SECTIONS 1917.160-1917.168 - California Statutes

CIVIL CODE

SECTION 1917.160-1917.168

1917.160. The relationship of the borrower and the lender, as to a
shared appreciation loan, is that of debtor and creditor and shall
not be, or be construed to be, a joint venture, equity venture,
partnership, or other relationship.

1917.161. Any waiver of any right of a borrower under the
provisions of this chapter shall be void and unenforceable.

1917.162. (a) Notwithstanding Section 711, a provision in a shared
appreciation loan made pursuant to this chapter permitting the lender
to accelerate the maturity date of the principal and accrued
interest on the loan upon sale of the property shall be valid and
enforceable against the borrower, except as may be precluded by
Section 2924.6.
(b) The Legislature finds and declares that potential exposure to
liability for enforcement of a "due-on-sale" clause consistent with
Section 711, as interpreted by the courts, makes use of such a
provision impractical. Moreover, the additional risks to the lender
inherent in shared appreciation financing are greater with longer
loan terms (which are more desirable from the standpoint of housing
affordability), but this risk is reduced with an enforceable
"due-on-sale" clause. Therefore, in order to facilitate shared
appreciation financing, it is necessary to establish the exception
specified in subdivision (a).

1917.163. This chapter facilitates the making of shared
appreciation financing in this state which conforms to the provisions
of this chapter. The terms and conditions of any shared appreciation
loan made pursuant to this chapter shall be consistent with this
chapter. This chapter does not, however, apply to or limit shared
appreciation financing of real property of a type specified in
Section 1917.130 that is made pursuant to other provisions of law, or
which is not otherwise unlawful. Nothing in this chapter shall be
construed to in any way affect shared appreciation financing of
commercial property or residential property not meeting the criteria
specified in Section 1917.130.

1917.164. A shared appreciation loan shall not be subject to any
provision of this code or the Financial Code which limits the
interest rate or change of interest rate of variable interest rate or
renegotiable interest instruments, or which requires particular
language or provisions in security instruments securing variable or
renegotiable rate obligations or in evidences of those debts.
This section is declaratory of existing law.

1917.165. The lien of a deed of trust securing a shared
appreciation loan shall include and secure the principal amount of
the shared appreciation loan, and all interest, whether accrued or to
be accrued, including all amounts of contingent deferred interest.

1917.166. The lien of a shared appreciation loan, including the
principal amount and all interest, whether accrued or to be accrued,
and all amounts of contingent deferred interest, shall attach from
the time of the recordation of the deed of trust securing the loan,
and the lien, including the lien of the interest accrued or to be
accrued and of the contingent deferred interest, shall have priority
over any other lien or encumbrance affecting the property secured by
the shared appreciation instrument, recorded after the time of
recordation of the shared appreciation instrument. However, nothing
in this section or Section 1917.165 shall preclude a junior lien or
encumbrance subordinate to the obligation of the shared appreciation
loan. In no case may a junior lien achieve priority over the lien
securing the obligation of the shared appreciation loan, provided
that nothing in this section shall be construed to supersede Section
3134 of the Civil Code.

1917.166. The lien of a shared appreciation loan, including the
principal amount and all interest, whether accrued or to be accrued,
and all amounts of contingent deferred interest, shall attach from
the time of the recordation of the deed of trust securing the loan,
and the lien, including the lien of the interest accrued or to be
accrued and of the contingent deferred interest, shall have priority
over any other lien or encumbrance affecting the property secured by
the shared appreciation instrument, recorded after the time of
recordation of the shared appreciation instrument. However, nothing
in this section or Section 1917.165 shall preclude a junior lien or
encumbrance subordinate to the obligation of the shared appreciation
loan. In no case may a junior lien achieve priority over the lien
securing the obligation of the shared appreciation loan, provided
that nothing in this section shall be construed to supersede Section
8450.

1917.167. A shared appreciation loan which at origination bears a
fixed interest rate complying with the usury provisions of Article XV
of the California Constitution shall not be deemed to become
usurious by reason of the payment of contingent deferred interest
pursuant to this chapter.

1917.168. The qualification requirements of Sections 25110, 25120,
and 25130 of the Corporations Code do not apply to a shared
appreciation loan to the extent the exemption afforded by subdivision
(p) of Section 25100 of that code is applicable.