Cal. Code Regs. tit. 25 § 7914

Current through Register 2024 Notice Reg. No. 50, December 13, 2024

Section 7914 - Contracts and Agreements

(a) All financial assistance provided by the Department shall be governed by contracts binding all recipients of such financial assistance as provided in this section. The Department may require such additional contracts, agreements, or amendments thereto, as it deems necessary to meet the purposes of the Program or requirements of the Code.

(b) Whenever the Department makes a funding commitment to a governmental agency applying for assistance on behalf of eligible recipients, the commitment of funds shall be governed by a state contract between the Department and the governmental agency. The state contract shall contain such terms and conditions as the Department considers necessary for the purposes of the Program and to meet the requirements of the Code, including but not limited to:

(1) a provision specifying the maximum amount of funds committed and the duration of the commitment by the Department to a governmental agency for the purpose of providing financial assistance to eligible recipients;

(2) a provision specifying the proposed sources, terms and conditions of public or private financing to be used in combination with funds from the Program;

(3) a description of the specific location of the housing development(s) in which the properties to be assisted are located;

(4) a provision specifying the minimum number of households to be assisted, including the minimum number of such households which are of lower income;

(5) a provision specifying that the maximum amount of assistance to be provided to eligible households or nonprofit corporations shall not exceed the amount provided in Section 7904(b);

(6) a description of the program of assistance to be provided by the governmental agency to eligible recipients which will receive financial assistance under the Program;

(7) a provision specifying the terms and conditions relating to breach of the state contract or this subchapter by the governmental agency; and

(8) a provision for periodic progress reports to the Department relating to implementation of the Program.

(c) Where financial assistance is provided to eligible households pursuant to Section 7904 (a) (1),(2) or (4), such assistance shall be provided either directly or indirectly by the Department in the form of a loan to such households. State loans shall be made in conjunction with loans made by a certified mortgage lender. During the term of its loan, the mortgage lender shall be repaid in monthly or periodic installments while repayment of the State's loan shall be deferred until the time of sale or transfer of the property or until repayment is required due to loss of eligibility. The purchaser shall execute a promissory note and deed of trust securing the State's loan. The form and content of the note and deed of trust utilized may vary provided that the State's loan is adequately secured and the following provisions are included;

(1) a description of the property being purchased;

(2) a provision requiring the purchaser to repay to the Department upon sale or transfer of the assisted property an amount of the sales proceeds of the assisted property proportionate to the percentage of the original purchase price contributed by the Department, incorporating any adjustments for improvements or partial repayments in accordance with Sections 7926 and 7928;

(3) a provision specifying that the assisted property shall not be sold for an amount substantially below its fair market value for the purpose of reducing the state's share in the sale proceeds;

(4) a provision for voluntary repayment to the Department of the total amount which would be owed to the Department if the property were sold at fair market value pursuant to Section 7930 at the time of such repayment;

(5) a provision allowing the purchaser to increase its equity in the assisted property by paying the Department less than the full amount owed to the state, as provided in Section 7928;

(6) provisions requiring the purchaser to:

(A) occupy the assisted property as its principal place of residence and not use such property as rental property during the term of the loan;

(B) pay all property and other taxes, fees and impounds levied with respect to the property;

(C) keep the property insured against fire;

(D) maintain the property in good condition; and

(E) comply with all terms and conditions of, and make all payments required by the promissory note and deed of trust;

(7) a provision requiring prior Department approval of any improvement to be made to the assisted property by the purchaser when a readjustment pursuant to Section 7926 will be sought;

(8) a provision prohibiting the purchaser from further encumbering the property with liens or deeds of trust without the express prior written approval of the Department;

(9) a provision requiring repayment or partial repayment to the Department if such repayment is determined to be necessary in accordance with Section 7936;

(10) a provision specifying that if the purchaser breaches any covenant or condition of the promissory note or deed of trust, a demand may be made for repayment of the full amount to the State would be entitled if the property were sold at fair market value and that, in the event of non-repayment, non-judicial foreclosure may be pursued;

(11) a provision specifying that if non-judicial foreclosure is pursued as a result of an alleged breach of the promissory note or deed of trust by the purchaser, the purchaser shall be notified of his/her right to dispute the alleged breach in a hearing before the Department as provided in Section 7938.

(d) Where financial assistance under the Program is provided to stock cooperatives or nonprofit corporations pursuant to Section 7904 (a) (3), the recipient shall execute a promissory note and deed of trust securing the State's loan. The form and content of the note and deed of trust utilized may vary provided that the State's loan is adequately secure, and the following provisions are contained in the note or deed of trust or in a contract prescribed by the State:

(1) the provisions required by subdivisions (c)(1) through (c)(11) inclusive of this section, except subdivisions (c)(2),(c)(6)(A), and (c)(9);

(2) a provision specifying that state funds shall not be released until a permanent financing commitment has been secured by the recipient corporation. In no event shall the period of interim financing exceed two (2) years where a park is to be developed or one (1) year where a park is to be purchased;

(3) a provision requiring that if during the period of interim financing the nonprofit or cooperative corporation intends to charge space rent to eligible households to be assisted under the Program, that such rent when added to other monthly housing costs not exceed thirty-five (35) percent of the eligible household's gross income or that such rent not exceed the space rent existing prior to the purchase of the mobilehome park with assistance under the Program, whichever is less;

(4) a provision requiring the recipient corporation to repay to the Department at the time permanent financing is secured, or upon sale or transfer of the property, whichever occurs first, an amount proportionate to the percentage of the development costs or purchase price provided by the Department, incorporating any adjustments for improvements, in accordance with Section 7926;

(5) where a mobilehome park is to be developed, provisions which require, pursuant to state or federal law the use of affirmative action in hiring by all contractors and subcontractors involved in the construction of a mobilehome park, and that the park will be developed in accordance with the Mobilehome Parks Act, Title 25, California Administrative Code Section 1000et seq.;

(6) a provision requiring that ownership of the park be transfered to a cooperative corporation with shareholders who will occupy the park or to individual owners who will occupy the park, at the termination of interim financing;

(7) a provision specifying the number of eligible households, including lower income households, which will occupy the mobilehome park for the purpose of determining the amount of assistance to be provided to the nonprofit or cooperative corporation;

(8) a provision requiring compliance by the cooperative or nonprofit corporation with an approved affirmative marketing plan as provided in Section 7934;

(9) a provision requiring the recipient corporation to pay reasonable actual moving expenses of households displaced as a result of the development of a mobilehome park using financial assistance under the Program. Only those displaced persons who occupied their dwelling at the time an application was submitted to the Department in accordance with Section 7916 shall be eligible for moving expense payments;

(e) Notwithstanding subdivisions (c) (2) and (d) (4) of this section, the promissory note and deed of trust may require that the Department not receive in repayment less than the amount of assistance originally provided.

(f) All promissory notes and deeds of trust shall be recorded in the office of the county recorder in which the assisted property is located.

(g) The Department shall enter into agreement(s) with the entity or entities that will originate and service State loans under the Program. The agreement(s) shall include but not limited to the following:

(1) a provision requiring Department approval prior to the close of escrow of each purchaser's loan application and other loan documents required by the Department;

(2) a provision requiring prior Department approval of the eligibility of improvements for reimbursement pursuant to Section 7926;

(3) a provision requiring prior Department approval before a recipient of funds may further encumber assisted property with liens or deeds of trust, other than those securing a loan under the Program;

(4) a provision requiring determination of the value of claimed improvements by a servicer of the state loans as provided in Section 7926;

(5) a provision requiring a loan servicer to make all necessary readjustments for improvements and partial repayments in accordance with Sections 7926 and 7928 and to maintain a record of any such readjustment and forward copies to the Department and the governmental agency;

(6) a provision requiring a loan servicer to periodically recertify the eligibility of the purchaser and to secure repayment on behalf of the Department as required by Section 7936;

(7) a provision requiring a loan servicer to notify the Department in writing in the event that it becomes aware of a default by a recipient in the performance of its obligations under this Section; and

(8) a provision requiring a loan servicer to secure repayment on behalf of the Department when assisted property is sold and to ensure that the assisted property is not sold for an amount substantially below its fair market value for the purpose of reducing the state's share in the sale proceeds.

Cal. Code Regs. Tit. 25, § 7914

1. Amendment filed 11-13080 as an emergency; effective upon filing (Register 80, No. 46). A Certificate of Compliance must be transmitted to OAL within 120 days or emergency language will be repealed on 3-13-81.
2. Certificate of Compliance including amendment transmitted to OAL 3-13-81 and filed 4-14-81 (Register 81, No. 16).
3. Amendment filed 6-11-81 as an emergency; effective upon filing (Register 81, No. 25).
4. Order of Repeal of 6-11-81 emergency order filed 6-19-81 by OAL pursuant to Government Code Section 11349.6 (Register 81, No. 25).
5. Amendment of subsections (a) and (c)-(g) filed 7-6-81 as an emergency; effective upon filing (Register 81, No. 28). A Certificate of Compliance must be transmitted to OAL within 120 days or emergency language will be repealed on 11-3-81.
6. Certificate of Compliance as to 7-6-81 order transmitted to OAL 10-23-81 and filed 11-18-81 (Register 81, No. 47).
7. Amendment of subsection (c) (6) (E) filed 4-30-83; effective thirtieth day thereafter (Register 82, No. 18).

Note: Authority cited: Section 50406, Health and Safety Code. Reference: Sections 50775, 50776, 50777, Health and Safety Code.