SECTIONS 1917.050 - California Statutes

CIVIL CODE

SECTION 1917.050

1917.050. The borrower may have the cost of capital improvements to
the security property completed within any 12-month period, and with
an appraised value in excess of two thousand five hundred dollars
($2,500), added to the borrower's cost of the property, for purposes
of determining the contingent deferred interest, but only if the
procedures set forth in this article are followed.
(a) Within 60 days following the completion of the improvements,
the borrower shall send by first-class mail a notice of the
completion of the improvements to the lender and shall submit proof
of cost of the improvements.
(b) Within 90 days following the completion of the improvements,
the lender shall select an appraiser to perform an appraisal to
determine the increase in value of the property, if any, by reason of
the improvements. A copy of the appraisal shall be sent by
first-class mail to the borrower, together with a notice informing
the borrower that the appraisal will constitute a final and
conclusive determination of the increase in the value of the property
by reason of the improvement for purposes of computing the net
appreciated value of the property, and that if the borrower disputes
the amount of the appraisal, the borrower may procure an independent
appraisal as provided in subdivision (c). The lender may require the
borrower to pay for the cost of the appraisal.
(c) If the borrower disputes the amount of the appraisal, the
borrower, within 120 days of the completion of the improvements, may
secure at borrower's expense, a qualified, independent appraiser to
perform an appraisal to determine the increase in value of the
property, if any, by reason of the improvements, and a copy of the
appraisal shall be sent by first-class mail to the lender within that
period of time.
(d) If the appraisal of the appraiser selected by the borrower is
greater in amount than the appraisal by the appraiser selected by the
lender, the amount of the appraisal, for the purposes of this
section, shall be one-half of the sum of the two appraisals.
(e) The lesser of the borrower's actual cost or the appraised
increase in the value of the property by reason of the improvements
shall be available as a credit to the buyer for purposes of
determining net appreciated value, except as provided in subdivision
(f).
(f) If 50 percent or more of the value of the labor or other work
on the improvements was performed by the borrower, then the appraised
increase in the value of the property by reason of the improvements
shall be the cost of capital improvements for purposes of
establishing the credit under this section.