Section 2791.9 - Use of Real Property Sales ContractsIf a subdivider proposes to sell subdivision interests using real property sales contracts (hereafter sales contracts) as defined in Section 10029 of the Code, a plan under which the subdivider conveys the subdivision interests in trust and records the conveyance prior to the execution of a sales contract by a prospective purchaser (hereafter vendee) and which includes all of the following elements shall be an acceptable alternative method under Section 11013.2(d) and Section 11013.4(f) of the Code:
(a) The original trustee and any successor trustee are expressly subject to the approval of the commissioner.(b) An express prohibition against any amendment of the trust instrument directly or indirectly affecting the interests of a vendee without the prior written approval of the commissioner.(c) An agreement by the trustee to continue in that capacity until a successor trustee acceptable to the commissioner has assumed the position.(d) Vendees are expressly designated in the trust instrument as beneficiaries.(e) If the subdivision interests in the trust are not subject to a blanket encumbrance, provisions for the vendee to make payments under the contract (hereafter purchase money) to the trustee and for the trustee to make disbursements from purchase money as follows: (1) Debt service, taxes, assessments, insurance premiums and any other periodic payments related to the ownership and use of the subdivision interest that the vendee is obligated to make under terms of the sales contract.(2) Payment to the subdivider from the balance of purchase money remaining after the trustee has paid or set aside funds to make payments under (1) above.(f) If a subdivision interest is subject to a blanket encumbrance as defined in Section 11013 of the Code: (1) Unless there has been an independent determination that the vendee is in default under the terms of the sales contract, all of the purchase money of a vendee will be held by the trustee in an interest-bearing account for the benefit of the vendee until the subdivision interest that the vendee has contracted to purchase is released from the blanket encumbrance.(2) Unless there has been an independent determination that the vendee is in default under the terms of the sales contract, the refund on demand by the vendee of the entire sum of purchase money paid if the subdivision interest has not been released from the blanket encumbrance within a specified period of time determined by the commissioner to be reasonable in the circumstances.(3) If the subdivider proposes a disbursement of purchase money to himself or for his account based upon vendee's default under the sales contract, a procedure for a determination of default by a court of law or arbitrator and for the disbursement by the trustee of funds as liquidated damages on the basis of the determination that the vendee has defaulted.Cal. Code Regs. Tit. 10, § 2791.9
1. New section filed 7-1-83; effective thirtieth day thereafter (Register 83, No. 30). Note: Authority cited: Section 11001, Business and Professions Code. Reference: Sections 11013.2, 11013.4, 11018 and 11018.5, Business and Professions Code.
1. New section filed 7-1-83; effective thirtieth day thereafter (Register 83, No. 30).