from the declarant or if the declarant, cannot be served as described in subdivision (e). (5) If a court action is filed, the declarant shall be notified of the lawsuit at the address shown on the Declaration of Opposition form and may appear to contest the claim. (6) The person may be liable for court costs if a judgment is entered in favor of the lienholder. (d) If the department receives the Declaration of Opposition form in the time specified, the department shall notify the lienholder within 16 days of the receipt of the form that a lien sale shall not be conducted unless the lienholder files an action in court within 30 days of the department’s notice under this subdivision. A lien sale of the vehicle shall not be conducted unless judgment is subsequently entered in favor of the lienholder or the declarant subsequently releases his or her interest in the vehicle. If a money judgment is entered in favor of the lienholder and the judgment is not paid within five days after becoming final, then the judgment may be enforced by lien sale proceedings conducted pursuant to subdivision (f). (e) Service on the declarant in person or by certified mail with return receipt requested, signed by the declarant or an authorized agent of the declarant at the address shown on the Declaration of Opposition form, shall be effective for the serving of process. If the lienholder has served the declarant by certified mail at the address shown on the Declaration of Opposition form and the mail has been returned unclaimed, or if the lienholder has attempted to effect service on the declarant in person with a marshal, sheriff, or licensed process server and the marshal, sheriff, or licensed process server has been unable to effect service on the declarant, the lienholder may proceed with the judicial proceeding or proceed with the lien sale without a judicial proceeding. The lienholder shall notify the department of the inability to effect service on the declarant and shall provide the department with a copy of the documents with which service on the declarant was attempted. Upon receipt of the notification of unsuccessful service, the department shall send authorization of the sale to the lienholder and send notification of the authorization to the declarant. (f) Upon receipt of authorization to conduct the lien sale from the department, the lienholder shall immediately do all of the following: (1) At least five days, but not more than 20 days, prior to the lien sale, not counting the day of the sale, give notice of the sale by advertising once in a newspaper of general circulation published in the county in which the vehicle is located. If there is no newspaper published in the county, notice shall be given by posting a Notice of Sale form in three of the most public places in the town in which the vehicle is located and at the place where the vehicle is to be sold for 10 consecutive days prior to and including the day of the sale. (2) Send a Notice of Pending Lien Sale form 20 days prior to the sale but not counting the day of sale, by certified mail with return receipt requested, to each of the following: (A) The registered and legal owners of the vehicle, if registered in this state. (B) All persons known to have an interest in the vehicle. (C) The department. (g) All notices required by this section, including the notice forms prescribed by the department, shall specify the make, year model, vehicle identification number, license number, and state of registration, if available, and the specific date, exact time, and place of sale. For motorcycles, the engine number shall also be included. (h) Following the sale of a vehicle, the person who conducts the sale shall do both of the following: (1) Remove and destroy the vehicle’s license plates. (2) Within five days of the sale, submit a completed “Notice of Release of Liability” form to the Department of Motor Vehicles. (i) The Department of Motor Vehicles shall retain all submitted forms described in paragraph (2) of subdivision (h) for two years. (j) No lien sale shall be undertaken pursuant to this section unless the vehicle has been available for inspection at a location easily accessible to the public for at least one hour before the sale and is at the place of sale at the time and date specified on the notice of sale. Sealed bids shall not be accepted. The lienholder shall conduct the sale in a commercially reasonable manner. (k) Within 10 days after the sale of any vehicle pursuant to this section, the legal or registered owner may redeem the vehicle upon the payment of the amount of the sale, all costs and expenses of the sale, together with interest on the sum at the rate of 12 percent per annum from the due date thereof or the date when that sum was advanced until the repayment. If the vehicle is not redeemed, all lien sale documents required by the department shall then be completed and delivered to the buyer. (l) Any lien sale pursuant to this section shall be void if the lienholder does not comply with this chapter. Any lien for fees or storage charges for parking and storage of a motor vehicle shall be subject to Section 10652.5 of the Vehicle Code. (Amended by Stats. 2001, Ch. 127, Sec. 1. Effective July 30, 2001.)
  199. 3071.5.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6.5. Liens on Vehicles [3067 - 3074] ( Chapter 6.5 added by Stats. 1959, Ch. 3. )

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    A registered or legal owner may release an interest in a vehicle after a lien has arisen, and the release must include specified information and be given in copy form when signed.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6.5. Liens on Vehicles [3067 - 3074] ( Chapter 6.5 added by Stats. 1959, Ch. 3. ) ## 3071.5. (a) A registered or legal owner of a vehicle in the possession of a person holding a lien under this chapter may release any interest in the vehicle after the lien has arisen. The release shall be dated when signed and a copy shall be given at the time the release is signed to the person releasing the interest. (b) The release shall be in at least 12-point type and shall contain all of the following information in simple, nontechnical language: (1) A description of the vehicle, including the year and make, the engine or vehicle identification number, and the license number, if available. (2) The names and addresses of the registered and legal owners of record with the Department of Motor Vehicles, if available. (3) A statement of the amount of the lien and the facts concerning the claim which gives rise to the lien. (4) A statement that the person releasing the interest understands that (i) he has a legal right to a hearing in court prior to any sale of the vehicle to satisfy the lien and (ii) he is giving up the right to appear to contest the claim of the lienholder. (5) A statement that (i) the person releasing the interest gives up any interest he may have in the vehicle and (ii) he is giving the lienholder permission to sell the vehicle. (c) The release required by this section shall not be filed with the department in connection with any transfer of interest in a vehicle. (Amended by Stats. 1978, Ch. 1005.)
  200. 3072.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6.5. Liens on Vehicles [3067 - 3074] ( Chapter 6.5 added by Stats. 1959, Ch. 3. )

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    This section sets out notice, filing, posting, and sale steps for a lien sale on certain vehicles valued at $4,000 or less.

    ## Civil Code - CIV ## DIVISION 3. OBLIGATIONS [1427 - 3273.91] ( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. ) ## PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.91] ( Part 4 enacted 1872. ) ## TITLE 14. LIEN [2872 - 3081] ( Title 14 enacted 1872. ) ## CHAPTER 6.5. Liens on Vehicles [3067 - 3074] ( Chapter 6.5 added by Stats. 1959, Ch. 3. ) ## 3072. (a) For vehicles with a value determined to be four thousand dollars ($4,000) or less, the lienholder shall apply to the department for the names and addresses of the registered and legal owners of record. The request shall include a description of the vehicle, including make, year, model, identification number, license number, and state of registration. If the vehicle identification number is not available, the Department of Motor Vehicles shall request an inspection of the vehicle by a peace officer, licensed vehicle verifier, or departmental employee before releasing the names and addresses of the registered and legal owners and interested parties. (b) The lienholder shall, immediately upon receipt of the names and addresses, send, by certified mail with return receipt requested or by United States Postal Service Certificate of Mailing, a completed Notice of Pending Lien Sale form, a blank Declaration of Opposition form, and a return envelope preaddressed to the department, to the registered owner and legal owner at their addresses of record with the department, and to any other person known to have an interest in the vehicle. The lienholder shall additionally send a copy of the completed Notice of Pending Lien Sale form to the department by certified mail on the same day that the other notices are mailed pursuant to this subdivision. (c) All notices to persons having an interest in the vehicle shall be signed under penalty of perjury and shall include all of the following information and statements: (1) A description of the vehicle, including make, year model, identification number, license number, and state of registration. For motorcycles, the engine number shall also be included. (2) The specific date, exact time, and place of sale, which shall be set not less than 31 days, but not more than 41 days, from the date of mailing. (3) The names and addresses of the registered and legal owners of the vehicle and any other person known to have an interest in the vehicle. (4) All of the following statements: (A) The amount of the lien and the facts concerning the claim which gives rise to the lien. (B) The person has a right to a hearing in court. (C) If a court hearing is desired, a Declaration of Opposition form, signed under penalty of perjury, shall be signed and returned to the department within 10 days of the date the Notice of Pending Lien Sale form was mailed. (D) If the Declaration of Opposition form is signed and returned, the lienholder shall be allowed to sell the vehicle only if he or she obtains a court judgment or if he or she obtains a subsequent release from the declarant or if the declarant cannot be served as described in subdivision (e). (E) If a court action is filed, the declarant shall be notified of the lawsuit at the address shown on the Declaration of Opposition form and may appear to contest the claim. (F) The person may be liable for court costs if a judgment is entered in favor of the lienholder. (d) If the department receives the completed Declaration of Opposition form within the time specified, the department shall notify the lienholder within 16 days that a lien sale shall not be conducted unless the lienholder files an action in court within 30 days of the notice and judgment is subsequently entered in favor of the lienholder or the declarant subsequently releases his or her interest in the vehicle. If a money judgment is entered in favor of the lienholder and the judgment is not paid within five days after becoming final, then the judgment may be enforced by lien sale proceedings conducted pursuant to subdivision (f). (e) Service on the declarant in person or by certified mail with return receipt requested, signed by the declarant or an authorized agent of the declarant at the address shown on the Declaration of Opposition form, shall be effective for the serving of process. If the lienholder has served the declarant by certified mail at the address shown on the Declaration of Opposition form and the mail has been returned unclaimed, or if the lienholder has attempted to effect service on the declarant in person with a marshal, sheriff, or licensed process server and the marshal, sheriff, or licensed process server has been unable to effect service on the declarant, the lienholder may proceed with the judicial proceeding or proceed with the lien sale without a judicial proceeding. The lienholder shall notify the Department of Motor Vehicles of the inability to effect service on the declarant and shall provide the Department of Motor Vehicles with a copy of the documents with which service on the declarant was attempted. Upon receipt of the notification of unsuccessful service, the Department of Motor Vehicles shall send authorization of the sale to the lienholder and shall send notification of the authorization to the declarant. (f) At least 10 consecutive days prior to and including the day of the sale, the lienholder shall post a Notice of Pending Lien Sale form in a conspicuous place on the premises of the business office of the lienholder and if the pending lien sale is scheduled to occur at a place other than the premises of the business office of the lienholder, at the site of the forthcoming sale. The Notice of Pending Lien Sale form shall state the specific date and exact time of the sale and description of the vehicle, including the make, year model, identification number, license number, and state of registration. For motorcycles, the engine number shall also be included. The notice of sale shall remain posted until the sale is completed. (g) Following the sale of a vehicle, the person who conducts the sale shall do both of the following: (1) Remove and destroy the vehicle’s license plates. (2) Within five days of the sale, submit a completed “Notice of Release of Liability” form with the Department of Motor Vehicles. (h) The Department of Motor Vehicles shall retain all submitted forms described in paragraph (2) of subdivision (g) for two years. (i) No lien sale shall be undertaken pursuant to this section unless the vehicle has been available for inspection at a location easily accessible to the public at least one hour before the sale and is at the place of sale at the time and date specified on the notice of sale. Sealed bids shall not be accepted. The lienholder shall conduct the sale in a commercially reasonable manner. All lien sale documents required by the department shall be completed and delivered to the buyer immediately following the sale. (j) Any lien sale pursuant to this section shall be void if the lienholder does not comply with this chapter. Any lien for fees or storage charges for parking and storage of a motor vehicle shall be subject to Section 10652.5 of the Vehicle Code. (Amended by Stats. 2001, Ch. 127, Sec. 2. Effective July 30, 2001.)

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