2007 California Military and Veterans Code Article 3.1. Veterans\' Farm And Home Purchase Act Of 1974 987.50-987.92

CA Codes (mvc:987.50-987.92)

987.50.  This article may be cited as the Veterans' Farm and Home
Purchase Act of 1974.



987.51.  The object of this article is to provide veterans with the
opportunity to acquire farms and homes.



987.52.  The provisions of this article are applicable, and the
benefits conferred thereby are available, to:
   (a) Any veteran as defined in Section 980;
   (b) Any person who is on active duty in the military or naval
service of the United States, whose service may or may not have been
continuous, and who is in all other respects qualified pursuant to
Section 980.


987.53.  As used in this article:
   (a) "Farm" means a tract of land, which, in the opinion of the
department, is capable of producing sufficient income to provide
payment of the amortized contract installments, including principal,
interest, and taxes.
   (b) "Home" means a parcel of real estate upon which there is a
dwelling house and other buildings that will, in the opinion of the
department, suit the needs of the purchaser and the purchaser's
dependents as a place of abode.  "Home" includes a "condominium," as
defined in subdivision (h). "Home" also includes a "mobilehome," as
defined in subdivision (k).
   (c) "Purchaser" means a veteran or any person who has entered into
a contract of purchase of a farm or home from the department.
   (d) "Purchase price" means the price which the department pays for
any farm or home.
   (e) "Selling price" means the price for which the department sells
any farm or home.
   (f) "Initial payment" means the first payment to be made by a
purchaser to the department for a farm or home.
   (g) "Progress payment plan" means payment by the department for
improvements on real property in installments as work progresses.
   (h) "Condominium" means an estate in real property consisting of
an undivided interest in common in a portion of a parcel of real
property together with a separate interest in space in a residential
building on the real property, such as an apartment, which, in the
opinion of the department, suits the needs of the purchaser and the
purchaser's dependents as a place of abode.  A condominium may
include, in addition, a separate interest in other portions of the
real property.
   (i) "Effective rate of interest" means the average rate of
interest on the unpaid balance due on a participation contract to
which the department's legal rights are subject, and the rate of
interest on the unpaid balance of the purchase price, as determined
by the department.
   (j) "Participation contract" means an obligation secured by a deed
of trust or mortgage, or other security interest established
pursuant to regulations of the department.
   (k) "Mobilehome" means either a parcel of real estate, or an
undivided interest in common in a portion of a parcel of real
property, on which is sited one or more mobilehome modules, or a site
in a mobilehome park, as defined in Section 18214 of the Health and
Safety Code, on which one or more mobilehome modules is sited or is
to be sited that will, in the opinion of the department, suit the
needs of the purchaser and the purchaser's dependents as a place of
abode and meets all requirements of local governmental jurisdictions.
  However, where the mobilehome module or modules are sited on trust
land, "local governmental jurisdictions" means the tribal governing
body.
   For purposes of this subdivision, "module" means a section of a
mobilehome at least 10 feet wide and at least 40 feet long.
   (l) "Indian veteran" means a veteran, as defined in Section 980,
who, in addition, either belongs to an Indian tribe, band, group,
reservation, rancheria, or community which is recognized by the
United States as eligible for services from the United States Bureau
of Indian Affairs or is an Indian beneficiary and who is eligible
under this article for purchase by the department of a home or farm
sited on trust land.
   (m) "Trust land," with respect to an Indian veteran, means land
held in trust by the United States government for individual Indians,
Indians who belong to Indian tribes, or Indian tribes.
   (n) "Allotment trust land" means land held by the United States
under the Indian General Allotment Act of 1887, as amended, (Chapter
9 (commencing with Section 331) of Title 25 of the United States
Code), in trust for an individual Indian or for two or more Indians
holding individual interests in common.  It includes both trust and
restricted public domain allotments and allotments within the
boundaries of an Indian reservation.
   (o) "Tribal trust land" means land held in trust by the United
States for an Indian tribe or band.
   (p) "Tribe" means any Indian tribe, band, group, reservation,
rancheria, or community which is recognized by the United States as
eligible for services from the United States Bureau of Indian
Affairs.
   (q) "Immediate family" means the spouse of a purchaser, the
natural or adopted dependent children of the purchaser, and the
parents of the purchaser if they are dependent on the purchaser for
50 percent or more of their support.
   (r) "Indian beneficiary" means an Indian for whom land is held in
trust by the United States government.



987.54.  The administration of the provisions of this article is
vested solely in the Department of Veterans Affairs.



987.55.  The department shall adopt rules and regulations in keeping
with the purpose of this article to establish preferences in the
granting of benefits conferred by this article.



987.56.  (a) The department shall prescribe and determine the
qualifications of all veterans.  Any person deeming himself or
herself a veteran and desiring to benefit hereunder, shall submit to
the department information, in the form prescribed by the department,
that will enable the department to determine his or her eligibility
and qualifications.  The department may make further inquiries and
investigations in order to determine eligibility and qualifications.

   (b) Whenever the department determines that a shortage of funds
exists in any of the funding sources available, the department shall
use the following preference categories for the use of those funds.
   (1) Veterans who are otherwise qualified because of service during
a time of war and who were wounded or disabled as a result of their
service shall be given first preference in the benefits conferred by
this article.  The department shall determine, in each case, whether
the veteran was wounded or disabled as a result of service.
   (2) The following group shall be given second preference in the
benefits conferred by this article:
   (A) The unremarried spouse of individuals who were members of the
Armed Forces on active military duty and were killed in the line of
duty while on active duty.
   (B) Members of the Armed Forces who were held as prisoners of war.

   (C) The unremarried spouse of members of the Armed Forces who have
been designated by the Armed Forces as missing in action.
   (3) Veterans whose eligibility is derived from service any portion
of which was on or after August 2, 1990, and prior to a date to be
set by law or by a Presidential proclamation ending the Gulf War, and
veterans with wartime service discharged or released from active
duty within 10 years of their application to the department shall be
given third preference in the benefits conferred by this article.
   (4) Active members of the California National Guard or a reserve
component of a branch of the United States Armed Forces who meet the
eligibility criteria of paragraph (3) of subdivision (a) of Section
980 shall be given fourth preference in the benefits conferred by
this article.
   (5) Veterans with wartime service discharged or released from
active duty more than 10 years prior to their application to the
department shall be given fifth preference in the benefits conferred
by this article.
   (6) Veterans who are otherwise qualified and whose only military
service was during a time of peace shall be given sixth preference
for the benefits conferred by this article.
   (7) Veterans eligible for a subsequent loan under subdivision (a)
of Section 987.86 shall be given seventh preference in the benefits
conferred by this article.
   (c) Nothing in this section regarding preferences shall affect any
eligibility requirement for benefits conferred by this article.




987.566.  Whenever applications exceed the amount of funds available
in any one or more of the available funding categories, the
department may establish a date for each funding category so as to
provide funding to veterans whose applications were filed on or
before that date, and whose applications are subsequently approved,
before funding is made available to those whose applications are
filed after that date.



987.57.  (a) The department shall require that all applicants under
this article qualify under applicable federal laws and regulations
governing the permitted uses of tax-exempt bond funds, and file
within the time limits required under applicable federal law and
regulations.
   (b) Notwithstanding any other provision of state law to the
contrary, no time limit for filing shall be imposed upon any veterans
who served in the Philippine Commonwealth Army, or the Regular
Scouts ("Old Scouts"), or the Special Philippine Scouts ("New Scouts"
) during World War II, except as required by federal law.



987.58.  (a) If a veteran dies after filing an application for
purchase of a farm or a home, and the veteran's eligibility and
qualifications are subsequently approved, the veteran's surviving
spouse may, in the discretion of the department, succeed to the
veteran's rights under the application, and may succeed to the
veteran's rights, privileges, and benefits under this article. The
contract of purchase which the department otherwise would have made
with the deceased veteran may be made with the surviving spouse.
   (b) If a person was a member of the armed forces on active
military duty, entered active duty while in the State of California
and lived in this state for six months immediately preceding entry
into active duty, and was killed in the line of duty while on active
duty or died after discharge from active duty from injuries incurred
in the line of duty while on active duty, that person is a veteran
for purposes of this article, and his or her unremarried surviving
spouse  may file an application, is entitled to the same rights,
privileges, and benefits for which the armed forces member would have
been eligible, and may contract with the department pursuant to
subdivision (a).  In making a determination of eligibility under this
subdivision, the department may base its determination on
documentation furnished to the surviving spouse by the United States
Department of Veterans Affairs specifying the cause of death of the
armed forces member.
   (c) If a member of the armed forces entered active military duty
while in the State of California, lived in this state for six months
or more immediately preceding entry into active duty, and is being
held as a prisoner of war or has been designated by the armed forces
as missing in action, that person is a veteran for purposes of this
article, and his or her spouse may file an application, is entitled
to the same rights, privileges, and benefits, and may contract with
the department pursuant to subdivision (a).


987.59.  (a) When a veteran has been authorized by the department to
select a farm or home, he or she shall submit that selection for
approval, as the department prescribes.  The department shall have
the sole responsibility for the underwriting and approval of all farm
or home loans, subject to this article.
   (b) In order to achieve efficient processing and approval of
loans, the department shall do all of the following:
   (1) The department shall establish all systems, procedures,
technologies, and guidelines necessary to achieve efficient
processing of farm or home loans submitted for approval by the
department, with the intent of achieving loan delivery within an
average of 30 days.  These shall include, but may not be limited to,
systems and technologies for the electronic transfer of loan funds
and related fees.
   (2) The department shall ensure optimal participation of qualified
mortgage brokers and other qualified financial institutions and
shall review, standardize, and where possible simplify, the
documentation required of mortgage brokers and other qualified
financial institutions.  The department shall provide adequate
training and certification of participating mortgage brokers and
other qualified financial institutions.
   (3) The department shall establish an outreach program to
effectively disseminate information concerning the simplified and
more efficient loan process to professional real estate and mortgage
broker associations.
   (4) The department shall offer broker compensation and fees
sufficient to ensure optimal participation of the private sector in
the loan origination process and consistent with the veteran borrower'
s interest in efficient and economical loan processing.
   (5) The department shall provide access over the Internet to
veteran applicants and their authorized agents to enable loan
applications to be filed, processed, and tracked electronically.
   (6) In cooperation with the Office of Administrative Law, the
department shall, on or before October 30, 2000, promulgate all
regulations necessary to implement the provisions of this section and
Section 987.67, with the intent of achieving loan delivery within an
average of 30 days through measures including, but not limited to,
optimal participation in the loan origination process by qualified
private sector real estate mortgage associations.



987.60.  (a) The department may acquire the farm or home from its
owner or may contract with a veteran for the construction of a
dwelling house and other improvements for a farm or home, upon the
terms agreed under all of the following terms and conditions:
   (1) The department is satisfied of the desirability of the
property submitted.
   (2) The veteran has agreed with the department that he or she, or
members of his or her immediate family, will actually reside on the
property within 60 days from the date of purchase by the department,
or, if the residence on the property is not complete on the date of
purchase, within 60 days after the residence is completed, and will
continue to reside on the property until all payments due the
department have been paid or the farm or home is sold, except where
the occupancy requirement is waived pursuant to Section 987.62.
   (3) If the department is to contract with a veteran for the
construction of a dwelling house and other buildings, or for the
purchase of a mobilehome, all of the following are required:
   (A) The veteran shall be the owner of the real property on which
the dwelling house and other buildings are to be constructed, or
shall be the owner of the real property or shall be the owner of an
undivided interest in common in a portion of a parcel of real
property on which a mobilehome is to be situated, and agrees to
convey that property to the department without cost.
   (B) The veteran has paid a reasonable fee set by the department to
cover the cost of any preliminary service of the department that may
be necessary to process the application.
   (C) The veteran has filed with the department adequate plans and
specifications for the improvements to be constructed upon the real
property, together with a contract, executed by a contractor licensed
by the State of California for the construction of the improvements
in accordance with the plans and specifications within 12 months
after the acquisition of the real property by the department.  The
department may require a bond or other security instrument executed
by the contractor in an amount determined by the department providing
for compliance with the terms of the contract and for the payment of
persons furnishing material or labor on the job, executed by a
surety company, or other financial institution, authorized to do
business in the State of California.  The department may also require
course-of-construction insurance for public liability, property
damage, and workers' compensation.
   (D) The plans, specifications, contract, and other required
documents or security instruments are approved by the department.
   (E) The veteran has placed in escrow all sums of money to be
advanced by him or her, where the cost is in excess of the maximum
that may be expended by the department.
   (b) As used in this section "immediate family" includes only the
veteran's spouse, natural or adoptive dependent children, and parents
only if the parents are dependent upon the veteran for 50 percent or
more of their support.



987.601.  (a) For purposes of the construction of a dwelling house
or other improvements for a farm or home or the acquisition of a farm
or home for an Indian veteran pursuant to this article, references
to property or real property include the Indian veteran's beneficial
interest in trust land held by the United States for that veteran and
a leasehold interest acquired by the Indian veteran from an Indian
beneficiary when the Indian veteran is not a beneficiary of trust
land; references to the purchase or acquisition of property or real
property include the assignment of an Indian veteran's beneficial
interest in trust land held by the United States for that veteran and
a leasehold interest in trust land acquired by an Indian veteran
from an Indian beneficiary; references to the sale of property or
real property include the assignment of an Indian veteran's
beneficial interest in trust land held by the United States for that
veteran and a leasehold interest in trust land acquired by the Indian
member from an Indian beneficiary; and references to purchaser,
seller, purchase price, and selling price refer to the acquisition or
sale of a home situated or constructed upon or a farm comprising an
assignment of an Indian veteran's beneficial interest in trust land
held by the United States for that veteran or a leasehold interest in
trust land acquired by the Indian veteran from an Indian
beneficiary.
   (b) Subject to the conditions and limitations specified in Section
987.603, the department may acquire an Indian veteran's leasehold
interest in allotment trust land,  or a sufficient portion of the
leasehold interest necessary to secure the loan, as determined by the
department and the Bureau of Indian Affairs, for the purpose of
entering into a contract with the Indian veteran for the acquisition
of a farm or home or for the construction of a dwelling house or
other improvements for a farm or home or for the purchase and
installation of a mobilehome on the leasehold land.
   (c) Subject to the conditions and limitations specified in Section
987.603, the department may acquire an assignment of an Indian
veteran's beneficial interest in trust land held by the United States
for that veteran,  or a sufficient portion of the beneficial
interest necessary to secure the loan, as determined by the
department and the Bureau of Indian Affairs, for the purpose of
entering into a contract for the acquisition of a farm or home or for
the construction of a dwelling house or other improvements for a
farm or home or for the purchase of a mobilehome on trust land
assigned to the department by the Indian veteran beneficiary.
   (d) For purposes of this section, the leasehold interest to be
acquired by the department shall have been granted by the person or
persons for whom the land is held in trust for a term of at least 25
years renewable without notice on the same terms and conditions for
an additional period of at least 25 years.  The lease shall be in a
form acceptable to the department and to the United States Secretary
of the Interior.  The Indian veteran shall satisfy the department
that it and its assignees will have access to the property for the
term of the lease.  The Indian veteran shall assign the lease to the
department without cost and shall obtain the consent of the United
States Secretary of the Interior to that assignment.
   (e) For purposes of this section, the beneficial interest to be
assigned by the Indian veteran shall be assigned as security for a
contract entered into pursuant to this article.  The assignment shall
be in a form acceptable to the department and to the United States
Secretary of the Interior.  The Indian beneficiary veteran shall
satisfy the department that the department and its assignees will
have access to the property for the term of the assignment.  The
beneficial interest of the Indian beneficiary veteran shall be
assigned at no cost to the department and with the consent of the
United States Secretary of the Interior.



987.602.  (a) Subject to the conditions and limitations specified in
Section 987.603, the department may acquire an Indian veteran's
leasehold interest in tribal trust land for the purpose of entering
into a contract with the Indian veteran for the acquisition of a farm
or home or for the construction of a dwelling house or other
improvements for a farm or home or for the purchase and installation
of a mobilehome on the leasehold land.
   (b) For purposes of this section, the leasehold interest to be
acquired by the department shall have been granted by the tribe for
which the land is held in trust to the Indian veteran for a term of
at least 25 years renewable without notice on the same terms and
conditions for an additional period of at least 25 years.  The lease
shall be in a form acceptable to the tribe, the department, and the
United States Secretary of the Interior, shall be duly executed in
accordance with the tribe's constitution and bylaws or other tribal
laws, and shall provide that the Indian veteran and his assignees
shall have access to the property for the term of the lease.  The
Indian veteran shall assign the lease to the department without cost
and shall obtain the consents of the tribe and the United States
Secretary of the Interior to that assignment.



987.603.  The department may acquire an assignment of an Indian
veteran's beneficial interest in trust land held by the United States
for that veteran or a leasehold interest in trust land acquired by
the Indian veteran from an Indian beneficiary and contract with an
Indian veteran as provided in Sections 987.601 and 987.602 upon the
terms agreed if all of the following conditions are met:
   (a) The department is satisfied of the desirability of the
property submitted.
   (b) The Indian veteran has agreed with the department that the
veteran, or members of the veteran's immediate family, will actually
reside on the property within 60 days from the date of acquisition by
the department, or if the residence on the property is not complete
on the date of acquisition, within 60 days after the residence is
completed.
   (c) The sum to be expended by the department pursuant to a
contract for the acquisition of a home or the construction of a
dwelling house and other improvements does not exceed the maximum
loan amount established pursuant to subdivision (a) of Section
987.65.  The sum to be expended by the department pursuant to a
contract for the acquisition of a mobilehome on trust land or
leasehold land does not exceed the maximum loan amount established
pursuant to subdivision (b) of Section 987.65.  The sum to be
expended by the department pursuant to a contract for the acquisition
of a farm on trust land or leasehold land does not exceed the
maximum loan amount established pursuant to subdivision (e) of
Section 987.65.
   (d) The Indian veteran has paid a reasonable fee set by the
department to cover the cost of preliminary service of the department
that may be necessary to process the application.
   (e) The Indian veteran has filed with the department adequate
plans and specifications for the improvements to be constructed upon
the real property, together with a contract executed by a contractor
licensed by the State of California or by an Indian contractor
approved by the department for the construction of the improvements,
in accordance with the plans and specifications, within 12 months
after the assignment of the Indian veteran's beneficial interest or
acquisition of the Indian veteran's leasehold interest in the real
property by the department.  The department may require a bond or
other security instrument executed by the contractor in an amount
determined by the department providing for compliance with the terms
of the contract and for the payment of persons furnishing material or
labor on the job, executed by a surety company, or other financial
institution, authorized to do business in the State of California.
The department may also require course-of-construction insurance for
public liability, property damage, and workers' compensation.
   (f) The plans, specifications, contract, and other required
documents or security instruments are approved by the department.
   (g) The Indian veteran has placed in escrow all sums of money to
be advanced by the veteran where the cost is in excess of the maximum
that may be expended by the department.



987.61.  The department may purchase property, subject to a
participation contract providing for a loan term of not less than 23
years.  The purchase price plus the participation contract shall not
exceed the maximum purchase prices available under this article.




987.62.  The department, after consummating a purchase under the
provisions of this article and the veteran having occupied the
property as required by Section 987.60 of this article, may annually
waive the occupancy requirement on a showing of good cause.  The
property financed under this article is intended to remain
owner-occupied, and not become an investment, rental, or business
property.  The department may also waive the occupancy requirement
for any period of time if the property is a farm and if the veteran
personally cultivates the property and harvests the crops or tends
livestock.  The department shall establish standards for the
occupancy waiver and shall make those standards known.  The
department shall waive the occupancy requirement in any case where
the State Department of Health determines that health hazards on
adjacent property render the farm, home, or mobilehome unsuitable for
occupancy, and the waiver shall be effective as long as those
conditions exist.



987.63.  Notwithstanding other provisions of this article relating
to the occupancy, leasing, letting, or subletting of a farm or home
acquired pursuant to this article, the department, with respect to
any veteran who after consummating a purchase of a farm or home under
this article and occupying such farms or home reenters the active
military, naval, or air service of the United State, may waive the
occupancy requirement for the period of such active service and for a
reasonable period subsequent to the termination of such active
service and consent to the leasing, letting, or subletting of the
farm or home during such period or periods.



987.64.  In the event of any conflict or difference between any
provision of this article and the federal Mortgage Subsidy Bond Tax
Act of 1980 (P.L.  96-499; 94 Stat. 2660), including any amendment
thereto and any regulation issued thereunder, the department shall
comply with that federal law or regulation to the extent necessary to
maintain the tax-exempt status of any issue of its general
obligation or revenue bonds.  Any action taken by the department
prior to the effective date of this section to effect that compliance
is hereby confirmed and ratified, it having at all times been the
intent of the Legislature that the tax-exempt status of those bonds
be maintained.



987.65.  (a) The purchase price of a home to the department, or the
sum to be expended by the department pursuant to a contract for the
construction of a dwelling house and other improvements, or the
purchase price of a mobilehome sited on a lot owned by the purchaser
and installed on a foundation system pursuant to Section 18551 of the
Health and Safety Code, or the purchase price of a mobilehome
converted to a fixture and improvement to the underlying real
property in a mobilehome park that has been converted to a
resident-owned subdivision, cooperative, condominium, or nonprofit
corporation as set forth in Section 18555 of the Health and Safety
Code, shall not exceed 125 percent of the then current maximum Fannie
Mae loan limit that is annually set by Fannie Mae for a
single-family home.
   (b) The purchase price of a mobilehome that is to be sited in a
mobilehome park, as defined in Section 18214 of the Health and Safety
Code, in addition to any assistance provided by the department to a
veteran pursuant to subdivision (e) of Section 987.85, may not exceed
one hundred seventy-five thousand dollars (5,000).
   (c) A veteran purchasing the home may advance, subject to Section
987.64, the difference between the total price or cost of the home
and the sum of the purchase price of the home to the department and
any amount the department adds, under Section 987.69, to the purchase
price of the home in fixing the selling price to the veteran. Any
amount of the purchase price to the department may be provided by
funds from participation contracts or revenue bonds.
   (d) The purchase price of a farm to the department shall not
exceed 150 percent of the limit described in subdivision (a). A
veteran purchasing the farm may advance the difference between the
total price of the farm, or the cost of the dwelling and improvements
to be constructed on a farm under a contract, and the sum of the
purchase price to the department or contract price to the department
and any amount that the department adds, under Section 987.69, to the
purchase or contract price to the department in fixing the selling
price of the farm to the veteran.



987.655.  For a mobilehome which is to be sited in a mobilehome park
as defined in Section 18214 of the Health and Safety Code, the
department shall charge a rate of interest 1 percent higher than that
which is charged to purchasers of conventional housing or of a
mobilehome sited on a lot owned by the purchaser.



987.656.  A mobilehome which is purchased under this act shall not
be moved from its original site to any other location, without first
obtaining prior authorization from the department.
   Any person who moves or causes to be moved a mobilehome under this
act, without first obtaining approval from the department, shall be
jointly and severally liable to the department for the full amount of
the mobilehome loan balance.



987.67.  (a) Before the purchase of any property by the department
there shall be filed with the department (1) an appraisement of the
market value of the property by an employee or an authorized agent of
the department or (2) an appraisement of the market value of the
property by either the Federal Housing Administration or the Veteran'
s Administration, and in addition there may be filed with the
department an appraisement of the market value of the property by an
authorized appraiser of a banking corporation formed under the laws
of this state or of a national banking association having a place of
business in this state.  Each appraisement shall be certified by the
maker thereof.  The certification shall state that it is made in good
faith, and that the valuation is honestly determined and represents
the bona fide opinion of the maker.
   (b) The department shall establish guidelines to ensure greater
participation of state-licensed real estate appraisers and shall
establish an outreach program to effectively disseminate information
concerning the participation to professional appraisal associations
or trade groups.



987.68.  The department, before consummating a purchase under the
provisions of this article, shall cause the title of the property
sought to be purchased to be examined and may require for that
purpose an abstract, an unlimited certificate of title, or a policy
of title insurance, and may refer the same to the Attorney General
for his opinion.



987.69.  The department shall then enter into a contract with the
veteran for the sale of the property to the veteran.  The department
shall fix the selling price of the property as the purchase price
thereof, as the total cost of improvements constructed, or as the
value of the property, as determined by the department when the
property is acquired by the department in a manner other than by
purchase, to which the department may add all expenses incurred and
estimated to be incurred by the department in relation thereto,
inclusive of interest, administration, appraisals, examination of
title, insurance premiums, mortgage guaranty fees, origination fees,
incidental expenses, and the sum deemed necessary to meet unforeseen
contingencies.  In the case of real property acquired for the purpose
of constructing improvements thereon, the department shall forthwith
after acquiring that real property enter into the contract with the
veteran authorized by this section at a selling price that does not
exceed the department's appraised value of the land, if the loan is
to include the value of the land, and the amount of the department's
appraised value of the improvements to be constructed thereon and any
of the other additions herein authorized.  After the execution of
the contract between the veteran and the department and the making of
the initial payment thereon the department shall be authorized to
pay the cost of the improvements contracted to be constructed on the
real property, making progress payments thereon in the amounts and at
those times that the department approves.  The department shall,
upon written request of the veteran and his or her contractor, have
authority to approve additions to or deletions from the improvements
contracted to be constructed and any savings affected or added cost
incurred shall be deducted from or added to the amount due the
department by the veteran under the terms of his or her contract.
   Where the department enters into a contract for the sale of
property on trust to an Indian veteran, the contract shall include
the following conditions:
   (a) The dwelling house or other improvements contracted to be
constructed on trust land shall be completed in compliance with the
standards of the building code applicable on the trust land.  If
there is no building code in force on the trust land, the applicable
standards shall be those of the building code of the county in which
the trust land is located.
   (b) On the completion of construction, the Indian veteran shall
provide to the department an inspection certificate from a qualified
building inspector certifying that the dwelling house or other
improvements comply with the standards of the building code as
required by subdivision (a).



987.71.  (a) The purchaser shall make an initial payment of at least
2 percent of the selling price of the property.  The department may
waive the initial payment in any case where the value of the property
as determined by the department from an appraisal equals the amount
to be paid by the department plus at least 5 percent.  In the case of
a purchase requiring a loan guaranty by the United States Department
of Veterans Affairs, the department may waive the initial payment
and the purchaser shall pay the loan guaranty fee, which may be added
to the loan amount.  The department may require the purchaser to pay
a loan origination fee, not to exceed 1 percent of the loan amount,
which may be added to the loan amount.
   (b) The balance of the loan amount may be amortized over a period
fixed by the department, not exceeding 40 years for farms or homes
and not exceeding 30 years for mobilehomes located in mobilehome
parks, as defined in Section 18214 of the Health and Safety Code,
together with interest thereon at the rate determined by the
department pursuant to Section 987.87 for these amortization
purposes.
   (c) The department may, in order to allow the veteran to purchase
the home selected without incurring excessive monthly payments, at
the time of initial purchase, postpone the commencement of payment of
the principal balance for a period not to exceed five years if the
veteran's current income meets the standards for purchase on these
terms and if the department determines, in accordance with previously
established criteria for these determinations, that the veteran's
income can reasonably be expected to increase sufficiently within the
five-year period to make the transition to fully amortized principal
and interest payments, so long as the total term of the contract of
purchase does not exceed 40 years, or 30 years where the contract
relates to a mobilehome located in a mobilehome park, as defined in
Section 18214 of the Health and Safety Code.
   (d) The purchaser on any installment date may pay any or all
installments still remaining unpaid.
   (e) In any individual case, the department may for good cause
postpone, from time to time, upon terms the department determines to
be proper, the payment of the whole or any part of any installment of
the purchase price or interest thereon.
   (f) Each installment shall include an amount sufficient to pay the
principal and interest on the participation contract to which the
interest of the department is subject, and any amount as may be
required by a covenant or provision contained in any resolution of
issuance.
   (g) When a purchaser makes an initial payment of less than 20
percent of the selling price of the property, the department shall do
all of the following:
   (1) Take prudent measures to minimize losses from loan defaults
and loan delinquencies.
   (2) (A) Ensure the continued financial solvency of the loan
program by charging fees to cover the costs, as determined by the
department, of any loan guaranty, primary mortgage insurance, or
other similar arrangement.
   (B) Fees charged under this paragraph may be included in the
amount of the loan, collected in advance, or collected as part of the
monthly payment.
   (h) (1) Subject to paragraph (2), the department may provide
initial payment assistance to lower income first-time purchasers by
providing a deferred-payment second loan, upon which simple interest
shall be charged at a rate established by the department.
   (2) A deferred-payment second loan described in paragraph (1) is
subject to all of the following conditions:
   (A) The loan may not exceed 3 percent of the selling price of the
farm or home.
   (B) The loan shall be secured by a deed of trust.
   (C) The loan shall be due and payable upon the payment in full of
the contract or upon the sale or transfer of the farm or home.



987.72.  The provisions of Section 987.71, relative to the rate of
interest to be charged to veteran purchasers do not apply to
assignees of such purchasers who are not veterans, but as to such
assignees the rate of interest shall be as fixed by the department,
compounded at periods fixed by the department.
   The action of the department in refusing to permit any assignments
except as provided in this section is hereby ratified and confirmed,
it having at all times been the intent of the Legislature that
Section 987.71 apply to veteran purchasers only.




987.721.  (a) Notwithstanding Section 987.72, upon the dissolution
of marriage or legal separation of a veteran contract purchaser and
the veteran's spouse, an assignment may be made in favor of the
nonveteran former spouse at the same rate of interest and upon the
same terms and conditions as are provided to veteran purchasers
provided the veteran's entire beneficial interest is transferred to
the spouse and provided there are one or more dependent children of
the veteran occupying the property and the spouse continues to reside
in the home and make the payments in the same amount required by the
purchase contract.  For purposes of this subdivision, any child of
the veteran who is legally adopted or who acquires a separate
domicile or marries shall not be considered a dependent child.
   (b) Should the veteran retain entire beneficial interest in the
property after dissolution or legal separation, the veteran may
continue as purchaser provided either the veteran or the former
spouse continues to occupy the property.


987.73.  (a) Except as provided in subdivision (b), the department
in each individual case may specify the terms of the contract entered
into with the purchaser, but no property sold under this article
shall, voluntarily or involuntarily, by operation of law or
otherwise, be transferred, assigned, encumbered, leased, let or
sublet, in whole or in part, nor shall any mobilehome be removed from
its original site, except in case of emergency where temporary
removal is necessary to avoid potential damage, without the written
consent of the department, until the purchaser has paid therefor in
full and has complied with all the terms and conditions of this
contract of purchase.  The department may give its written consent to
such transfers, assignments, encumbrances, leasings, lettings or
sublettings, or removals, for good cause shown, subject to the
interest of the department and consistent with the purposes of this
article.
   (b) The consent of the department shall not be required where a
veteran, alone or jointly with his spouse, transfers his interest in
property which is the subject of a loan agreement with the department
into a revocable trust established for the benefit of the veteran or
of the veteran and his spouse.
   (c) The department may consent to an assignment in favor of a
nonveteran spouse if a veteran purchaser qualifies as "a person in
long-term care" as defined in Section 14050.3 of the Welfare and
Institutions Code if the department is satisfied that the interest of
the veteran is adequately protected.  If consent is given to the
assignment, the contract shall continue at the same rate of interest
and upon the same terms and conditions as are provided to veteran
purchasers.  Consent by the department to the assignment shall be
deemed given if the assignment is pursuant to a court order, and if
notice of the hearing was provided to the department at least 30 days
prior to the hearing at which the court order was issued.



987.74.  (a) All properties purchased by the department shall be
covered by insurance.  Insurance purchased by the department shall be
guaranteed replacement cost coverage as described in subdivisions
(e) and (f) of Section 10102 of the Insurance Code against fire and
other hazards for the full replacement cost of the improvements or
structures, shall include limited building code upgrade as described
in Section 10103 of the Insurance Code, and shall be placed with a
company or companies as the department may determine from time to
time.
   The department may charge purchasers a premium to cover the cost
to the department for insurance obtained pursuant to this
subdivision.  The premium shall not exceed the actual cost to the
department for the coverage provided.
   (b) The contract made between the department and the purchaser
shall provide that the purchaser maintain the farm or home as his or
her place of residence and keep in good order and repair all
buildings, fences, and other permanent improvements situated thereon.
  Insurance policies purchased by the department shall be obtained to
insure and keep insured against fire and other hazards, all
buildings, fences, and other permanent improvements on the property.
All policies shall be written with any loss payable to the
department and the purchaser as their interests may appear.
Insurance shall be in the amount, with the insurance companies, and
under the terms and conditions as may be specified by the department.

   (c) Upon renewal, the department shall assist the purchaser in
determining the insurance level necessary to repair or replace the
damaged or destroyed dwelling with like or equivalent construction
and in determining how best to purchase additional coverage, if
desired.  The purchaser shall be solely responsible for requesting in
writing and maintaining any additional amounts of insurance
necessary to protect his or her interest in the property, and shall
bear the risk of any loss in excess of the amount of insurance in
force at the time of the loss.
   (d) The department shall annually send a disclosure notice to all
purchasers who have residential property insurance provided through
the department.  The notice shall identify the type of coverage, and
shall disclose all of the following in a clear and reasonable manner:

   (1) The limits of liability for the structure and improvements.
   (2) The amount of any deductibles.
   (3) Whether the policy covers the increased costs due to changes
in building ordinances or laws regulating construction or repair.
   (4) A statement explaining the importance of having guaranteed
replacement cost coverage.
   (5) A statement that the policy provided by the department
provides limited building code upgrade coverage and the applicable
limits and restrictions to that coverage.



987.75.  If the purchaser fails or neglects to pay, satisfy, and
discharge at maturity all taxes and assessments, and all other
charges and encumbrances which are a lien upon the property being
purchased from the department, or any part thereof, and also all
taxes and assessments levied or assessed upon the interest created by
the contract of purchase of such property; or to keep the buildings,
fences, other permanent improvements upon such property insured and
in good order and repair, or to keep the crops upon such property
insured; or to keep in good order and repair all buildings, fences,
and other permanent improvements situated upon such property; then,
in such event, the department may pay, satisfy, discharge, settle, or
compromise the taxes, assessments, charges, or encumbrances, or
insure the buildings, fences, permanent improvements, or crops, or do
the work and supply the materials necessary to keep the buildings,
fences, and other improvements in good order and repair.  All moneys
so expended by the department shall be added to the selling price of
the property and bear interest at the rate of interest designated in
Section 987.71 from the date of expending the same, and shall be
repaid by the purchaser to the department on demand.  The department
may amortize the repayment of such expenditures or permit repayment
in installments upon the terms and conditions which it deems proper.



987.76.  Notwithstanding Section 6157 of the Government Code, the
department shall be the sole judge of all of the following:
   (a) The legality or validity of taxes, assessments, charges,
insurance premiums, guaranty fees, or encumbrances, and the amount
necessary to be paid in satisfaction or discharge thereof.
   (b) The amount of insurance to be placed upon the buildings,
fences, other permanent improvements, and crops and the amount
necessary to be paid for the premiums for that insurance.
   (c) The necessity and nature of the work required to keep the
buildings, fences, and other improvements in good order and repair,
and the amount to be paid therefor.
   (d) The amount of loan insurance or guaranty to be placed upon the
veteran's liability for repayment of the veteran's contract and the
amount necessary to be paid by the veteran or the department for the
premiums or fees for that insurance or guaranty.



987.77.  In the event of a failure of a purchaser to comply with any
of the terms of his contract of purchase, the department may cancel
such contract, and thereupon be released from all obligations, at law
or in equity, to convey the property, and the purchaser shall
forfeit all right thereto.  All payments theretofore made shall be
deemed to be rental paid for occupancy.  Upon such forfeiture, the
department shall take possession of the property covered by such
contract, and shall remove all persons and personal property
therefrom without any liability whatsoever on the part of the
department or of any official or employee thereof for any damage or
injury caused by or incident to the entry or removal.  The failure of
the department to exercise any option to cancel or to exercise any
other privilege under such contract for any default shall not
constitute a waiver of the right to exercise such option or privilege
for any other default on the part of the purchaser.



987.775.  Whenever the department proceeds under Section 987.77 to
declare a forfeiture and to retain all payments made under the
forfeited contract as rental paid for occupancy, the department may,
in lieu of paying any net gain to the purchaser in accordance with
Section 987.79, deposit that net gain into a segregated account in
the Veterans' Farm and Home Building Fund of 1943 created to receive
funds pursuant to this section.  The funds in the account shall be
accumulated until June 30 of each year, and any losses on the sales
of forfeited properties during the fiscal year shall be deducted from
the total of the net gains deposited in the account during the
fiscal year.  The department may expend the funds remaining in the
account on June 30 each year, after deduction for losses on sales of
forfeited properties, for purposes of assistance to lower income
purchasers pursuant to subdivision (c), (e), or (h) of Section
987.71.


987.78.  (a) In the event of a forfeiture of a contract of purchase
under this article, the department may sell or otherwise dispose of
the property covered by the forfeited contract to any person and upon
any terms and conditions as it determines to be proper, under the
conditions set forth in this section.
   (b) The department shall give first preference to a veteran who
qualifies under this article and who served during a time of war,
second preference to any other person serving in or honorably
discharged from the armed forces of the United States, third
preference to any person who is a first-time home buyer, and fourth
preference to any other person.
   (c) Where the department elects in the event of a forfeiture to
sell or otherwise dispose of an assignment of an Indian veteran's
beneficial interest or of a leasehold interest in allotment trust
land, the department shall first offer it for sale to the person or
persons for whom the land is held in trust, including an Indian
veteran having a beneficial interest in the trust land on which the
forfeiture occurred, at a price equal to the unpaid balance of the
contract price.  If none of the persons for whom the land is held in
trust accepts the offer, the department shall next offer it to the
United States Secretary of the Interior at the same price.
   (d) Where the department elects in the event of forfeiture to sell
or otherwise dispose of a leasehold interest in tribal trust land,
the department shall first offer it for sale to the tribe for whom
the land is held in trust at a price equal to the unpaid balance of
the contract price.  If the tribe fails to accept the offer, the
department shall next offer it to the United States Secretary of the
Interior at the same price.
   (e) Where all the parties to whom the department is required to
offer the property under subdivision (c) or (d) fail to accept the
offer, the department may sell or otherwise dispose of the property
covered by the forfeited contract as provided by subdivision (a) and,
in so doing, the department shall give first preference to any good
faith offer by a person approved by the tribal council of the
reservation, rancheria, or land held under the jurisdiction of that
particular tribal governing body on which the allotment land is
sited.
   (f) If the property is subject to a participation contract, the
department may, at its option, pay the balance due upon the
participation contract, including accrued interest, without penalty.

   (g) Nothing in this section invalidates a transfer to, or affects
the interest of, a good faith purchaser for value without notice of
any failure of the department to comply with any requirement of this
section in the disposition of any property subject to a forfeited
contract.


987.785.  Whenever the department cancels a contract and takes
possession of a property pursuant to Section 987.77 and elects to
sell the property covered by a forfeited contract, the department
may, at its option, establish a procedure for listing the property
for sale, together with similarly located properties, with a licensed
real estate broker.  The department may, in this connection, prepare
schedules of properties available for sale by geographic areas and
may offer a schedule from time to time to any licensed real estate
broker within the geographic area covered by the schedule for a fee
which shall be sufficient to cover the costs to the department in
compiling the schedules and making them available.  If the department
enters into a real estate listing agreement, exclusive or otherwise,
with a licensed real estate broker, the department shall cooperate
with the broker in all customary respects and make the property
available at reasonable times for inspections by prospective
purchasers.


987.79.  The department may, in the contract of purchase with a
veteran, provide that, in the event of default by the veteran and
forfeiture of his or her rights under the contract and subsequent
sale of the property by the department, it may pay to the veteran any
net gain realized by the department upon the sale.  The department
is the sole judge of the net gain.



987.80.  (a) The department may insure and keep insured against fire
or other hazards all buildings, fences, other permanent
improvements, or crops situated upon any property which has reverted
to and is under the control of the department, or may do the work and
supply the materials necessary to keep the buildings, fences, and
other improvements situated upon the property in good order and
repair.  The department may lease or let the property, in whole or in
part, upon any terms that the department determines to be proper.
In the case of a farm, the department may cultivate the farm or
harvest the crop.
   (b) Whenever the department determines to lease or let any
reverted property pursuant to subdivision (a), the department may
give first priority to public or private organizations serving
homeless veterans if the property is zoned for that use and all state
and local building permit and use conditions are met.  The
department may give second priority to a public housing authority
organized pursuant to the Housing Authorities Law (Chapter 1
(commencing with Section 34200) of Part 2 of Division 24 of the
Health and Safety Code) for leasing or letting to persons of low
income, as defined in Section 34213 of the Health and Safety Code.



987.81.  If illness or accident prevents a purchaser of a farm from
cultivating his farm or harvesting any crop, the department may enter
and cultivate the farm or harvest the crop.  In such event the
department has a first lien upon the crop for all moneys expended and
may sell the harvested crop.  Out of the proceeds of the sale the
department may reimburse itself for any expense which it has incurred
in the cultivation of the farm, the harvesting of crops and the sale
thereof, and retain any moneys due to the department from the
purchaser.  Any balance shall be paid by the department to the
purchaser.


987.82.  When a purchaser dies, indebted to the department under
contract of purchase, his rights acquired under this article and such
contract shall devolve upon his heirs, devisees, or personal
representatives, but subject to all rights, claims, and charges of
the department.  Default on the part of an heir, devisee, or personal
representative, with respect to any right, claim, or charge of the
department shall have the same effect as would default on the part of
the purchaser but for his death.



987.83.  For the purposes of carrying out the Veterans' Farm and
Home Purchase Act of 1974 the Director of Finance may by executive
order authorize the withdrawal from the General Fund of an amount or
amounts not to exceed the amount of the unsold bonds which have been
authorized to be sold for the purpose of carrying out this article,
and the amount necessary to carry out this section is hereby
appropriated without regard to fiscal years.  Any amounts withdrawn
shall be deposited in the Veterans' Farm and Home Building Fund of
1974.  Any moneys made available under this section to the department
shall be returned to the General Fund in such amounts as may be
received by the department from the sale of bonds sold for the
purpose of carrying out this article, together with interest at the
rate of interest fixed in the bonds so sold.



987.84.  The right to declare a forfeiture for breach of a condition
contained in any deed to real property may not be enforced as
against the interest of the  department in said real property or any
portion thereof.


987.85.  The department shall not acquire a home in which the
veteran has an interest of record except in the following instances:

   (a) Where the application is for aid for the construction of a
home upon real property owned by the applicant and the improvements
to be constructed thereon have not reached completion as evidenced by
the issuance of a certificate of occupancy.
   (b) Where the veteran had no interest of record in the property at
the time of filing his or her application and thereafter secured
interim financing pending the processing and approval of the
application by the department.
   (c) Where the application is for the purchase of a mobilehome to
be situated upon real property, or an undivided interest therein,
owned by the applicant.
   (d) Where the applicant is an Indian veteran and the application
is for the construction of a dwelling house or other improvements on,
or for the purchase of  a mobilehome to be sited on, trust land in
which the Indian veteran has a beneficial interest or owns an
interest of record.
   (e) Where the application is for assistance to enable the veteran
to purchase his or her space, or share in a mobilehome park, which is
converted from a rental park to a nonprofit corporate resident-owned
park or subdivision, cooperative, or condominium for mobilehomes, in
which the veteran resides in his or her mobilehome.  A veteran
applying for assistance under this subdivision shall not be required
to have his or her mobilehome reinstalled on a permanent foundation
system as a condition of receiving the proceeds of the loan to
purchase his or her space or share of the park.  This subdivision
shall be implemented by the department only to the extent that
expenditures for the kind of financial assistance to veterans
enumerated herein conform to the requirements of federal tax law with
regard to the tax-exempt status of funding instruments utilized to
provide the assistance.



987.86.  (a) Any veteran for whom a farm or home is purchased under
this article may be granted a subsequent opportunity to purchase
another farm or home when the farm or home purchased under this
article is sold, refinanced, or the veteran's interest is divested
through divorce or dissolution of marriage.  The maximum amount that
the department may advance under this subdivision is limited to the
maximum amounts set forth in Section 987.65 at the time the
application is made for the subsequent loan.
   (b) Only one farm or home purchased under this article shall be
owned by a veteran or a veteran and the veteran's spouse at any one
time.  This subdivision does not apply to an interest of a former
spouse.


987.87.  (a) The department shall establish the actual interest rate
to be paid.  To this end, the department, within 60 days of receipt
of the survey of the financial condition of the Division of Farm and
Home Purchases required at the close of each fiscal year conducted by
an independent public accounting firm of recognized standing as
provided under various veterans bond acts, shall report to the
California Veterans Board and the Veterans' Finance Committee of
1943, regarding the recommended uniform rate of interest payable upon
the amount remaining unpaid under any veteran's purchase contract
executed on or after September 26, 1974.  The department shall make
its finding as to the rate of interest to be charged, determined by a
floating rate based upon the actual cost of general obligation bond
and revenue bond sales, plus a certain percent for administrative
costs, taking into consideration the current value of money, the
solvency of the Veterans' Farm and Home Building Fund of 1943, and
the interest paid on any participation contracts to which the
interest of the department may be subject.  Upon approval by the
board and the committee, the department may raise or lower the
effective rate of interest payable under these contracts annually as
it deems to be for the best interests of the department, as well as
the contractholders, if in so doing this action is made applicable
alike to any and all of these contracts.  The interest rate shall not
be raised so that the effective date of a higher rate of interest
occurs more than once in any calendar year, unless the board and
committee, by a two-thirds vote of the members of each, make a
finding that an additional increase in the interest rate is necessary
to enable the department to maintain the financial solvency of the
fund or to meet its obligations to bondholders or purchasers.  At
least 90 days' advance written notice to the contractholders shall be
given before any increase in the interest rate becomes effective.
   (b) The total amount of any installment payment shall be raised or
lowered to reflect any change in the effective rate of interest.
The department may, however, adjust or postpone any installment
payment for good cause pursuant to Section 987.71 and, for these
purposes, good cause shall include a consideration of whether an
increased installment payment would be excessively burdensome in
light of a purchaser's financial circumstances.  The department shall
include notice of this provision in the 90 days' advance notice
required under subdivision (a).
   (c) Notwithstanding subdivision (a) and Section 987.875, the
department may establish separate rates of interest payable on the
amounts remaining unpaid under veterans' purchase contracts for any
and all contractholders who are called to active duty in the military
service of the United States, and who qualify for relief under the
provisions of the federal Soldier's and Sailor's Civil Relief Act of
1940, as amended.  The rates need not be uniform for all who qualify,
but shall not be greater than the rate provided for in that act.
Rates shall be established at the discretion of the department, and
may apply to any contract from the date of entry into active duty to,
and including, 90 days after the date of release from active duty.



987.875.  Notwithstanding Section 987.87 or any other provision of
law, the department shall report to the California Veterans Board and
the Veterans' Finance Committee of 1943, regarding the recommended
rate of interest payable upon the amount remaining unpaid under any
veteran's purchase contract executed on or after January 1, 1999.
The department, from time to time, shall establish and may modify,
subject to the approval of the board and the committee, the actual
rates to be paid, which may be fixed interest rates or variable
interest rates, or the methodology and timing for determining or
modifying the actual interest rates to be paid, which methodology may
produce fixed interest rates or variable interest rates on purchase
contracts executed on or after January 1, 1999.  The interest rates
need not be uniform for all the purchase contracts.  The interest
rates shall be determined by the department in accordance with
guidelines established by the board and the committee.



987.88.  (a) In the event the department enters into a master
agreement with one or more insurance companies to provide life or
disability insurance coverage for the purchasers of farms and homes
from the department, the master agreement shall provide that the life
insurance will be offered to purchasers who are disabled solely as a
result of their qualifying military service and to nondisabled
purchasers on an equal basis and that no purchaser shall be denied
coverage solely because that purchaser has a qualifying military
service-connected disability at the time of application.
Notwithstanding Part 2 (commencing with Section 10110) of Division 2
of the Insurance Code, the life or disability insurance shall be a
form of group life or group disability insurance.
   (b) The master agreement shall provide for maintenance of those
reserves as the department, after consultation with the Insurance
Commissioner, deems appropriate and prudent, and the department may
use from time to time any accumulated surplus in those reserves, or
any refunds or returns therefrom upon termination of the agreement,
for the purposes of this article or of any veterans general
obligation or revenue bond act.  Any and all acts of the department
in maintaining and using the reserves consistent with this
subdivision are hereby ratified and confirmed, it having at all times
been the intent of the Legislature that reserves be maintained and
that any surpluses therein or refunds or returns therefrom be used by
the department for the purposes stated in this subdivision.
   (c) Notwithstanding subdivision (b), on and after January 1, 1987,
any reserves maintained under the master agreement shall not exceed
a level greater than 20 percent in excess of actuarial requirements
plus a reasonable contingency reserve, as determined annually by the
department, and the department may contract with one or more
independent actuaries or actuarial firms to assist the department in
the annual determination.
   (d) Any departmental proposal to enter into, revise, amend, renew,
extend, or cancel, any agreement described in this section shall be
a policy change subject to subdivisions (b), (c), and (d) of Section
84.


987.881.  The insurance company or companies may provide life and
disability insurance pursuant to Section 987.88 by one or more
separate accounts.


987.89.  The action of a veteran purchaser for damages against any
third party does not affect his right of action for all damages
against any party other than the department.  If the department
indemnifies, or becomes obligated to indemnify, the veteran
purchaser, it may likewise bring an action against any such third
party responsible for damage to the contract property.  In the latter
event, the department may recover in the same suit all payments made
on behalf of the veteran purchaser.
   If either the veteran purchaser or the department brings an action
against such third party, the veteran purchaser or the department,
as the case may be, shall forthwith give to the other written notice
of the action and of the name of the court in which the action is
brought, by personal service or registered mail.  Proof of such
service shall be filed in such action.  If the action is brought by
either the veteran purchaser or the department, the other may, at any
time before trial on the facts, join as party plaintiff, or shall
consolidate the action if brought independently.
   The court shall first apply, out of the entire amount of any
judgment for any damage recovered by the veteran purchaser, a
sufficient amount to reimburse the department for the amount of its
expenditures for indemnification.  If the department has not joined
in the action or has not brought action, or if the action has not
been consolidated, the court, on the department's application, shall
allow as a first lien against the entire amount of any judgment for
any damages recovered by the veteran purchaser, the amount of the
department's expenditures for indemnification.



987.90.  For the purposes of carrying out the provisions of the
Veterans' Farm and Home Purchase Act of 1974, there is hereby
appropriated, and the department is hereby authorized to utilize the
proceeds derived from the Veterans Bond Act of 1974, and from all
veterans bond acts subsequent thereto, and to combine such funds up
to a percent to be established by the Veterans Finance Committee and
reported to the Legislature annually, with funds derived from
participation contracts.



987.91.  Pursuant to the provisions of Section 987.90, the
Department of Veterans Affairs is authorized to issue to lenders or
investors supplying funds for the program a participation contract.



987.92.  Notwithstanding other provisions of this article relating
to maximum sums to be expended by the department and maximum purchase
price, the department may acquire or construct a home equipped with
solar energy heating devices at a purchase price not in excess of
five thousand dollars (,000) over the maximum amounts specified in
Sections 987.60, 987.61, and 987.65.  Solar energy heating devices
for swimming pools, hot tubs, saunas, and spas shall not qualify for
any expenditure pursuant to this section except in the case of
veterans who were wounded or disabled as a result of their service
and who provide medical evidence satisfactory to the department that
a heated swimming pool, hot tub, sauna, or spa, is therapeutically
necessary.