2010 California Code
Civil Code
Article 7. Notices And Disclosures

1917.170.  (a) The disclosures made pursuant to this chapter, as
required, shall be the only disclosures required to be made pursuant
to state law for shared appreciation loans, notwithstanding any
contrary provision applicable to loans not made under this chapter,
except those, if any, that may be required by reason of the
application of Division 1 (commencing with Section 25000) of the
Corporations Code, or Chapter 1 (commencing with Section 11000) of
Part 2 of Division 4 of the Business and Professions Code. However, a
lender shall not be precluded from supplementing the disclosures
required by this chapter with additional disclosures that are not
inconsistent with the disclosures required by this chapter.
   (b) Whenever specific language is prescribed by this chapter,
substantially the same language shall be utilized if possible, but
reasonably equivalent language may be used to the extent necessary or
appropriate to achieve a clearer or more accurate disclosure.




1917.171.  (a) Each lender offering shared appreciation loans shall
furnish to a prospective borrower, on the earlier of the dates on
which the lender first provides written information concerning shared
appreciation loans from the lender or provides a loan application
form to the prospective borrower, a written disclosure as provided in
this section.
   (b) The disclosure shall be entitled "INFORMATION ABOUT THE (Name
of Lender) SHARED APPRECIATION LOAN," and shall describe the
operation and effect of the shared appreciation loan including a
brief summary of its terms and conditions, together with a statement
consisting of substantially the following language, to the extent
applicable to such loan:

          INFORMATION ABOUT THE (Name of Lender) SHARED APPRECIATION
LOAN

   (Name of Lender) is pleased to offer you the opportunity to
finance your home through a shared appreciation loan.
   Because the shared appreciation loan differs from the usual
mortgage loan, the law requires that you have a detailed explanation
of the special features of the loan before you apply. Before you sign
your particular shared appreciation loan documents, you will receive
more information about your particular shared appreciation loan,
which you should read and understand before you sign the loan
documents.
   The loan will bear a stated rate of interest which will be
(percent) below the prevailing market interest rate. In exchange for
a stated interest rate which is below the prevailing rate, you will
be obligated to pay us additional interest later. This additional
interest is called "contingent interest."
   The loan will require a balloon payment at the end of the _____
year. Thus, if you do not sell the property before that time, you
will need to refinance the loan at that time.

                                Contingent Interest

   This loan provides that you, as borrower, must pay to us, as
lender, as contingent interest, (percent) of the net appreciated
value of the real property which secures the loan. This contingent
interest is due and payable when the property is sold or transferred,
when the loan is paid in full, upon any acceleration of the loan
upon default, or at the end of the term of the loan, whichever first
occurs. The dollar amount of contingent interest, if any, which you
will be required to pay cannot be determined at this time. If the
property does not appreciate, you will owe us nothing. The contingent
interest will not become due if title to the property is transferred
on your death to a spouse, or where a transfer results from a decree
of dissolution of a marriage and a spouse becomes the sole owner.
   Your obligation to pay contingent interest will reduce the amount
of the appreciation, if any, that you will realize on the property.
This appreciation will not produce a real gain in your equity in the
property, unless the appreciation rate exceeds the general inflation
rate, but you will be required to pay a portion of the appreciation
as contingent interest without regard to whether the appreciation has
resulted in a real gain.
   When you sell or refinance your home, you normally will receive
enough cash to pay the shared appreciation loan balance, accrued
interest, prepayment charge (if applicable), contingent interest, and
expenses of sale. However, if you sell with only a small
downpayment, you may possibly not receive enough cash to pay the
contingent interest, and, in that event, it will be necessary for you
to provide cash from other funds.

                        Calculating the Contingent Interest

   Contingent interest will be calculated as follows:
FAIR MARKET VALUE OF THE PROPERTY (Sale
price or appraised value.
- (less) BORROWER'S COST OF THE PROPERTY (This amount
includes certain costs paid by you incident to
the purchase.
- (less) VALUE OF CAPITAL IMPROVEMENTS MADE BY YOU
(Must exceed $2,500 in value. Must also exceed
$2,500 in cost unless you perform more than 50%
of the value of the labor or work on the
improvement.
_______________________________________________
= (equals) NET APPRECIATED VALUE
x (times) ______ PERCENT OWED TO LENDER
= (equals) TOTAL CONTINGENT INTEREST


                           Determining Fair Market Value

   If you sell your property for cash before maturity of your shared
appreciation loan, the gross sale price will be the fair market value
of the property, unless appraisals are requested by us and the
appraisals average more than the gross sale price. However, at your
request, we also will tell you what we consider to be the fair market
value of the property. If you sell for cash for a gross sale price
that equals or exceeds that amount, the gross sale price will control
and appraisals will not be needed.
   Fair market value is determined by appraisals in the event of
sales involving a consideration other than cash, prepayment of the
loan in full, or maturity of the loan.
   When appraisals are required, fair market value is determined by
averaging two independent appraisals of the property. You may select
one of the two appraisers from a list approved by the Federal
National Mortgage Association. If appraisals are requested by us, we
will provide you with full information on how to select an appraiser.
   In lieu of appraisals, we may establish fair market value at an
agreed amount if an agreement can be reached between you and us.

                     Determining Value of Capital Improvements

   Capital improvements with a value exceeding $2,500 (but no
maintenance or repair costs) may be added to your cost of the
property for the purpose of determining the net appreciated value,
but only if the procedures set forth in the shared appreciation loan
documents are followed. It is important to note that capital
improvements completed and claimed in any 12-month period must add
more than $2,500 in value to the property and must generally also
cost more than $2,500. However, if you have performed at least half
the value of the labor or other work involved, then the cost of the
improvements will not be considered. The appraised value of the
improvements will be the increase in the value of the property
resulting from the improvements. You will receive no credit for minor
or major repairs or for improvements that are not appraised at more
than $2,500, but the lender will acquire a share of any resulting
appreciation in the value of the property.

                         Determining Net Appreciated Value

   We are entitled to receive __ percent of the net appreciated value
of the property as contingent interest. As shown in the chart above,
net appreciated value equals (1) the fair market value of the
property at the time of the sale or appraisal, less (2) your cost of
the property, less (3) the value of any capital improvements for
which you are entitled to credit.

                            Balloon Payment of Principal

   If you do not sell the property before the end of the term of this
loan, you will need to refinance this loan at that time. The term of
this loan is (duration) years. We Ýare not obligated to refinance
either the unpaid balance of the loan or the contingent interest at
that time; you alone will be responsible for obtaining refinancing] Ý
will offer or arrange with another lender to refinance the
outstanding obligation, including any contingent interest, at that
time]. If you refinance this loan, your monthly payments may increase
substantially if the property appreciates significantly or if the
interest rate on the refinancing loan is much higher than today's
prevailing rates. In general, the more your property appreciates, the
larger will be the amount of the contingent interest that you will
have an obligation to pay or refinance.

                         Your Right to Refinance This Loan
(For loans with a refinancing obligation)

   If the property is not sold or transferred prior to the maturity
of the loan, we will offer or arrange with another lender to
refinance the outstanding obligation of the loan, including any
contingent interest. The refinancing will be at the then prevailing
interest rate.
   The terms of the refinancing loan will be like those of home loans
offered at that time by banks or savings and loan associations. If
at the time of refinancing, banks or savings and loan associations in
this state offer loans of sufficient duration, you are assured that
the combined length of your shared appreciation loan and refinancing
loan will be at least 30 years. However, if loans of sufficient
duration are not then offered by banks or savings and loan
associations, you may elect any type and maturity of loan then
offered by banks or savings and loan associations.
   We will not be permitted to look to the forecast of your income in
offering or arranging for your refinancing loan. The interest rate
and specific terms of any refinancing loan will be subject to
then-prevailing market conditions. The interest rate and monthly
payment upon refinancing cannot be determined at this time. They may
be either more or less burdensome to you than the currently
prevailing rates and terms.

                                  Tax Consequences
(For all loans)

   USE OF THE SHARED APPRECIATION LOAN WILL HAVE INCOME TAX OR ESTATE
PLANNING CONSEQUENCES WHICH WILL DEPEND UPON YOUR OWN FINANCIAL AND
TAX SITUATION. FOR FURTHER INFORMATION, YOU ARE URGED TO CONSULT YOUR
OWN ACCOUNTANT, ATTORNEY, OR OTHER FINANCIAL ADVISOR.
   THE QUESTIONS YOU SHOULD DISCUSS INCLUDE THE TAX DEDUCTIBILITY OF
THE CONTINGENT INTEREST PAYMENT, YOUR RIGHT TO UTILIZE THAT DEDUCTION
IN YEARS OTHER THAN THE YEAR IT IS PAID, AND THE EFFECT OF THE LOSS
OF TAX BENEFITS BEFORE THAT TIME.

                            Other Important Information

   (Here insert additional description, if necessary, of the
operation and effect of the shared appreciation loan.
   The foregoing describes our shared appreciation loan, includes a
summary of all of its important provisions, and informs you of some
of the risks of a shared appreciation loan.
   If your loan application is accepted by us, we will provide you
with more information about your particular shared appreciation loan,
which will include a comparison with conventional mortgages, an
illustration of the possible increase in your monthly payments upon
refinancing, and other important information.
   Before you enter into a shared appreciation loan with us, we
recommend that you and your attorney or tax accountant review the
loan documents for the full text of all of the terms and conditions
which will govern the loan.



1917.172.  (a) Each lender making a shared appreciation loan shall
also furnish to the prospective borrower, prior to the consummation
of the loan, the disclosures required by Subpart C of Federal Reserve
Board Regulation Z (12 CFR Part 226), including 12 CFR Section
226.18(f), to the extent applicable to the transaction.
   (b) The disclosure made pursuant to subdivision (a) and Regulation
Z shall be based on the fixed interest rate of the shared
appreciation loan, and shall include a description of the shared
appreciation feature, including (1) the conditions for its
imposition, the time at which it would be collected, and the
limitations on the lender's share, as required by the Federal Reserve
Board in the information published by the board in 46 Federal
Register 20877-78 (April 7, 1981), and (2) the lender's share of the
net appreciated value and the prevailing interest rate as defined in
Section 1917.120 of the Civil Code.
   (c) The disclosure made pursuant to subdivision (a) and Regulation
Z shall be accompanied by (1) one or more transaction-specific
examples of the operation and effect of the shared appreciation loan
and (2) the following charts comparing the shared appreciation loan
and a conventional loan made at the prevailing interest rate, and
illustrating the possible increase in the monthly payments, and the
possible annual percentage rate of finance charge, on the assumptions
therein stated:
Chart 1
_______________________________________________________
' CONVENTIONAL MORTGAGE AT __% '
'_____________________________________________________'
' If the same loan balance were financed under a '
' conventional, 30-year, fixed-rate, level-payment '
' mortgage, your monthly payments would be: '
'_____________________________________________________'
' Years 1-30 '
'_____________________________________________________'
' $______/mo. '
'_____________________________________________________'

Chart 2
_______________________________________________________
' IF YOU REFINANCE THIS TRANSACTION AT __% '
'_______________________________________________________'
' If your property appreciates at 10% per year, and if '
' your loan balance (including contingent interest '
' due) at the end of __ years is refinanced at __% (the '
' prevailing market interest rate now), your monthly '
' payments will be: '
'_______________________________________________________'
' Years 1-__ Refinancing loan '
'_______________________________________________________'
' $____/mo. $____/mo.* '
'_______________________________________________________'
* Refinancing loan, assuming a conventional, 30-year,
fixed-rate, level-payment mortgage. Other mortgage
instruments, e.g., graduated-payment or
shared-appreciation, if available, may result in lower
payments.

Chart 3
________________________________________________________
' APR IF PROPERTY APPRECIATES AT 10% '
'________________________________________________________'
' '
' If your property appreciates at 10% per year, the '
' total finance charge on your shared appreciation '
' loan (including contingent interest) will equal '
' $____, and the annual percentage rate of the total '
' finance charge (including contingent interest) will '
' equal ____%. '
'________________________________________________________'

   (d) The disclosures required by subdivision (c) shall be separate
from the disclosures required by Regulation Z, and may be presented
in the document containing the disclosures required by Regulation Z
or in one or more separate documents.
   (e) Except to the extent that this section requires disclosure of
additional information not required by Regulation Z, compliance with
the applicable credit disclosure requirements of Regulation Z shall
constitute compliance with the requirements of this section.
   (f) The disclosure prescribed in Section 1917.171 shall be
physically attached to the disclosures required by this section and
Regulation Z at the time the Regulation Z disclosures are furnished
to the borrower.
   (g) In the event federal law is amended so that this section is
inconsistent therewith, the federal law shall prevail as to the
disclosures required by this section.



1917.173.  Each lender making a shared appreciation loan shall
additionally furnish to the prospective borrower, prior to
consummation of the loan, a statement containing the following
information:

             IMPORTANT INFORMATION ABOUT YOUR SHARED APPRECIATION
LOAN

   You are being offered a shared appreciation loan. Before you
decide to accept this loan, read this statement, which is designed to
provide important information you should consider.
   1. Prevailing interest rate: __%.
   2. Interest rate on this loan: __%.
   3. Lender's share of net appreciated value: __%.
   4. Amount of this loan: $__.
   5. Amount of the monthly payments: $__.
   6. Term of this loan: __ years.
   7. Amortization period on which payments are calculated: __ years.
   8. Prepayment charge (if any): __.




1917.174.  Each deed of trust and evidence of debt executed in
connection with a shared appreciation loan shall contain a statement,
printed or written in a size equal to at least 12-point bold type,
consisting of substantially the following language: "THIS IS A Ý
DURATION] SHARED APPRECIATION LOAN. THE LENDER'S INTEREST INCLUDES Ý
PERCENT] OF THE NET APPRECIATED VALUE OF THE PROPERTY. A BALLOON
PAYMENT OF PRINCIPAL WILL BE REQUIRED. FOR FURTHER INFORMATION, READ
THE FLYER ENTITLED " INFORMATION ABOUT THE ÝNAME OF LENDER] SHARED
APPRECIATION LOAN. "' The notice required by this section shall be
completed to state the terms of the shared appreciation loan and the
lender's share of the net appreciated value.



1917.175.  Where, pursuant to any provision of law, the lender is
required to disclose the amount of interest due or to be due under a
shared appreciation loan and the amount of contingent deferred
interest due or to be due is not known, the lender may disclose that
fact and specify in the disclosure the method for calculating
contingent deferred interest.