ARTICLE 3. Terms and Conditions [1917.030. - 1917.034.]

Cal. Civil Code - CIV 3.

in effect

Cal. Civil Code - CIV § 1917.030. Section 1917.030.

Lenders may make shared appreciation loans pursuant to this chapter for the purchase of real property improved with one- to four-family dwelling units, including structures ancillary to such dwelling units and including attached single-family dwelling units, single-family mobilehome units placed upon permanent foundations, residential condominium units and dwelling units within a planned unit development. Shared appreciation loans shall be made to finance only owner-occupied dwelling units, but in the case of two- to four-unit dwellings financed under this chapter only one of the units need be owner-occupied. The original recipient of a shared appreciation loan shall certify in writing to the lender that he or she will occupy the security property as his or her principal residence, provided that failure to so occupy the security property shall not void a shared appreciation loan, but at the option of the lender the loan may be accelerated in accordance with the terms and conditions provided in the shared appreciation loan. All shared appreciation loans shall be originated by the lender on behalf of a pension fund which is subject to the Employee Retirement Income Security Act of 1974 (P.L. 93-406, 88 Stat. 829), pursuant to a prior written commitment to purchase the loan.

Cal. Civil Code - CIV § 1917.031. Section 1917.031.

A shared appreciation loan shall include the following terms and conditions: (a) The term of the loan, excluding refinancing under Section 1917.033, shall be at least seven years, but not more than 30 years. (b) The repayment schedule for the loan, excluding refinancing under Section 1917.033, shall be cast so that full amortization of the principal amount of the loan would occur in 30 years, regardless of the actual term of the loan. Any principal balance remaining at maturity shall be due and payable at that time, unless refinanced as provided in Section 1917.033. Monthly installment payments shall be equal in amount and in addition to amortization of principal, shall include fixed interest pursuant to subdivision (d). (c) The loan shall be secured by a deed of trust or mortgage on the real property financed. (d) The loan shall bear interest at a fixed rate, which shall be one-third below the prevailing rate in effect 90 days prior to the loan closing, or at another date between that date and the loan closing if mutually agreed by the lender and borrower. (e) The borrower shall additionally be obligated to pay contingent deferred interest in the amount of one-third of the net appreciated value of the real property which secures the loan, at the time the property is sold (including a sale pursuant to a land sale contract), when title is transferred, other than a transfer specified in Section 2924.6, when a lease with an option to purchase is entered into, when a partnership is formed which in effect transfers the beneficial ownership to another person, when a trust is created which affects title to the property, upon a judicial or nonjudicial foreclosure sale, at the time the loan is prepaid in full, or upon the maturity of the loan, whichever first occurs.

Cal. Civil Code - CIV § 1917.032. Section 1917.032.

(a) The borrower shall have the right to prepay, at any time, in full or in part, the principal loan balance of the shared appreciation loan, together with accrued interest, including deferred contingent interest. (b) Nothing in this chapter shall prevent a borrower from obligating himself or herself, by an agreement in writing, to pay a prepayment charge, as authorized by this section, upon prepayment of the loan, in full or in part, within five years of the date of execution of the shared appreciation loan. (c) Any prepayment charge imposed upon the prepayment of a shared appreciation loan shall not exceed the amount authorized and specified in subdivision (b) of Section 2954.9. (d) No prepayment charge shall be imposed as to any portion of the contingent deferred interest.

Cal. Civil Code - CIV § 1917.033. Section 1917.033.

(a) If the shared appreciation loan is not prepaid in full or the real property securing the loan is not sold or transferred prior to maturity of the loan, the lender shall offer to the original borrower refinancing of the unpaid balance of the loan and all contingent deferred interest. (b) The term of the refinancing loan shall be at least 30 years from the date of the refinancing, provided that if the interest rate of the refinancing loan is not adjustable or variable during the term of such loan, the loan may contain a call provision giving the lender an option to accelerate the principal loan balance making it, together with accrued interest, payable in full at a date specified in the shared appreciation loan, which shall be no earlier than seven years following the date of refinancing under this section. If such a call provision is included in the refinancing loan, a concise description thereof shall be included in upper case print in the disclosures on refinancing required by Section 1917.071. (c) The interest rate for the refinancing loan shall not exceed the prevailing rate existing at maturity of the shared appreciation loan. (d) The lender may require as a condition of the refinancing loan that it be secured by a deed of trust or mortgage of first priority on the property financed. (e) The terms and conditions of refinancing pursuant to this section shall be specified in the shared appreciation loan, shall be a part of the shared appreciation loan contract, and shall be subject to the applicable laws in effect on the date of execution of the shared appreciation loan. The refinancing shall be fully amortizing and the interest rate may be either fixed or adjustable as permitted by law for home financing offered by banks or savings and loan associations doing business in this state to the public for financing housing similar to the borrower’s property, provided that nothing in this section shall preclude such other lawful refinancing terms as may be mutually acceptable to the borrower and lender. If the lender offers more than one form of refinancing, the borrower may select from among the types of refinancing offered by the lender.

Cal. Civil Code - CIV § 1917.034. Section 1917.034.

Nothing in this chapter shall preclude the borrower from obtaining any other financing, in lieu of the refinancing provided for in Section 1917.033, including refinancing on other terms that are mutually agreeable to the borrower and lender.

Source: CA Legislative Counsel Bulk DataURL: https://downloads.leginfo.legislature.ca.gov/pubinfo_2025.zipFetched: 6/27/2026