Section 4013 - Demand Procedures(a) The Lender shall be authorized to make a Demand upon the Corporation executing the Guarantee for repayment of the unpaid Loan principal and interest pursuant to the Guarantee, upon compliance with the following: (1)(A) Borrower is a minimum of ninety (90) calendar days in arrears on payment either of Loan interest or principal,(B) a petition in bankruptcy has been filed by or against the Borrower, or(C) the Loan has matured and any portion remains unpaid.(2) In the case of a Demand pursuant to subsection (a)(1)(A), Lender has delivered to both the Borrower and Corporation a minimum of two (2) letters subsequent to the Default, at least thirty (30) calendar days apart, explaining the Default, the need for Borrower to remedy the Default, and the consequences for failure to remedy the Default. This requirement shall not apply if Borrower is in bankruptcy or if the Loan has matured.(b) The Lender delivers to the Corporation executing the Guarantee a Demand Letter requesting immediate payment of the guaranteed portion of Loan interest and principal, and documenting compliance with subsection (a)(1), and where applicable, subsection (a)(2).(c) Upon receipt of the Demand Letter, the Corporation, or Corporation's contractor, which may be the California Department of Financial Institutions, shall conduct an investigation to determine whether the Lender has complied with the terms of the Guarantee. No later than thirty (30) calendar days from the date the Corporation receives the Demand Letter, the Corporation shall do one of the following: (1) Deliver to the Agency a Request for payment on the Demand, summarizing the results of the investigation, with a copy simultaneously delivered to the Lender, or(2) Deliver to the Lender, with a copy simultaneously delivered to the Agency, a refusal to make payment pursuant to the Demand, and detailing the reasons for refusal.(d) Upon receipt of the request for payment described in subsection (c) (1), within ten (10) calendar days from the date the Agency receives the request for payment, the Agency shall do one of the following and simultaneously inform the Lender of such action: (1) Deliver or cause to be delivered to the Corporation a check in an amount not to exceed the amount contained in the Demand Letter, made payable to the Lender; or(2) Deliver or cause to be delivered a denial of request of payment to the Corporation based upon fraud or gross negligence on the part of the Lender known to the Agency.(3) Deliver or cause to be delivered to the Corporation a statement that the investigation was incomplete, and requiring the Corporation to complete the investigation and resubmit the request for payment to the Agency within ten (10) calendar days from the date the statement is received by the Corporation.(e) The amount paid to the Lender pursuant to a Demand Letter shall be less than the amount contained in the Demand Letter only under the following circumstances: (1) The Demand contains an incorrect calculation of amount owing;(2) Lender failed to comply with the collateral requirements contained in the Guarantee. The Agency or Corporation shall calculate the estimated value of the missing Security based upon immediate sale value and subtract the amount from any principal and/or interest then due and owing on the Loan; or(3) The amount owing on the Loan has been reduced by subsequent payments from the Borrower to the Lender.(f) Within one working day of receiving the check pursuant to subsection (d)(1) above, the Corporation shall contact the Lender and arrange to deliver the check to the Lender. The Corporation shall deliver the check simultaneously with receipt of an assignment of the Lender's interest in the Loan. The Loan shall be assigned to the Corporation, and shall include all Security and the Loan note.(g) The Guarantee document shall include a provision for binding arbitration in the event that either the Corporation or Agency denies the requested Demand pursuant to subsections (c)(2) or (d)(2), or the amount paid to the Lender is less than the amount contained in the Demand Letter.(h) Demand must be made upon the Corporation no later than noon on the thirty-first day following the date on which the Guarantee terminates; provided, however, that if the thirty-first is not a day upon which the Corporation is open for business, the last day for making a Demand shall occur on the next succeeding day upon which the Corporation is open for business.Cal. Code Regs. Tit. 10, § 4013
1. New section filed 12-8-89 as an emergency; operative 12-8-89 (Register 89, No. 52). A Certificate of Compliance must be transmitted to OAL within 120 days or emergency language will be repealed on 4-9-90.
2. Amendment of subsection (d)(2) and new subsection (d)(3) filed 12-22-89 as an emergency; operative 12-22-89 (Register 89, No. 52). A Certificate of Compliance must be transmitted to OAL within 120 days or emergency language will be repealed by operation of law on 4-23-90.
3. Certificate of Compliance as to 12-8-89 and 12-22-89 orders including nonsubstantive amendments transmitted to OAL 4-6-90 and filed 5-7-90 (Register 90, No. 25).
4. Amendment of subsection (f) filed 3-22-91 as an emergency; operative 3-22-91 (Register 91, No. 16). A Certificate of Compliance must be transmitted to OAL by 7-22-91 or emergency language will be repealed by operation of law on the following day.
5. Editorial correction of printing error in subsection (d)(3) (Register 91, No. 32).
6. Repealer and new section filed 3-19-92 as an emergency; operative 3-19-92 (Register 92, No. 15). A Certificate of Compliance must be transmitted to OAL 7-17-92 or emergency language will be repealed by operation of law on the following day.
7. Renumbering of former section 4013 to section 4613 and new section 4013 filed 6-2-92; operative 6-2-92 (Register 92, No. 24).
8. Amendment filed 12-27-2004 as a deemed emergency pursuant to Corporations Code section 14024; operative 12-27-2004 (Register 2004, No. 53). A Certificate of Compliance must be transmitted to OAL by 6-27-2005 or emergency language will be repealed by operation of law on the following day.
9. Editorial correction of HISTORY 8 (Register 2005, No. 27).
10. Certificate of Compliance as to 12-27-2004 order, including amendment of NOTE, transmitted to OAL 5-25-2005 and filed 7-7-2005 (Register 2005, No. 27). Note: Authority cited: Section 14075 (b), Corporations Code. Reference: Section 14075 (a), Corporations Code; and Section 8684.2, Government Code.
1. New section filed 12-8-89 as an emergency; operative 12-8-89 (Register 89, No. 52). A Certificate of Compliance must be transmitted to OAL within 120 days or emergency language will be repealed on 4-9-90.
2. Amendment of subsection (d)(2) and new subsection (d)(3) filed 12-22-89 as an emergency; operative 12-22-89 (Register 89, No. 52). A Certificate of Compliance must be transmitted to OAL within 120 days or emergency language will be repealed by operation of law on 4-23-90.
3. Certificate of Compliance as to 12-8-89 and 12-22-89 orders including nonsubstantive amendments transmitted to OAL 4-6-90 and filed 5-7-90 (Register 90, No. 25).
4. Amendment of subsection (f) filed 3-22-91 as an emergency; operative 3-22-91 (Register 91, No. 16). A Certificate of Compliance must be transmitted to OAL by 7-22-91 or emergency language will be repealed by operation of law on the following day.
5. Editorial correction of printing error in subsection (d)(3) (Register 91, No. 32).
6. Repealer and new section filed 3-19-92 as an emergency; operative 3-19-92 (Register 92, No. 15). A Certificate of Compliance must be transmitted to OAL 7-17-92 or emergency language will be repealed by operation of law on the following day.
7. Renumbering of former section 4013 to section 4613 and new section 4013 filed 6-2-92; operative 6-2-92 (Register 92, No. 24).
8. Amendment filed 12-27-2004 as a deemed emergency pursuant to Corporations Code section 14024; operative 12-27-2004 (Register 2004, No. 53). A Certificate of Compliance must be transmitted to OAL by 6-27-2005 or emergency language will be repealed by operation of law on the following day.
9. Editorial correction of History8 (Register 2005, No. 27).
10. Certificate of Compliance as to 12-27-2004 order, including amendment of Note, transmitted to OAL 5-25-2005 and filed 7-7-2005 (Register 2005, No. 27).