California Military and Veterans Code
This article may be cited as the Veterans' Farm and Home Purchase Act of 1974.
The object of this article is to provide veterans with the opportunity to acquire farms and homes.
The provisions of this article are applicable, and the benefits conferred thereby are available, to:
(a) Any veteran as defined in Section 980;
(b) Any person who is on active duty in the military or naval service of the United States, whose service may or may not have been continuous, and who is in all other respects qualified pursuant to Section 980.
As used in this article: (a) "Farm" means a tract of land, which, in the opinion of the department, is capable of producing sufficient income to provide payment of the amortized contract installments, including principal, interest, and taxes.
(b) "Home" means a parcel of real estate upon which there is a dwelling house and other buildings that will, in the opinion of the department, suit the needs of the purchaser and the purchaser's dependents as a place of abode. "Home" includes a "condominium," as defined in subdivision (h). "Home" also includes a "mobilehome," as defined in subdivision (k).
(c) "Purchaser" means a veteran or any person who has entered into a contract of purchase of a farm or home from the department.
(d) "Purchase price" means the price which the department pays for any farm or home.
(e) "Selling price" means the price for which the department sells any farm or home.
(f) "Initial payment" means the first payment to be made by a purchaser to the department for a farm or home.
(g) "Progress payment plan" means payment by the department for improvements on real property in installments as work progresses.
(h) "Condominium" means an estate in real property consisting of an undivided interest in common in a portion of a parcel of real property together with a separate interest in space in a residential building on the real property, such as an apartment, which, in the opinion of the department, suits the needs of the purchaser and the purchaser's dependents as a place of abode. A condominium may include, in addition, a separate interest in other portions of the real property.
(i) "Effective rate of interest" means the average rate of interest on the unpaid balance due on a participation contract to which the department's legal rights are subject, and the rate of interest on the unpaid balance of the purchase price, as determined by the department.
(j) "Participation contract" means an obligation secured by a deed of trust or mortgage, or other security interest established pursuant to regulations of the department.
(k) "Mobilehome" means either a parcel of real estate, or an undivided interest in common in a portion of a parcel of real property, on which is sited one or more mobilehome modules, or a site in a mobilehome park, as defined in Section 18214 of the Health and Safety Code, on which one or more mobilehome modules is sited or is to be sited that will, in the opinion of the department, suit the needs of the purchaser and the purchaser's dependents as a place of abode and meets all requirements of local governmental jurisdictions.
However, where the mobilehome module or modules are sited on trust land, "local governmental jurisdictions" means the tribal governing body.
For purposes of this subdivision, "module" means a section of a mobilehome at least 10 feet wide and at least 40 feet long.
(l) "Indian veteran" means a veteran, as defined in Section 980, who, in addition, either belongs to an Indian tribe, band, group, reservation, rancheria, or community which is recognized by the United States as eligible for services from the United States Bureau of Indian Affairs or is an Indian beneficiary and who is eligible under this article for purchase by the department of a home or farm sited on trust land.
(m) "Trust land," with respect to an Indian veteran, means land held in trust by the United States government for individual Indians, Indians who belong to Indian tribes, or Indian tribes.
(n) "Allotment trust land" means land held by the United States under the Indian General Allotment Act of 1887, as amended, (Chapter 9 (commencing with Section 331) of Title 25 of the United States Code), in trust for an individual Indian or for two or more Indians holding individual interests in common. It includes both trust and restricted public domain allotments and allotments within the boundaries of an Indian reservation.
(o) "Tribal trust land" means land held in trust by the United States for an Indian tribe or band.
(p) "Tribe" means any Indian tribe, band, group, reservation, rancheria, or community which is recognized by the United States as eligible for services from the United States Bureau of Indian Affairs.
(q) "Immediate family" means the spouse of a purchaser, the natural or adopted dependent children of the purchaser, and the parents of the purchaser if they are dependent on the purchaser for 50 percent or more of their support.
(r) "Indian beneficiary" means an Indian for whom land is held in trust by the United States government.
The administration of the provisions of this article is vested solely in the Department of Veterans Affairs.
The department shall adopt rules and regulations in keeping with the purpose of this article to establish preferences in the granting of benefits conferred by this article.
(a) The department shall prescribe and determine the qualifications of all veterans. Any person deeming himself or herself a veteran and desiring to benefit hereunder, shall submit to the department information, in the form prescribed by the department, that will enable the department to determine his or her eligibility and qualifications. The department may make further inquiries and investigations in order to determine eligibility and qualifications.
(b) Whenever the department determines that a shortage of funds exists in any of the funding sources available, the department shall use the following preference categories for the use of those funds.
(1) Veterans who are otherwise qualified because of service during a time of war and who were wounded or disabled as a result of their service shall be given first preference in the benefits conferred by this article. The department shall determine, in each case, whether the veteran was wounded or disabled as a result of service.
(2) The following group shall be given second preference in the benefits conferred by this article:
(A) The unremarried spouse of individuals who were members of the Armed Forces on active military duty and were killed in the line of duty while on active duty.
(B) Members of the Armed Forces who were held as prisoners of war.
(C) The unremarried spouse of members of the Armed Forces who have been designated by the Armed Forces as missing in action.
(3) Veterans whose eligibility is derived from service any portion of which was on or after August 2, 1990, and prior to a date to be set by law or by a Presidential proclamation ending the Gulf War, and veterans with wartime service discharged or released from active duty within 10 years of their application to the department shall be given third preference in the benefits conferred by this article.
(4) Active members of the California National Guard or a reserve component of a branch of the United States Armed Forces who meet the eligibility criteria of paragraph (3) of subdivision (a) of Section 980 shall be given fourth preference in the benefits conferred by this article.
(5) Veterans with wartime service discharged or released from active duty more than 10 years prior to their application to the department shall be given fifth preference in the benefits conferred by this article.
(6) Veterans who are otherwise qualified and whose only military service was during a time of peace shall be given sixth preference for the benefits conferred by this article.
(7) Veterans eligible for a subsequent loan under subdivision (a) of Section 987.86 shall be given seventh preference in the benefits conferred by this article.
(c) Nothing in this section regarding preferences shall affect any eligibility requirement for benefits conferred by this article.
(a) The department shall require that all applicants under this article qualify under applicable federal laws and regulations governing the permitted uses of tax-exempt bond funds, and file within the time limits required under applicable federal law and regulations.
(b) Notwithstanding any other provision of state law to the contrary, no time limit for filing shall be imposed upon any veterans who served in the Philippine Commonwealth Army, or the Regular Scouts ("Old Scouts"), or the Special Philippine Scouts ("New Scouts" ) during World War II, except as required by federal law.
(a) If a veteran dies after filing an application for purchase of a farm or a home, and the veteran's eligibility and qualifications are subsequently approved, the veteran's surviving spouse may, in the discretion of the department, succeed to the veteran's rights under the application, and may succeed to the veteran's rights, privileges, and benefits under this article. The contract of purchase which the department otherwise would have made with the deceased veteran may be made with the surviving spouse.
(b) If a person was a member of the armed forces on active military duty, entered active duty while in the State of California and lived in this state for six months immediately preceding entry into active duty, and was killed in the line of duty while on active duty or died after discharge from active duty from injuries incurred in the line of duty while on active duty, that person is a veteran for purposes of this article, and his or her unremarried surviving spouse may file an application, is entitled to the same rights, privileges, and benefits for which the armed forces member would have been eligible, and may contract with the department pursuant to subdivision (a). In making a determination of eligibility under this subdivision, the department may base its determination on documentation furnished to the surviving spouse by the United States Department of Veterans Affairs specifying the cause of death of the armed forces member.
(c) If a member of the armed forces entered active military duty while in the State of California, lived in this state for six months or more immediately preceding entry into active duty, and is being held as a prisoner of war or has been designated by the armed forces as missing in action, that person is a veteran for purposes of this article, and his or her spouse may file an application, is entitled to the same rights, privileges, and benefits, and may contract with the department pursuant to subdivision (a).
(a) When a veteran has been authorized by the department to select a farm or home, he or she shall submit that selection for approval, as the department prescribes. The department shall have the sole responsibility for the underwriting and approval of all farm or home loans, subject to this article.
(b) In order to achieve efficient processing and approval of loans, the department shall do all of the following:
(1) The department shall establish all systems, procedures, technologies, and guidelines necessary to achieve efficient processing of farm or home loans submitted for approval by the department, with the intent of achieving loan delivery within an average of 30 days. These shall include, but may not be limited to, systems and technologies for the electronic transfer of loan funds and related fees.
(2) The department shall ensure optimal participation of qualified mortgage brokers and other qualified financial institutions and shall review, standardize, and where possible simplify, the documentation required of mortgage brokers and other qualified financial institutions. The department shall provide adequate training and certification of participating mortgage brokers and other qualified financial institutions.
(3) The department shall establish an outreach program to effectively disseminate information concerning the simplified and more efficient loan process to professional real estate and mortgage broker associations.
(4) The department shall offer broker compensation and fees sufficient to ensure optimal participation of the private sector in the loan origination process and consistent with the veteran borrower' s interest in efficient and economical loan processing.
(5) The department shall provide access over the Internet to veteran applicants and their authorized agents to enable loan applications to be filed, processed, and tracked electronically.
(6) In cooperation with the Office of Administrative Law, the department shall, on or before October 30, 2000, promulgate all regulations necessary to implement the provisions of this section and Section 987.67, with the intent of achieving loan delivery within an average of 30 days through measures including, but not limited to, optimal participation in the loan origination process by qualified private sector real estate mortgage associations.
(a) The department may acquire the farm or home from its owner or may contract with a veteran for the construction of a dwelling house and other improvements for a farm or home, upon the terms agreed under all of the following terms and conditions:
(1) The department is satisfied of the desirability of the property submitted.
(2) The veteran has agreed with the department that he or she, or members of his or her immediate family, will actually reside on the property within 60 days from the date of purchase by the department, or, if the residence on the property is not complete on the date of purchase, within 60 days after the residence is completed, and will continue to reside on the property until all payments due the department have been paid or the farm or home is sold, except where the occupancy requirement is waived pursuant to Section 987.62.
(3) If the department is to contract with a veteran for the construction of a dwelling house and other buildings, or for the purchase of a mobilehome, all of the following are required:
(A) The veteran shall be the owner of the real property on which the dwelling house and other buildings are to be constructed, or shall be the owner of the real property or shall be the owner of an undivided interest in common in a portion of a parcel of real property on which a mobilehome is to be situated, and agrees to convey that property to the department without cost.
(B) The veteran has paid a reasonable fee set by the department to cover the cost of any preliminary service of the department that may be necessary to process the application.
(C) The veteran has filed with the department adequate plans and specifications for the improvements to be constructed upon the real property, together with a contract, executed by a contractor licensed by the State of California for the construction of the improvements in accordance with the plans and specifications within 12 months after the acquisition of the real property by the department. The department may require a bond or other security instrument executed by the contractor in an amount determined by the department providing for compliance with the terms of the contract and for the payment of persons furnishing material or labor on the job, executed by a surety company, or other financial institution, authorized to do business in the State of California. The department may also require course-of-construction insurance for public liability, property damage, and workers' compensation.
(D) The plans, specifications, contract, and other required documents or security instruments are approved by the department.
(E) The veteran has placed in escrow all sums of money to be advanced by him or her, where the cost is in excess of the maximum that may be expended by the department.
(b) As used in this section "immediate family" includes only the veteran's spouse, natural or adoptive dependent children, and parents only if the parents are dependent upon the veteran for 50 percent or more of their support.
The department may purchase property, subject to a participation contract providing for a loan term of not less than 23 years. The purchase price plus the participation contract shall not exceed the maximum purchase prices available under this article.
The department, after consummating a purchase under the provisions of this article and the veteran having occupied the property as required by Section 987.60 of this article, may annually waive the occupancy requirement on a showing of good cause. The property financed under this article is intended to remain owner-occupied, and not become an investment, rental, or business property. The department may also waive the occupancy requirement for any period of time if the property is a farm and if the veteran personally cultivates the property and harvests the crops or tends livestock. The department shall establish standards for the occupancy waiver and shall make those standards known. The department shall waive the occupancy requirement in any case where the State Department of Health determines that health hazards on adjacent property render the farm, home, or mobilehome unsuitable for occupancy, and the waiver shall be effective as long as those conditions exist.
Notwithstanding other provisions of this article relating to the occupancy, leasing, letting, or subletting of a farm or home acquired pursuant to this article, the department, with respect to any veteran who after consummating a purchase of a farm or home under this article and occupying such farms or home reenters the active military, naval, or air service of the United State, may waive the occupancy requirement for the period of such active service and for a reasonable period subsequent to the termination of such active service and consent to the leasing, letting, or subletting of the farm or home during such period or periods.
In the event of any conflict or difference between any provision of this article and the federal Mortgage Subsidy Bond Tax Act of 1980 (P.L. 96-499; 94 Stat. 2660), including any amendment thereto and any regulation issued thereunder, the department shall comply with that federal law or regulation to the extent necessary to maintain the tax-exempt status of any issue of its general obligation or revenue bonds. Any action taken by the department prior to the effective date of this section to effect that compliance is hereby confirmed and ratified, it having at all times been the intent of the Legislature that the tax-exempt status of those bonds be maintained.
(a) The purchase price of a home to the department, or the sum to be expended by the department pursuant to a contract for the construction of a dwelling house and other improvements, or the purchase price of a mobilehome sited on a lot owned by the purchaser and installed on a foundation system pursuant to Section 18551 of the Health and Safety Code, or the purchase price of a mobilehome converted to a fixture and improvement to the underlying real property in a mobilehome park that has been converted to a resident-owned subdivision, cooperative, condominium, or nonprofit corporation as set forth in Section 18555 of the Health and Safety Code, shall not exceed 125 percent of the then current maximum Fannie Mae loan limit that is annually set by Fannie Mae for a single-family home.
(b) The purchase price of a mobilehome that is to be sited in a mobilehome park, as defined in Section 18214 of the Health and Safety Code, in addition to any assistance provided by the department to a veteran pursuant to subdivision (e) of Section 987.85, may not exceed one hundred twenty-five thousand dollars ($125,000).
(c) A veteran purchasing the home may advance, subject to Section 987.64, the difference between the total price or cost of the home and the sum of the purchase price of the home to the department and any amount the department adds, under Section 987.69, to the purchase price of the home in fixing the selling price to the veteran. Any amount of the purchase price to the department may be provided by funds from participation contracts or revenue bonds.
(d) The purchase price of a farm to the department shall not exceed 150 percent of the limit described in subdivision (a). A veteran purchasing the farm may advance the difference between the total price of the farm, or the cost of the dwelling and improvements to be constructed on a farm under a contract, and the sum of the purchase price to the department or contract price to the department and any amount that the department adds, under Section 987.69, to the purchase or contract price to the department in fixing the selling price of the farm to the veteran.
(a) Before the purchase of any property by the department there shall be filed with the department (1) an appraisement of the market value of the property by an employee or an authorized agent of the department or (2) an appraisement of the market value of the property by either the Federal Housing Administration or the Veteran' s Administration, and in addition there may be filed with the department an appraisement of the market value of the property by an authorized appraiser of a banking corporation formed under the laws of this state or of a national banking association having a place of business in this state. Each appraisement shall be certified by the maker thereof. The certification shall state that it is made in good faith, and that the valuation is honestly determined and represents the bona fide opinion of the maker.
(b) The department shall establish guidelines to ensure greater participation of state-licensed real estate appraisers and shall establish an outreach program to effectively disseminate information concerning the participation to professional appraisal associations or trade groups.
The department, before consummating a purchase under the provisions of this article, shall cause the title of the property sought to be purchased to be examined and may require for that purpose an abstract, an unlimited certificate of title, or a policy of title insurance, and may refer the same to the Attorney General for his opinion.
The department shall then enter into a contract with the veteran for the sale of the property to the veteran. The department shall fix the selling price of the property as the purchase price thereof, as the total cost of improvements constructed, or as the value of the property, as determined by the department when the property is acquired by the department in a manner other than by purchase, to which the department may add all expenses incurred and estimated to be incurred by the department in relation thereto, inclusive of interest, administration, appraisals, examination of title, insurance premiums, mortgage guaranty fees, origination fees, incidental expenses, and the sum deemed necessary to meet unforeseen contingencies. In the case of real property acquired for the purpose of constructing improvements thereon, the department shall forthwith after acquiring that real property enter into the contract with the veteran authorized by this section at a selling price that does not exceed the department's appraised value of the land, if the loan is to include the value of the land, and the amount of the department's appraised value of the improvements to be constructed thereon and any of the other additions herein authorized. After the execution of the contract between the veteran and the department and the making of the initial payment thereon the department shall be authorized to pay the cost of the improvements contracted to be constructed on the real property, making progress payments thereon in the amounts and at those times that the department approves. The department shall, upon written request of the veteran and his or her contractor, have authority to approve additions to or deletions from the improvements contracted to be constructed and any savings affected or added cost incurred shall be deducted from or added to the amount due the department by the veteran under the terms of his or her contract.
Where the department enters into a contract for the sale of property on trust to an Indian veteran, the contract shall include the following conditions:
(a) The dwelling house or other improvements contracted to be constructed on trust land shall be completed in compliance with the standards of the building code applicable on the trust land. If there is no building code in force on the trust land, the applicable standards shall be those of the building code of the county in which the trust land is located.
(b) On the completion of construction, the Indian veteran shall provide to the department an inspection certificate from a qualified building inspector certifying that the dwelling house or other improvements comply with the standards of the building code as required by subdivision (a).
(a) The purchaser shall make an initial payment of at least 2 percent of the selling price of the property. The department may waive the initial payment in any case where the value of the property as determined by the department from an appraisal equals the amount to be paid by the department plus at least 5 percent. In the case of a purchase requiring a loan guaranty by the United States Department of Veterans Affairs, the department may waive the initial payment and the purchaser shall pay the loan guaranty fee, which may be added to the loan amount. The department may require the purchaser to pay a loan origination fee, not to exceed 1 percent of the loan amount, which may be added to the loan amount.
(b) The balance of the loan amount may be amortized over a period fixed by the department, not exceeding 40 years for farms or homes and not exceeding 30 years for mobilehomes located in mobilehome parks, as defined in Section 18214 of the Health and Safety Code, together with interest thereon at the rate determined by the department pursuant to Section 987.87 for these amortization purposes.
(c) The department may, in order to allow the veteran to purchase the home selected without incurring excessive monthly payments, at the time of initial purchase, postpone the commencement of payment of the principal balance for a period not to exceed five years if the veteran's current income meets the standards for purchase on these terms and if the department determines, in accordance with previously established criteria for these determinations, that the veteran's income can reasonably be expected to increase sufficiently within the five-year period to make the transition to fully amortized principal and interest payments, so long as the total term of the contract of purchase does not exceed 40 years, or 30 years where the contract relates to a mobilehome located in a mobilehome park, as defined in Section 18214 of the Health and Safety Code.
(d) The purchaser on any installment date may pay any or all installments still remaining unpaid.
(e) In any individual case, the department may for good cause postpone, from time to time, upon terms the department determines to be proper, the payment of the whole or any part of any installment of the purchase price or interest thereon.
(f) Each installment shall include an amount sufficient to pay the principal and interest on the participation contract to which the interest of the department is subject, and any amount as may be required by a covenant or provision contained in any resolution of issuance.
(g) When a purchaser makes an initial payment of less than 20 percent of the selling price of the property, the department shall do all of the following:
(1) Take prudent measures to minimize losses from loan defaults and loan delinquencies.
(2) (A) Ensure the continued financial solvency of the loan program by charging fees to cover the costs, as determined by the department, of any loan guaranty, primary mortgage insurance, or other similar arrangement.
(B) Fees charged under this paragraph may be included in the amount of the loan, collected in advance, or collected as part of the monthly payment.
(h) (1) Subject to paragraph (2), the department may provide initial payment assistance to lower income first-time purchasers by providing a deferred-payment second loan, upon which simple interest shall be charged at a rate established by the department.
(2) A deferred-payment second loan described in paragraph (1) is subject to all of the following conditions:
(A) The loan may not exceed 3 percent of the selling price of the farm or home.
(B) The loan shall be secured by a deed of trust.
(C) The loan shall be due and payable upon the payment in full of the contract or upon the sale or transfer of the farm or home.
The provisions of Section 987.71, relative to the rate of interest to be charged to veteran purchasers do not apply to assignees of such purchasers who are not veterans, but as to such assignees the rate of interest shall be as fixed by the department, compounded at periods fixed by the department.
The action of the department in refusing to permit any assignments except as provided in this section is hereby ratified and confirmed, it having at all times been the intent of the Legislature that Section 987.71 apply to veteran purchasers only.
(a) Except as provided in subdivision (b), the department in each individual case may specify the terms of the contract entered into with the purchaser, but no property sold under this article shall, voluntarily or involuntarily, by operation of law or otherwise, be transferred, assigned, encumbered, leased, let or sublet, in whole or in part, nor shall any mobilehome be removed from its original site, except in case of emergency where temporary removal is necessary to avoid potential damage, without the written consent of the department, until the purchaser has paid therefor in full and has complied with all the terms and conditions of this contract of purchase. The department may give its written consent to such transfers, assignments, encumbrances, leasings, lettings or sublettings, or removals, for good cause shown, subject to the interest of the department and consistent with the purposes of this article.
(b) The consent of the department shall not be required where a veteran, alone or jointly with his spouse, transfers his interest in property which is the subject of a loan agreement with the department into a revocable trust established for the benefit of the veteran or of the veteran and his spouse.
(c) The department may consent to an assignment in favor of a nonveteran spouse if a veteran purchaser qualifies as "a person in long-term care" as defined in Section 14050.3 of the Welfare and Institutions Code if the department is satisfied that the interest of the veteran is adequately protected. If consent is given to the assignment, the contract shall continue at the same rate of interest and upon the same terms and conditions as are provided to veteran purchasers. Consent by the department to the assignment shall be deemed given if the assignment is pursuant to a court order, and if notice of the hearing was provided to the department at least 30 days prior to the hearing at which the court order was issued.
(a) All properties purchased by the department shall be covered by insurance. Insurance purchased by the department shall be guaranteed replacement cost coverage as described in subdivisions (e) and (f) of Section 10102 of the Insurance Code against fire and other hazards for the full replacement cost of the improvements or structures, shall include limited building code upgrade as described in Section 10103 of the Insurance Code, and shall be placed with a company or companies as the department may determine from time to time.
The department may charge purchasers a premium to cover the cost to the department for insurance obtained pursuant to this subdivision. The premium shall not exceed the actual cost to the department for the coverage provided.
(b) The contract made between the department and the purchaser shall provide that the purchaser maintain the farm or home as his or her place of residence and keep in good order and repair all buildings, fences, and other permanent improvements situated thereon.
Insurance policies purchased by the department shall be obtained to insure and keep insured against fire and other hazards, all buildings, fences, and other permanent improvements on the property. All policies shall be written with any loss payable to the department and the purchaser as their interests may appear. Insurance shall be in the amount, with the insurance companies, and under the terms and conditions as may be specified by the department.
(c) Upon renewal, the department shall assist the purchaser in determining the insurance level necessary to repair or replace the damaged or destroyed dwelling with like or equivalent construction and in determining how best to purchase additional coverage, if desired. The purchaser shall be solely responsible for requesting in writing and maintaining any additional amounts of insurance necessary to protect his or her interest in the property, and shall bear the risk of any loss in excess of the amount of insurance in force at the time of the loss.
(d) The department shall annually send a disclosure notice to all purchasers who have residential property insurance provided through the department. The notice shall identify the type of coverage, and shall disclose all of the following in a clear and reasonable manner:
(1) The limits of liability for the structure and improvements.
(2) The amount of any deductibles.
(3) Whether the policy covers the increased costs due to changes in building ordinances or laws regulating construction or repair.
(4) A statement explaining the importance of having guaranteed replacement cost coverage.
(5) A statement that the policy provided by the department provides limited building code upgrade coverage and the applicable limits and restrictions to that coverage.
If the purchaser fails or neglects to pay, satisfy, and discharge at maturity all taxes and assessments, and all other charges and encumbrances which are a lien upon the property being purchased from the department, or any part thereof, and also all taxes and assessments levied or assessed upon the interest created by the contract of purchase of such property; or to keep the buildings, fences, other permanent improvements upon such property insured and in good order and repair, or to keep the crops upon such property insured; or to keep in good order and repair all buildings, fences, and other permanent improvements situated upon such property; then, in such event, the department may pay, satisfy, discharge, settle, or compromise the taxes, assessments, charges, or encumbrances, or insure the buildings, fences, permanent improvements, or crops, or do the work and supply the materials necessary to keep the buildings, fences, and other improvements in good order and repair. All moneys so expended by the department shall be added to the selling price of the property and bear interest at the rate of interest designated in Section 987.71 from the date of expending the same, and shall be repaid by the purchaser to the department on demand. The department may amortize the repayment of such expenditures or permit repayment in installments upon the terms and conditions which it deems proper.
Notwithstanding Section 6157 of the Government Code, the department shall be the sole judge of all of the following:
(a) The legality or validity of taxes, assessments, charges, insurance premiums, guaranty fees, or encumbrances, and the amount necessary to be paid in satisfaction or discharge thereof.
(b) The amount of insurance to be placed upon the buildings, fences, other permanent improvements, and crops and the amount necessary to be paid for the premiums for that insurance.
(c) The necessity and nature of the work required to keep the buildings, fences, and other improvements in good order and repair, and the amount to be paid therefor.
(d) The amount of loan insurance or guaranty to be placed upon the veteran's liability for repayment of the veteran's contract and the amount necessary to be paid by the veteran or the department for the premiums or fees for that insurance or guaranty.
In the event of a failure of a purchaser to comply with any of the terms of his contract of purchase, the department may cancel such contract, and thereupon be released from all obligations, at law or in equity, to convey the property, and the purchaser shall forfeit all right thereto. All payments theretofore made shall be deemed to be rental paid for occupancy. Upon such forfeiture, the department shall take possession of the property covered by such contract, and shall remove all persons and personal property therefrom without any liability whatsoever on the part of the department or of any official or employee thereof for any damage or injury caused by or incident to the entry or removal. The failure of the department to exercise any option to cancel or to exercise any other privilege under such contract for any default shall not constitute a waiver of the right to exercise such option or privilege for any other default on the part of the purchaser.
(a) In the event of a forfeiture of a contract of purchase under this article, the department may sell or otherwise dispose of the property covered by the forfeited contract to any person and upon any terms and conditions as it determines to be proper, under the conditions set forth in this section.
(b) The department shall give first preference to a veteran who qualifies under this article and who served during a time of war, second preference to any other person serving in or honorably discharged from the armed forces of the United States, third preference to any person who is a first-time home buyer, and fourth preference to any other person.
(c) Where the department elects in the event of a forfeiture to sell or otherwise dispose of an assignment of an Indian veteran's beneficial interest or of a leasehold interest in allotment trust land, the department shall first offer it for sale to the person or persons for whom the land is held in trust, including an Indian veteran having a beneficial interest in the trust land on which the forfeiture occurred, at a price equal to the unpaid balance of the contract price. If none of the persons for whom the land is held in trust accepts the offer, the department shall next offer it to the United States Secretary of the Interior at the same price.
(d) Where the department elects in the event of forfeiture to sell or otherwise dispose of a leasehold interest in tribal trust land, the department shall first offer it for sale to the tribe for whom the land is held in trust at a price equal to the unpaid balance of the contract price. If the tribe fails to accept the offer, the department shall next offer it to the United States Secretary of the Interior at the same price.
(e) Where all the parties to whom the department is required to offer the property under subdivision (c) or (d) fail to accept the offer, the department may sell or otherwise dispose of the property covered by the forfeited contract as provided by subdivision (a) and, in so doing, the department shall give first preference to any good faith offer by a person approved by the tribal council of the reservation, rancheria, or land held under the jurisdiction of that particular tribal governing body on which the allotment land is sited.
(f) If the property is subject to a participation contract, the department may, at its option, pay the balance due upon the participation contract, including accrued interest, without penalty.
(g) Nothing in this section invalidates a transfer to, or affects the interest of, a good faith purchaser for value without notice of any failure of the department to comply with any requirement of this section in the disposition of any property subject to a forfeited contract.
The department may, in the contract of purchase with a veteran, provide that, in the event of default by the veteran and forfeiture of his or her rights under the contract and subsequent sale of the property by the department, it may pay to the veteran any net gain realized by the department upon the sale. The department is the sole judge of the net gain.
(a) The department may insure and keep insured against fire or other hazards all buildings, fences, other permanent improvements, or crops situated upon any property which has reverted to and is under the control of the department, or may do the work and supply the materials necessary to keep the buildings, fences, and other improvements situated upon the property in good order and repair. The department may lease or let the property, in whole or in part, upon any terms that the department determines to be proper. In the case of a farm, the department may cultivate the farm or harvest the crop.
(b) Whenever the department determines to lease or let any reverted property pursuant to subdivision (a), the department may give first priority to public or private organizations serving homeless veterans if the property is zoned for that use and all state and local building permit and use conditions are met. The department may give second priority to a public housing authority organized pursuant to the Housing Authorities Law (Chapter 1 (commencing with Section 34200) of Part 2 of Division 24 of the Health and Safety Code) for leasing or letting to persons of low income, as defined in Section 34213 of the Health and Safety Code.
If illness or accident prevents a purchaser of a farm from cultivating his farm or harvesting any crop, the department may enter and cultivate the farm or harvest the crop. In such event the department has a first lien upon the crop for all moneys expended and may sell the harvested crop. Out of the proceeds of the sale the department may reimburse itself for any expense which it has incurred in the cultivation of the farm, the harvesting of crops and the sale thereof, and retain any moneys due to the department from the purchaser. Any balance shall be paid by the department to the purchaser.
When a purchaser dies, indebted to the department under contract of purchase, his rights acquired under this article and such contract shall devolve upon his heirs, devisees, or personal representatives, but subject to all rights, claims, and charges of the department. Default on the part of an heir, devisee, or personal representative, with respect to any right, claim, or charge of the department shall have the same effect as would default on the part of the purchaser but for his death.
For the purposes of carrying out the Veterans' Farm and Home Purchase Act of 1974 the Director of Finance may by executive order authorize the withdrawal from the General Fund of an amount or amounts not to exceed the amount of the unsold bonds which have been authorized to be sold for the purpose of carrying out this article, and the amount necessary to carry out this section is hereby appropriated without regard to fiscal years. Any amounts withdrawn shall be deposited in the Veterans' Farm and Home Building Fund of 1974. Any moneys made available under this section to the department shall be returned to the General Fund in such amounts as may be received by the department from the sale of bonds sold for the purpose of carrying out this article, together with interest at the rate of interest fixed in the bonds so sold.
The right to declare a forfeiture for breach of a condition contained in any deed to real property may not be enforced as against the interest of the department in said real property or any portion thereof.
The department shall not acquire a home in which the veteran has an interest of record except in the following instances:
(a) Where the application is for aid for the construction of a home upon real property owned by the applicant and the improvements to be constructed thereon have not reached completion as evidenced by the issuance of a certificate of occupancy.
(b) Where the veteran had no interest of record in the property at the time of filing his or her application and thereafter secured interim financing pending the processing and approval of the application by the department.
(c) Where the application is for the purchase of a mobilehome to be situated upon real property, or an undivided interest therein, owned by the applicant.
(d) Where the applicant is an Indian veteran and the application is for the construction of a dwelling house or other improvements on, or for the purchase of a mobilehome to be sited on, trust land in which the Indian veteran has a beneficial interest or owns an interest of record.
(e) Where the application is for assistance to enable the veteran to purchase his or her space, or share in a mobilehome park, which is converted from a rental park to a nonprofit corporate resident-owned park or subdivision, cooperative, or condominium for mobilehomes, in which the veteran resides in his or her mobilehome. A veteran applying for assistance under this subdivision shall not be required to have his or her mobilehome reinstalled on a permanent foundation system as a condition of receiving the proceeds of the loan to purchase his or her space or share of the park. This subdivision shall be implemented by the department only to the extent that expenditures for the kind of financial assistance to veterans enumerated herein conform to the requirements of federal tax law with regard to the tax-exempt status of funding instruments utilized to provide the assistance.
(a) Any veteran for whom a farm or home is purchased under this article may be granted a subsequent opportunity to purchase another farm or home when the farm or home purchased under this article is sold, refinanced, or the veteran's interest is divested through divorce or dissolution of marriage. The maximum amount that the department may advance under this subdivision is limited to the maximum amounts set forth in Section 987.65 at the time the application is made for the subsequent loan.
(b) Only one farm or home purchased under this article shall be owned by a veteran or a veteran and the veteran's spouse at any one time. This subdivision does not apply to an interest of a former spouse.
(a) The department shall establish the actual interest rate to be paid. To this end, the department, within 60 days of receipt of the survey of the financial condition of the Division of Farm and Home Purchases required at the close of each fiscal year conducted by an independent public accounting firm of recognized standing as provided under various veterans bond acts, shall report to the California Veterans Board and the Veterans' Finance Committee of 1943, regarding the recommended uniform rate of interest payable upon the amount remaining unpaid under any veteran's purchase contract executed on or after September 26, 1974. The department shall make its finding as to the rate of interest to be charged, determined by a floating rate based upon the actual cost of general obligation bond and revenue bond sales, plus a certain percent for administrative costs, taking into consideration the current value of money, the solvency of the Veterans' Farm and Home Building Fund of 1943, and the interest paid on any participation contracts to which the interest of the department may be subject. Upon approval by the board and the committee, the department may raise or lower the effective rate of interest payable under these contracts annually as it deems to be for the best interests of the department, as well as the contractholders, if in so doing this action is made applicable alike to any and all of these contracts. The interest rate shall not be raised so that the effective date of a higher rate of interest occurs more than once in any calendar year, unless the board and committee, by a two-thirds vote of the members of each, make a finding that an additional increase in the interest rate is necessary to enable the department to maintain the financial solvency of the fund or to meet its obligations to bondholders or purchasers. At least 90 days' advance written notice to the contractholders shall be given before any increase in the interest rate becomes effective.
(b) The total amount of any installment payment shall be raised or lowered to reflect any change in the effective rate of interest. The department may, however, adjust or postpone any installment payment for good cause pursuant to Section 987.71 and, for these purposes, good cause shall include a consideration of whether an increased installment payment would be excessively burdensome in light of a purchaser's financial circumstances. The department shall include notice of this provision in the 90 days' advance notice required under subdivision (a).
(c) Notwithstanding subdivision (a) and Section 987.875, the department may establish separate rates of interest payable on the amounts remaining unpaid under veterans' purchase contracts for any and all contractholders who are called to active duty in the military service of the United States, and who qualify for relief under the provisions of the federal Soldier's and Sailor's Civil Relief Act of 1940, as amended. The rates need not be uniform for all who qualify, but shall not be greater than the rate provided for in that act. Rates shall be established at the discretion of the department, and may apply to any contract from the date of entry into active duty to, and including, 90 days after the date of release from active duty.
(a) In the event the department enters into a master agreement with one or more insurance companies to provide life or disability insurance coverage for the purchasers of farms and homes from the department, the master agreement shall provide that the life insurance will be offered to purchasers who are disabled solely as a result of their qualifying military service and to nondisabled purchasers on an equal basis and that no purchaser shall be denied coverage solely because that purchaser has a qualifying military service-connected disability at the time of application. Notwithstanding Part 2 (commencing with Section 10110) of Division 2 of the Insurance Code, the life or disability insurance shall be a form of group life or group disability insurance.
(b) The master agreement shall provide for maintenance of those reserves as the department, after consultation with the Insurance Commissioner, deems appropriate and prudent, and the department may use from time to time any accumulated surplus in those reserves, or any refunds or returns therefrom upon termination of the agreement, for the purposes of this article or of any veterans general obligation or revenue bond act. Any and all acts of the department in maintaining and using the reserves consistent with this subdivision are hereby ratified and confirmed, it having at all times been the intent of the Legislature that reserves be maintained and that any surpluses therein or refunds or returns therefrom be used by the department for the purposes stated in this subdivision.
(c) Notwithstanding subdivision (b), on and after January 1, 1987, any reserves maintained under the master agreement shall not exceed a level greater than 20 percent in excess of actuarial requirements plus a reasonable contingency reserve, as determined annually by the department, and the department may contract with one or more independent actuaries or actuarial firms to assist the department in the annual determination.
(d) Any departmental proposal to enter into, revise, amend, renew, extend, or cancel, any agreement described in this section shall be a policy change subject to subdivisions (b), (c), and (d) of Section 84.
The action of a veteran purchaser for damages against any third party does not affect his right of action for all damages against any party other than the department. If the department indemnifies, or becomes obligated to indemnify, the veteran purchaser, it may likewise bring an action against any such third party responsible for damage to the contract property. In the latter event, the department may recover in the same suit all payments made on behalf of the veteran purchaser.
If either the veteran purchaser or the department brings an action against such third party, the veteran purchaser or the department, as the case may be, shall forthwith give to the other written notice of the action and of the name of the court in which the action is brought, by personal service or registered mail. Proof of such service shall be filed in such action. If the action is brought by either the veteran purchaser or the department, the other may, at any time before trial on the facts, join as party plaintiff, or shall consolidate the action if brought independently.
The court shall first apply, out of the entire amount of any judgment for any damage recovered by the veteran purchaser, a sufficient amount to reimburse the department for the amount of its expenditures for indemnification. If the department has not joined in the action or has not brought action, or if the action has not been consolidated, the court, on the department's application, shall allow as a first lien against the entire amount of any judgment for any damages recovered by the veteran purchaser, the amount of the department's expenditures for indemnification.
For the purposes of carrying out the provisions of the Veterans' Farm and Home Purchase Act of 1974, there is hereby appropriated, and the department is hereby authorized to utilize the proceeds derived from the Veterans Bond Act of 1974, and from all veterans bond acts subsequent thereto, and to combine such funds up to a percent to be established by the Veterans Finance Committee and reported to the Legislature annually, with funds derived from participation contracts.
Pursuant to the provisions of Section 987.90, the Department of Veterans Affairs is authorized to issue to lenders or investors supplying funds for the program a participation contract.
Notwithstanding other provisions of this article relating to maximum sums to be expended by the department and maximum purchase price, the department may acquire or construct a home equipped with solar energy heating devices at a purchase price not in excess of five thousand dollars ($5,000) over the maximum amounts specified in Sections 987.60, 987.61, and 987.65. Solar energy heating devices for swimming pools, hot tubs, saunas, and spas shall not qualify for any expenditure pursuant to this section except in the case of veterans who were wounded or disabled as a result of their service and who provide medical evidence satisfactory to the department that a heated swimming pool, hot tub, sauna, or spa, is therapeutically necessary.