SECTIONS 1917.410-1917.412 - California Statutes

CIVIL CODE

SECTION 1917.410-1917.412

1917.410. The borrower, at any time for the purpose of facilitating
a sale of the property or prepaying or refinancing the loan, may
request the lender to stipulate the minimum amount which the lender
considers to be the fair market value of the property for the
purposes of this chapter. The lender shall advise the borrower within
10 working days of the receipt of such request of the lender's
estimate of the minimum fair market value. The estimate shall remain
effective for purposes of this section for 90 days. For the purposes
of this section and Section 1917.411, a sale of the property shall be
deemed to have occurred within the 90-day period if there is a valid
contract entered by an offer and acceptance within the 90-day period
for the sale of the property. The lender's stipulation shall remain
effective for an additional 60 days following execution of the sale
contract to permit completion of the sale and close of escrow.
The lender shall not be liable to the borrower or any other party
on account of damages alleged as a result of providing the
stipulation or estimate required by this section if such stipulation
or estimate is made in good faith. Evidence of lack of good faith
shall include, but not be limited to, a showing that the lender has
willfully or repeatedly overrepresented the fair market value of
other properties in similar situations, applying equitable principles
to those determinations. The lender shall be conclusively presumed
to have acted in good faith and no action may be brought or
maintained against a lender which arises out of the provision by the
lender of such stipulation or estimate, if the lender relied upon an
appraisal of an independent appraiser approved by the Federal
National Mortgage Association.

1917.411. (a) In the case of a sale for cash within 90 days after
the lender stipulates, under the provisions of Section 1917.410, a
minimum amount which the lender considers to be the fair market value
of the property, the fair market value shall be the gross sale
price, unless the gross sale price is below the minimum amount
stipulated by the lender and the lender contests in writing the
reasonableness of the gross sale price in relation to the fair market
value within 10 working days of the lender's receipt of notice of
the gross sale price from the borrower, in which case fair market
value shall be the greater of gross sale price or the amount
determined under Section 1917.412.
(b) In the case of a sale for cash where the borrower has not
requested the lender under the provisions of Section 1917.410 to
stipulate to the minimum amount which the lender considers to be the
fair market value of the property or where the stipulated minimum
amount was provided by the lender more than 90 days prior to the date
of sale, fair market value shall be the gross sale price, unless the
lender contests in writing the reasonableness of the gross sale
price in relation to the fair market value within 10 working days of
the lender's receipt of notice of the gross sale price from borrower,
in which case fair market value shall be the greater of the gross
sale price or the amount determined under Section 1917.412.
(c) In the case of a sale which includes consideration to the
seller other than cash, fair market value shall be as determined
under Section 1917.412.
(d) If the shared appreciation loan is prepaid in full, or upon
the occurrence of a maturity event, fair market value shall be as
determined under Section 1917.412.

1917.412. When Section 1917.411 requires the application of this
section, the fair market value shall be determined by averaging two
appraisals of the property performed as described in this section. If
possible, the appraisals shall be based on the sale prices of
comparable properties in the market area sold within the preceding
three-month period. The appraisals shall be made upon request of the
lender by two independent residential appraisers, one to be selected
by the lender and one by the borrower. Each appraiser shall be
approved by the Federal National Mortgage Association. The cost of
the appraiser selected by the lender shall be borne by the lender,
and the cost of the appraiser selected by the borrower shall be borne
by the borrower, unless the average of the two appraisals equals or
is less than the gross sale price of the property, in which case the
lender shall also pay the fee of the borrower's appraiser up to two
hundred dollars ($200). If either of the appraisers determines that
the gross sale price does not reasonably reflect the fair market
value of the property, or, in the case of a sale for which appraisal
is required by this section, then the fair market value of the
property shall be determined as the average of the two appraisals. If
the borrower fails to select a qualified appraiser within 15 days
after the lender has notified the borrower in writing of the lender's
request for an appraisal of the property, the reasons therefor, and
the borrower's option to select an independent appraiser within 15
days after the lender's request is submitted to the borrower, the
lender may designate the second appraiser, provided the lender's
request informs the borrower of this time limitation, and that the
lender will select an appraiser on behalf of the borrower in the
event the borrower fails to designate an appraiser, with consequent
cost to the borrower. If pursuant to this section the lender
designates the second appraiser, the cost of both appraisals shall be
borne equally by the borrower and lender. If in any case the
property has been damaged (other than normal wear and tear) and the
damage has not been fully repaired, the determination of fair market
value shall be based on the condition of the property not including
the damage.
Nothing in this section shall preclude the borrower and lender
from establishing the fair market value of the property by mutual
agreement in lieu of appraisals pursuant to this section.