Current through Register 2024 Notice Reg. No. 38, September 20, 2024
(a) The Contract proposed to be used by an
applicant for a public report (Subdivider) for the sale or lease of subdivision
interests shall provide that if the escrow for sale or lease of a subdivision
interest does not close on or before the date set forth in the contract, or a later
closing date mutually agreed to by subdivider and the prospective buyer or lessee
(Buyer), within 15 days after the closing date set forth in the contract or an
extended closing date mutually agreed to by Subdivider and Buyer, Subdivider shall,
except as provided in subdivision (c), order all of the money remitted by Buyer
under the terms of the Contract for acquisition of the subdivision interest
(Purchase Money) to be refunded to Buyer.
(b) The Contract may provide for disbursements or
charges to be made against Purchase Money for payments to third parties for credit
reports, escrow services, preliminary title reports, appraisals and loan processing
services by such parties provided that the Contract includes:
(1) specific enumeration of all of the
disbursements or charges that may be made against Purchase Money, and
(2) the Subdivider's estimate of the total amount
of such disbursements and charges.
(c)
(1) Any
contractual provision which calls for disbursement or a charge against Purchase
Money based upon Buyer's alleged failure to complete the purchase of the subdivision
interest must conform with Civil Code Sections
1675 (including
either subsection (c) or subsection (d) thereof), 1676, 1677 and 1678.
(2) Except for a disbursement made following
substantial compliance with the procedures set forth in paragraph (4) below or
pursuant to a written agreement of the parties which either cancels the Contract or
is executed after the final closing date specified by the parties, a disbursement or
charge against Purchase Money as liquidated damages may be done only pursuant to a
determination by a court of law, or by an arbitrator if the parties have so provided
by contract, that Subdivider is entitled to a disbursement or charge against
Purchase Money as liquidated damages.
(3) A contractual provision for a determination by
arbitration that Subdivider is entitled to a disbursement or charge against Purchase
Money as liquidated damages shall require that the arbitration be conducted in
accordance with procedures that are equivalent in substance to the commercial
arbitration rules of the American Arbitration Association, that any arbitration
include every cause of action that has arisen between Buyer and Subdivider under the
Contract, and that the Subdivider remit the fee to initiate arbitration with the
costs of the arbitration ultimately to be borne as determined by the
arbitrator.
(4) The contract of sale may
include a procedure under which Purchase Money may be disbursed by the escrow holder
to the Subdivider as liquidated damages upon Buyer's failure to timely give the
escrow holder Buyer's written objection to disbursement of Purchase Money as
liquidated damages. This procedure shall contain at least the following elements:
(A) The Subdivider shall give written notice, in
the manner prescribed by Section
116.340
of the Code of Civil Procedure for service in a small claims action, to escrow
holder and to Buyer that Buyer is in default under the Contract and that Subdivider
is demanding that escrow holder remit $__________ from the Purchase Money to
Subdivider as liquidated damages unless, within 20 days, Buyer gives escrow holder
Buyer's written objection to disbursement of Purchase Money as liquidated
damages.
(B) Buyer shall have a period
of 20 days from the date of receipt of the Subdivider's 20-day notice and demand in
which to give escrow holder Buyer's written objection to disbursement of Purchase
Money as liquidated damages.
(5) The Contract may not make Buyer's failure to
timely give the escrow holder the aforesaid written objection a waiver of any cause
of action, other than a waiver of the right to specific performance of the contract,
that the Buyer may have against the Subdivider under the Contract unless the waiver
is conditioned upon service of the Subdivider's 20-day notice and demand in a manner
prescribed by Section
116.340
of the Code of Civil Procedure for service in a small claims action.
(6) If the Subdivider has had the use of Purchase
Money pending consummation of the sale or lease transaction under authorization by
the Bureau pursuant to subdivision (c) or (d) of Section 11013.2 of the Code or
subdivision (b) or (c) of Section 11013.4 of the Code, Subdivider shall immediately
upon alleging the default of Buyer, transmit to the escrow holder, funds equal to
all of the Purchase Money paid by Buyer.
1. New section
filed 12-3-80; effective thirtieth day thereafter (Register 80, No. 49). For history
of former section, see Register 71, No. 50.
2. Amendment filed 1-21-83;
effective thirtieth day thereafter (Register 83, No. 4).
3. Amendment
filed 11-13-96; operative 11-13-96 pursuant to Government Code section
11343.4(d)
(Register 96, No. 46).
4. Amendment of subsection (c)(3) filed 7-31-98;
operative 8-30-98 (Register 98, No. 31).
5. Amendment of subsections
(c)(1) and (c)(5) filed 2-28-2006; operative 3-30-2006 (Register 2006, No.
9).
6. Change without regulatory effect amending subsection (c)(6) filed
6-30-2014 pursuant to section
100, title 1, California Code of
Regulations (Register 2014, No. 27).
Note: Authority cited: Section
11001,
Business and Professions Code. Reference: Sections
11013.2
and
11013.4,
Business and Professions Code.
