2009 California Civil Code - Section 1917.120 :: Article 2. Definitions

CIVIL CODE
SECTION 1917.120

1917.120.  For purposes of this chapter:
   (a) "Borrower" means the recipient or recipients of a shared
appreciation loan and includes any successor in interest to the
borrower under a shared appreciation loan, to the extent such
succession is permitted by law or by the terms of the shared
appreciation loan.
   (b) "Borrower's cost of the property" means the price paid by the
borrower for the purchase of the property to be financed with a
shared appreciation loan and also includes documentary transfer
taxes, escrow and recording fees, title insurance premiums, and any
other fees directly paid by the borrower as a necessary or customary
cost of consummating acquisition of the property. However, if the
purchase price to be paid for the property does not reasonably
reflect the true value of the property, the borrower may request
that, in lieu of the actual price paid, the "borrower's cost of the
property" be established at an amount mutually agreed by the lender
and borrower or be established by averaging two appraisals in the
same manner as specified in Section 1917.142 for determination of
fair market value. Nothing in this subdivision shall be construed to
require a lender to make shared appreciation loans with the borrower'
s cost of the property established on the basis of appraisals.
   (c) "Contingent deferred interest" means the lender's share of net
appreciated value, calculated as the sum resulting upon multiplying
the net appreciated value by a percentage agreed by the lender and
borrower, not to exceed 50 percent.
   (d) "Fair market value" means the highest price on the date of
valuation that would be agreed to by a seller, being willing to sell
but under no particular or urgent necessity for so doing, nor obliged
to sell, and a buyer, being ready, willing, and able to buy but
under no particular necessity for so doing, each dealing with the
other with full knowledge of all the uses and purposes for which the
property is reasonably adaptable and available.
   Fair market value shall be determined pursuant to Article 4
(commencing with Section 1917.140).
   (e) "Lender" means any person who makes a shared appreciation loan
or the successor in interest to any such person.
   (f) "Net appreciated value" means the fair market value less the
sum of the borrower's cost of the property and the value of capital
improvements. Nothing in this chapter shall, however, preclude a
shared appreciation loan from additionally including a provision
requiring deduction of any or all of the borrower's costs of selling
the property from fair market value in determining, "net appreciated
value," and if such a provision is included, the disclosures required
by Section 1917.171 shall be modified accordingly.
   (g) "Prevailing rate" means the weighted average yield accepted by
the Federal National Mortgage Association in its most recent free
market system auction for four-month conventional mortgage
commitments. In the event that the Federal National Mortgage
Association discontinues or substantially alters its free market
system auction for conventional mortgages then the "prevailing rate"
shall be the average yield established at the most recent immediate
delivery auction of the Federal Home Loan Mortgage Corporation, or if
the auction has been discontinued, then the "prevailing rate" shall
be specified in the shared appreciation loan as either (1) the most
recently published Federal Home Loan Bank Board mortgage contract
rate or (2) the average single-family home mortgage rate for the 10
largest savings and loan associations with principal offices in this
state.
   (h) "Property" means the property financed by the shared
appreciation loan.
   (i) "Sale" means any transfer of title to the property and
additionally includes the execution of an installment sale contract
giving the purchaser a right to possess the property before transfer
of title, refinancing, judicial sale on execution or other legal
process of foreclosure or trustee's sale (regardless of whether
initiated by the lender), but "sale" does not include a transfer
specified in Section 2924.6.
   (j) "Shared appreciation loan" means any loan made pursuant to
this chapter upon the security of owner-occupied real property of a
type specified in Section 1917.130, and in connection with which the
lender has a right to receive a share of the appreciation in the
value of the security property. "Shared appreciation loan" includes a
deed of trust and any evidence of debt issued in connection with the
loan.
   (k) "Value of capital improvements" means the amount of the credit
or credits for capital improvements, if any, determined pursuant to
Article 5 (commencing with Section 1917.150).

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