State Codes and Statutes

Statutes > California > Mvc > 985-987.31

MILITARY AND VETERANS CODE
SECTION 985-987.31



985.  As used in this article:
   (a) "Farm" means a tract of land, which, in the opinion of the
department, is capable of producing sufficiently to provide a living
for the purchaser and the purchaser's dependents.
   (b) "Home" means any of the following:
   (1) A parcel of real estate upon which there is a dwelling house
or 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.
   (2) Condominium, as defined in subdivision (h).
   (3) Mobilehome, as defined in subdivision (k).
   (4) Cooperative housing, as defined in subdivision (m).
   (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 interest rate
of the interest on the unpaid balance due on a participation contract
to which the interest of the department is subject and the interest
rate 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 situated a mobilehome 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.
   (l) "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.
   (m) "Cooperative housing corporation" means a real estate
development in which membership in the corporation, by stock
ownership, is coupled with the exclusive right to possess a portion
of the real property.


985.1.  This article may be cited as the Veterans' Farm and Home
Purchase Act of 1943.



985.2.  The object of this article is to provide veterans with the
opportunity to acquire farms and homes.



985.3.  The administration of the provisions of this article is
vested in the Department of Veterans Affairs.



985.4.  The department shall adopt rules and regulations in keeping
with the purpose of this article to establish preferences in the
granting of the benefits conferred by this article.



986.  The department shall prescribe and determine the
qualifications of all veterans. Any person deeming himself a veteran
and desiring to benefit hereunder, shall submit to the department
information, in such form as the department prescribes, which will
enable the department to determine his eligibility and
qualifications. The department may make further inquiries and
investigations in order to determine such eligibility and
qualifications. Veterans who are otherwise qualified 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 or not the veteran was
wounded or disabled as a result of service.
   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, entered active duty while in
the State of California, lived in this state for six months
immediately preceding his or her entry into active duty, and were
killed in the line of duty while on active duty.
   (b) Members of the armed forces who entered active military duty
while in the State of California, lived in this state for six months
preceding his or her entry into active duty, and were held as
prisoners of war.
   (c) The unremarried spouse of members of the armed forces who
entered active military duty while in the State of California, lived
in this state for six months preceding his or her entry into active
duty, and have been designated by the armed forces as missing in
action.
   Veterans 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.
   Nothing in this section regarding preferences shall affect any
eligibility requirement for benefits conferred by this article.



986.01.  On and after January 1, 1974, all applications for the
benefits contained in this article shall be filed with the department
within 25 years from the date of the applicant's discharge from the
service, except applications filed by either:
   (a) Veterans who were wounded or are disabled as a result of
wartime service; or
   (b) Veterans who were previously declared prisoners of war.



986.1.  (a) If a veteran dies after filing an application for a farm
or a home, and the application setting forth the veteran's
eligibility and qualifications is subsequently approved, his or her
surviving spouse may, in the discretion of the department, succeed to
the veteran's rights under the application, and may be entitled to
the rights, privileges, and benefits under this article that would
have been the veteran's, but for his or her death. The contract of
purchase that the department otherwise would have made with the
veteran may be made with his or her 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, he or she shall be considered to be a "veteran" for the
purposes of this article, and his or her unremarried surviving spouse
may file an application, may be entitled to the same rights,
privileges, and benefits, and may contract with the department as
provided in the case of a surviving spouse under subdivision (a).
   (c) If a member of the armed forces entered active military duty
while in the State of California, and lived in this state for six
months 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, he or she shall be considered to be a "veteran"
for the purposes of this article, and his or her surviving spouse
may file an application, may be entitled to the same rights,
privileges, and benefits, and may contract with the department as
provided in the case of a surviving spouse under subdivision (a).




986.2.  When a veteran has been authorized by the department to
select a farm or home, he shall submit his selection in such form as
the department prescribes.



986.3.  The department may acquire a farm or home from the owner
thereof 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 if:
   (a) The department is satisfied of the desirability of the
property submitted.
   (b) The veteran has agreed with the department that the veteran or
members of his or her immediate family will actually reside on the
property within 60 days from the day 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.
   (c) The sum to be expended by the department pursuant to a
contract for the construction of a dwelling house and other
improvements does not exceed twenty-five thousand dollars ($25,000).
   (d) Where 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:
   (1) The veteran is the owner in fee of the real property on which
the dwelling house and other buildings are to be constructed, or is
the owner in fee of the real property or 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.
   (2) The veteran has paid a reasonable fee set by the department to
cover the cost of any preliminary service of the department as may
be necessary to process the application.
   (3) 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 eight months
after the acquisition of the real property by the department, and a
bond executed by the contractor 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,
authorized to do business in the State of California.
   (4) The plans, specifications, contract and bond are approved by
the department.
   (5) 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.
   As used in this section "immediate family" includes only the
following:
   Spouse, children, either natural or adoptive; and the parents if
they are dependent upon the veteran for 50 percent or more of their
support.



986.31.  The department may purchase property, subject to a
participation contract providing for a loan term of not less than 23
years. In no event shall the purchase price plus the participation
contract exceed twenty-five thousand dollars ($25,000) or equal more
than 90 percent of the market value of the property as determined by
department appraisal, whichever is the lower amount.



986.35.  The department, after consummating a purchase under the
provisions of this article and the veteran having occupied the
property as required by Section 986.3 of this code, may waive the
occupancy requirement for a period not to exceed four years on a
showing of good cause. 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 or home unsuitable for occupancy,
and such waiver shall be effective as long as such conditions exist.




986.36.  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 farm or home reenters the active
military, naval, or air service of the United States, 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.



986.4.  The department shall not acquire a home under the provisions
of this article where the market value of the improvements exceeds
the sum of forty-five thousand dollars ($45,000), to be determined by
an appraiser or an authorized representative of the department.



986.5.  The purchase price of a home to the department shall not
exceed the sum of twenty-five thousand dollars ($25,000), except that
the purchase price of a mobilehome to the department shall not
exceed twelve thousand five hundred dollars ($12,500), and a veteran
purchasing the home may advance, subject to the provisions of Section
986.4, 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 is required under Section 986.9 of this
code to add to the purchase price of the home in fixing the selling
price thereof to the veteran. The purchase price of a farm to the
department shall not exceed eighty thousand dollars ($80,000), and a
veteran purchasing the farm may advance the difference between the
total price of the farm or cost of the dwelling and improvements to
be constructed on a farm under a contract and the sum of such
purchase price to the department or contract price to the department
and any amount which the department is required under Section 986.9
of this code to add to such purchase or contract price to the
department in fixing the selling price of the farm to the veteran.




986.6.  The department may acquire a farm in which the veteran to
whom such farm is to be sold has theretofore acquired an interest.



986.7.  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) in lieu of the appraisal by the department, the
department may accept 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.



986.8.  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.



986.9.  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 by adding to the purchase
price thereof, to the total cost of improvements constructed, or to
the value of such property as determined by the department when such
property is acquired by the department in a manner other than by
purchase, all expenses incurred and estimated to be incurred by the
department in relation thereto, inclusive of interest,
administration, appraisals, examination of title, incidental
expenses, and the sum deemed necessary to meet unforeseen
contingencies. In the case of real property acquired from a veteran
for the purpose of constructing improvements thereon, the department
shall forthwith after acquiring said real property enter into the
contract with the veteran authorized by this section at a selling
price determined by the amount of the contract price for the
improvements and any of the other additions herein authorized. After
the execution of said 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 said real property, making progress payments thereon
in such amounts and at such times as the department approves. The
department shall upon written request of the veteran and his
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
contract.



986.10.  For the purposes of this article any veteran who is under
the age of 21 shall be deemed to be of the age of majority and to be
an adult person for the purpose of entering into any contract for the
purchase of a farm or home from the department or any other contract
with respect to such property.


987.  The purchaser shall make an initial payment of at least 10
percent of the selling price of the property, in case of a farm, and
5 percent in the case of a home. The department may waive the initial
payment in any case where the value of the property as determined by
the department appraisal shall equal the amount to be paid by the
department plus at least 10 percent in the case of a farm, and 5
percent in the case of a home. The balance of the purchase price may
be amortized over a period fixed by the department, not exceeding 40
years for farms or homes, but not exceeding 15 years for mobilehomes,
together with interest thereon at the rate as determined by the
department pursuant to Section 987.17 for such amortization purposes.
The purchaser on any installment date may pay any or all
installments still remaining unpaid. In any individual case the
department may for good cause postpone from time to time, upon terms
as the department deems proper, the payment of the whole or any part
of any installment of the purchase price or interest thereon. 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.



987.01.  The provisions of Section 987, 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 apply to veteran purchasers only.



987.02.  (a) Notwithstanding Section 987.01, upon the dissolution of
marriage or legal separation of a veteran contract purchaser and the
veteran's spouse, an assignment may be made in favor of the
nonveteran former spouse at the same rate of interest and upon the
same terms and conditions as are provided to veteran purchasers,
provided the veteran's entire beneficial interest is transferred to
the spouse and provided there are dependent children of the veteran
occupying the property and the spouse agrees to: (1) actually reside
in the home and (2) continue to make the payments in the same amount
required by the purchase contract. For the purposes of this
subdivision, any child of the veteran who is legally adopted or who
acquires a separate domicile or marries shall not be considered a
dependent child.
   (b) Should the veteran retain entire beneficial interest in the
property after dissolution or legal separation, the veteran may
continue as purchaser provided either the veteran or the former
spouse continues to occupy the property.



987.1.  (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 the provisions of
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.



987.2.  The contract made between the department and the purchaser
shall provide that the purchaser maintain the farm or home as the
purchaser's place of residence and keep in good order and repair all
buildings, fences, and other permanent improvements situated thereon,
and that the purchaser, if required, insure and keep insured against
fire or other hazards, all buildings, fences, other permanent
improvements, or crops on the property, the loss, if any, under the
insurance policies to be made payable to the department as its
interest appears. Insurance shall be in the amount, with the
insurance companies, and under the conditions specified by the
department. The department shall make an annual report on or before
September 1st of each year to the Legislature regarding any insurance
coverage implemented or required by it. The report shall include,
but not be limited to, the type of insurance coverage, its cost, the
reason for requiring that coverage, loss-ratio information, and any
changes in existing insurance coverage and the reason for those
changes.



987.3.  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 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.



987.4.  The department shall be the sole judge of:
   (a) The legality or validity of taxes, assessments, charges, 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 such insurance.
   (c) The necessity and nature of the work necessary to keep the
buildings, fences, and other improvements in good order and repair,
and the amount necessary to be paid therefor.



987.5.  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.



987.6.  In the event of a forfeiture of a contract of purchase under
the provisions of this article, the department may sell or otherwise
dispose of the property covered by the forfeited contract to such
person and upon such terms and conditions as it deems proper.
   In the event such property is subject to a participation contract,
the department may, at its option, pay the balance due upon such
participation contract, including accrued interest without penalty.



987.7.  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.



987.8.  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
such terms as it deems proper. In the case of a farm, the department
may cultivate the farm or harvest the crop.



987.9.  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.


987.10.  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.



987.12.  For the purposes of carrying out the Veterans' Farm and
Home Purchase Act of 1943 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
1943. 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.



987.14.  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 deparement in said real property or any
portion thereof.


987.15.  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 unimproved real property owned by the applicant.
   (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 his or her
application by the department.
   (c) Where the application is to pay the balance due on an existing
loan not insured or guaranteed by the federal government, and which
bears an interest rate of more than 5 3/4 percent.
   (d) Where the application is for purchase of a mobilehome to be
situated upon real property, or an undivided interest therein, owned
by the applicant.
   (e) Where the veteran had a prior interest of record in the
property as a result of property left in trust at the time of filing
his or her application. The loan may only be used to pay the amount
of any existing encumbrance.



987.16.  (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 because of any of the following:
   (1) Condemnation proceedings instituted by a public agency.
   (2) A change in the veteran's employment which compels a change in
residence location.
   (3) The health of a veteran or of a member of his immediate family
compels a change in residence location.
   (4) Any increase or decrease in the veteran's obligation to
provide housing for dependents has resulted in the livable area of
the house being inadequate or excessive for the veteran's current
housing needs.
   (5) Increased real property taxes beyond the veteran's ability to
pay.
   (b) The provisions of subdivision (a) shall apply only if the
veteran pays his purchase contract in full, applies for a subsequent
loan within six months from date of sale and pays toward the purchase
of the new farm or home the net equity received from sale of the
former property.
   (c) 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 under the provisions of this article.
   (d) 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 if he has paid his purchase contract in full, and
qualifies as a veteran as described in Section 980, under another
separate period of service, or the veteran and the veteran's spouse
each qualify as a veteran as described in Section 980.
   (e) A member of the armed forces, eligible for military retirement
who meets the residence requirements of Section 980, or a veteran as
described in Section 980 who is receiving military retirement pay,
for whom a farm or home was purchased under this article while in
active military service, may be granted a subsequent opportunity to
purchase another farm or home provided he has paid his purchase
contract in full and has served during more than one period for which
eligibility is granted.


987.17.  The department shall establish the actual interest rate to
be paid. To this end the department, by a two-thirds vote of
California Veterans Board members and with the approval of the
Veterans' Finance Committee of 1943, is empowered to establish a
uniform rate of interest payable upon the amount remaining unpaid
under any veteran's purchase contract executed prior to the effective
date of the amendments to this section enacted at the 1972 Regular
Session of the Legislature. The California Veterans Board and the
Veterans' Finance Committee shall periodically, at least once each
year, make a finding as to the rate of interest to be charged, not to
exceed 5 percent per annum on contracts for the purchase of farms or
homes, and not to exceed 8 percent per annum on contracts for the
purchase of mobilehomes, taking into consideration the current value
of money, bond market conditions, and the solvency of the Veterans'
Farm and Home Building Fund of 1943. The California Veterans Board
may raise or lower the rate of interest payable under such contracts
for any given period as many times and as frequently as it deems to
be for the best interests of the department, as well as the contract
holders, if in so doing its action is made applicable alike to any
and all contract holders and 90 days' advance notice be given of the
time when the new rate of interest is to become effective. Any change
in the interest rate shall not affect the total amount of any
installment payment, but the difference shall be credited to interest
or principal and accelerate or prolong the period of payment.




987.17a.  (a) The department shall establish the actual interest
rate to be paid. To this end the department, by a two-thirds vote of
California Veterans Board members and with the approval of the
Veterans' Finance Committee of 1943, is empowered to establish a
uniform effective rate of interest. The California Veterans Board and
the Veterans' Finance Committee shall periodically, at least once
each year, make a finding as to the effective rate of interest to be
charged, not to exceed 5 percent per annum, taking into consideration
the current value of money and the solvency of the Veterans' Farm
and Home Building Fund of 1943 and the interest paid on participation
contracts to which the interest of the department is subject. The
California Veterans Board may raise or lower the effective rate of
interest payable under those contracts for any given period as many
times and as frequently as it deems to be for the best interests of
the department, as well as the contractholders, if in so doing its
action is made applicable alike to any and all contracts executed
after the effective date of this section, and 90 days' advance notice
be given of the time when the new rate of interest is to become
effective.
   (b) The total amount of any installment payment shall be raised or
lowered to reflect a change in the effective rate of interest. The
department shall, upon request of the purchaser, instead increase or
decrease the period fixed by the department for amortization of the
purchase price without changing the amount of the installment
payment. The department shall provide the purchaser with full
information as to the repayment options available to him or her under
this subdivision and, upon request of the purchaser, the financial
consequences of each option. The actual interest rate to be paid on
the amount remaining unpaid under any veteran's purchase contract
shall be a rate of interest that, when combined with the interest
paid on the unpaid balance of a participation contract to which the
department's interest is subject, equals the effective rate of
interest.



987.25.  (a) In the event the department enters into a master
agreement with one or more insurance companies to provide life
insurance coverage for the purchasers of farms and homes from the
department, the master agreement shall provide that the life
insurance coverage offered under the master agreement will be offered
by the insurance company or companies to disabled and nondisabled
veterans on an equal basis and that no veteran shall be denied
coverage because that veteran is disabled at the time of application.
   (b) Any 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.



987.30.  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.



987.31.  This article shall be applicable to all farm and home
purchase loans made or entered into prior to the effective date of
the legislation adding this section during the 1974 legislative
session and thereafter Article 3.1 (commencing with Section 987.50)
of this chapter shall apply.

State Codes and Statutes

Statutes > California > Mvc > 985-987.31

MILITARY AND VETERANS CODE
SECTION 985-987.31



985.  As used in this article:
   (a) "Farm" means a tract of land, which, in the opinion of the
department, is capable of producing sufficiently to provide a living
for the purchaser and the purchaser's dependents.
   (b) "Home" means any of the following:
   (1) A parcel of real estate upon which there is a dwelling house
or 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.
   (2) Condominium, as defined in subdivision (h).
   (3) Mobilehome, as defined in subdivision (k).
   (4) Cooperative housing, as defined in subdivision (m).
   (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 interest rate
of the interest on the unpaid balance due on a participation contract
to which the interest of the department is subject and the interest
rate 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 situated a mobilehome 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.
   (l) "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.
   (m) "Cooperative housing corporation" means a real estate
development in which membership in the corporation, by stock
ownership, is coupled with the exclusive right to possess a portion
of the real property.


985.1.  This article may be cited as the Veterans' Farm and Home
Purchase Act of 1943.



985.2.  The object of this article is to provide veterans with the
opportunity to acquire farms and homes.



985.3.  The administration of the provisions of this article is
vested in the Department of Veterans Affairs.



985.4.  The department shall adopt rules and regulations in keeping
with the purpose of this article to establish preferences in the
granting of the benefits conferred by this article.



986.  The department shall prescribe and determine the
qualifications of all veterans. Any person deeming himself a veteran
and desiring to benefit hereunder, shall submit to the department
information, in such form as the department prescribes, which will
enable the department to determine his eligibility and
qualifications. The department may make further inquiries and
investigations in order to determine such eligibility and
qualifications. Veterans who are otherwise qualified 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 or not the veteran was
wounded or disabled as a result of service.
   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, entered active duty while in
the State of California, lived in this state for six months
immediately preceding his or her entry into active duty, and were
killed in the line of duty while on active duty.
   (b) Members of the armed forces who entered active military duty
while in the State of California, lived in this state for six months
preceding his or her entry into active duty, and were held as
prisoners of war.
   (c) The unremarried spouse of members of the armed forces who
entered active military duty while in the State of California, lived
in this state for six months preceding his or her entry into active
duty, and have been designated by the armed forces as missing in
action.
   Veterans 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.
   Nothing in this section regarding preferences shall affect any
eligibility requirement for benefits conferred by this article.



986.01.  On and after January 1, 1974, all applications for the
benefits contained in this article shall be filed with the department
within 25 years from the date of the applicant's discharge from the
service, except applications filed by either:
   (a) Veterans who were wounded or are disabled as a result of
wartime service; or
   (b) Veterans who were previously declared prisoners of war.



986.1.  (a) If a veteran dies after filing an application for a farm
or a home, and the application setting forth the veteran's
eligibility and qualifications is subsequently approved, his or her
surviving spouse may, in the discretion of the department, succeed to
the veteran's rights under the application, and may be entitled to
the rights, privileges, and benefits under this article that would
have been the veteran's, but for his or her death. The contract of
purchase that the department otherwise would have made with the
veteran may be made with his or her 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, he or she shall be considered to be a "veteran" for the
purposes of this article, and his or her unremarried surviving spouse
may file an application, may be entitled to the same rights,
privileges, and benefits, and may contract with the department as
provided in the case of a surviving spouse under subdivision (a).
   (c) If a member of the armed forces entered active military duty
while in the State of California, and lived in this state for six
months 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, he or she shall be considered to be a "veteran"
for the purposes of this article, and his or her surviving spouse
may file an application, may be entitled to the same rights,
privileges, and benefits, and may contract with the department as
provided in the case of a surviving spouse under subdivision (a).




986.2.  When a veteran has been authorized by the department to
select a farm or home, he shall submit his selection in such form as
the department prescribes.



986.3.  The department may acquire a farm or home from the owner
thereof 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 if:
   (a) The department is satisfied of the desirability of the
property submitted.
   (b) The veteran has agreed with the department that the veteran or
members of his or her immediate family will actually reside on the
property within 60 days from the day 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.
   (c) The sum to be expended by the department pursuant to a
contract for the construction of a dwelling house and other
improvements does not exceed twenty-five thousand dollars ($25,000).
   (d) Where 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:
   (1) The veteran is the owner in fee of the real property on which
the dwelling house and other buildings are to be constructed, or is
the owner in fee of the real property or 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.
   (2) The veteran has paid a reasonable fee set by the department to
cover the cost of any preliminary service of the department as may
be necessary to process the application.
   (3) 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 eight months
after the acquisition of the real property by the department, and a
bond executed by the contractor 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,
authorized to do business in the State of California.
   (4) The plans, specifications, contract and bond are approved by
the department.
   (5) 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.
   As used in this section "immediate family" includes only the
following:
   Spouse, children, either natural or adoptive; and the parents if
they are dependent upon the veteran for 50 percent or more of their
support.



986.31.  The department may purchase property, subject to a
participation contract providing for a loan term of not less than 23
years. In no event shall the purchase price plus the participation
contract exceed twenty-five thousand dollars ($25,000) or equal more
than 90 percent of the market value of the property as determined by
department appraisal, whichever is the lower amount.



986.35.  The department, after consummating a purchase under the
provisions of this article and the veteran having occupied the
property as required by Section 986.3 of this code, may waive the
occupancy requirement for a period not to exceed four years on a
showing of good cause. 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 or home unsuitable for occupancy,
and such waiver shall be effective as long as such conditions exist.




986.36.  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 farm or home reenters the active
military, naval, or air service of the United States, 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.



986.4.  The department shall not acquire a home under the provisions
of this article where the market value of the improvements exceeds
the sum of forty-five thousand dollars ($45,000), to be determined by
an appraiser or an authorized representative of the department.



986.5.  The purchase price of a home to the department shall not
exceed the sum of twenty-five thousand dollars ($25,000), except that
the purchase price of a mobilehome to the department shall not
exceed twelve thousand five hundred dollars ($12,500), and a veteran
purchasing the home may advance, subject to the provisions of Section
986.4, 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 is required under Section 986.9 of this
code to add to the purchase price of the home in fixing the selling
price thereof to the veteran. The purchase price of a farm to the
department shall not exceed eighty thousand dollars ($80,000), and a
veteran purchasing the farm may advance the difference between the
total price of the farm or cost of the dwelling and improvements to
be constructed on a farm under a contract and the sum of such
purchase price to the department or contract price to the department
and any amount which the department is required under Section 986.9
of this code to add to such purchase or contract price to the
department in fixing the selling price of the farm to the veteran.




986.6.  The department may acquire a farm in which the veteran to
whom such farm is to be sold has theretofore acquired an interest.



986.7.  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) in lieu of the appraisal by the department, the
department may accept 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.



986.8.  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.



986.9.  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 by adding to the purchase
price thereof, to the total cost of improvements constructed, or to
the value of such property as determined by the department when such
property is acquired by the department in a manner other than by
purchase, all expenses incurred and estimated to be incurred by the
department in relation thereto, inclusive of interest,
administration, appraisals, examination of title, incidental
expenses, and the sum deemed necessary to meet unforeseen
contingencies. In the case of real property acquired from a veteran
for the purpose of constructing improvements thereon, the department
shall forthwith after acquiring said real property enter into the
contract with the veteran authorized by this section at a selling
price determined by the amount of the contract price for the
improvements and any of the other additions herein authorized. After
the execution of said 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 said real property, making progress payments thereon
in such amounts and at such times as the department approves. The
department shall upon written request of the veteran and his
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
contract.



986.10.  For the purposes of this article any veteran who is under
the age of 21 shall be deemed to be of the age of majority and to be
an adult person for the purpose of entering into any contract for the
purchase of a farm or home from the department or any other contract
with respect to such property.


987.  The purchaser shall make an initial payment of at least 10
percent of the selling price of the property, in case of a farm, and
5 percent in the case of a home. The department may waive the initial
payment in any case where the value of the property as determined by
the department appraisal shall equal the amount to be paid by the
department plus at least 10 percent in the case of a farm, and 5
percent in the case of a home. The balance of the purchase price may
be amortized over a period fixed by the department, not exceeding 40
years for farms or homes, but not exceeding 15 years for mobilehomes,
together with interest thereon at the rate as determined by the
department pursuant to Section 987.17 for such amortization purposes.
The purchaser on any installment date may pay any or all
installments still remaining unpaid. In any individual case the
department may for good cause postpone from time to time, upon terms
as the department deems proper, the payment of the whole or any part
of any installment of the purchase price or interest thereon. 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.



987.01.  The provisions of Section 987, 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 apply to veteran purchasers only.



987.02.  (a) Notwithstanding Section 987.01, upon the dissolution of
marriage or legal separation of a veteran contract purchaser and the
veteran's spouse, an assignment may be made in favor of the
nonveteran former spouse at the same rate of interest and upon the
same terms and conditions as are provided to veteran purchasers,
provided the veteran's entire beneficial interest is transferred to
the spouse and provided there are dependent children of the veteran
occupying the property and the spouse agrees to: (1) actually reside
in the home and (2) continue to make the payments in the same amount
required by the purchase contract. For the purposes of this
subdivision, any child of the veteran who is legally adopted or who
acquires a separate domicile or marries shall not be considered a
dependent child.
   (b) Should the veteran retain entire beneficial interest in the
property after dissolution or legal separation, the veteran may
continue as purchaser provided either the veteran or the former
spouse continues to occupy the property.



987.1.  (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 the provisions of
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.



987.2.  The contract made between the department and the purchaser
shall provide that the purchaser maintain the farm or home as the
purchaser's place of residence and keep in good order and repair all
buildings, fences, and other permanent improvements situated thereon,
and that the purchaser, if required, insure and keep insured against
fire or other hazards, all buildings, fences, other permanent
improvements, or crops on the property, the loss, if any, under the
insurance policies to be made payable to the department as its
interest appears. Insurance shall be in the amount, with the
insurance companies, and under the conditions specified by the
department. The department shall make an annual report on or before
September 1st of each year to the Legislature regarding any insurance
coverage implemented or required by it. The report shall include,
but not be limited to, the type of insurance coverage, its cost, the
reason for requiring that coverage, loss-ratio information, and any
changes in existing insurance coverage and the reason for those
changes.



987.3.  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 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.



987.4.  The department shall be the sole judge of:
   (a) The legality or validity of taxes, assessments, charges, 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 such insurance.
   (c) The necessity and nature of the work necessary to keep the
buildings, fences, and other improvements in good order and repair,
and the amount necessary to be paid therefor.



987.5.  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.



987.6.  In the event of a forfeiture of a contract of purchase under
the provisions of this article, the department may sell or otherwise
dispose of the property covered by the forfeited contract to such
person and upon such terms and conditions as it deems proper.
   In the event such property is subject to a participation contract,
the department may, at its option, pay the balance due upon such
participation contract, including accrued interest without penalty.



987.7.  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.



987.8.  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
such terms as it deems proper. In the case of a farm, the department
may cultivate the farm or harvest the crop.



987.9.  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.


987.10.  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.



987.12.  For the purposes of carrying out the Veterans' Farm and
Home Purchase Act of 1943 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
1943. 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.



987.14.  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 deparement in said real property or any
portion thereof.


987.15.  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 unimproved real property owned by the applicant.
   (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 his or her
application by the department.
   (c) Where the application is to pay the balance due on an existing
loan not insured or guaranteed by the federal government, and which
bears an interest rate of more than 5 3/4 percent.
   (d) Where the application is for purchase of a mobilehome to be
situated upon real property, or an undivided interest therein, owned
by the applicant.
   (e) Where the veteran had a prior interest of record in the
property as a result of property left in trust at the time of filing
his or her application. The loan may only be used to pay the amount
of any existing encumbrance.



987.16.  (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 because of any of the following:
   (1) Condemnation proceedings instituted by a public agency.
   (2) A change in the veteran's employment which compels a change in
residence location.
   (3) The health of a veteran or of a member of his immediate family
compels a change in residence location.
   (4) Any increase or decrease in the veteran's obligation to
provide housing for dependents has resulted in the livable area of
the house being inadequate or excessive for the veteran's current
housing needs.
   (5) Increased real property taxes beyond the veteran's ability to
pay.
   (b) The provisions of subdivision (a) shall apply only if the
veteran pays his purchase contract in full, applies for a subsequent
loan within six months from date of sale and pays toward the purchase
of the new farm or home the net equity received from sale of the
former property.
   (c) 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 under the provisions of this article.
   (d) 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 if he has paid his purchase contract in full, and
qualifies as a veteran as described in Section 980, under another
separate period of service, or the veteran and the veteran's spouse
each qualify as a veteran as described in Section 980.
   (e) A member of the armed forces, eligible for military retirement
who meets the residence requirements of Section 980, or a veteran as
described in Section 980 who is receiving military retirement pay,
for whom a farm or home was purchased under this article while in
active military service, may be granted a subsequent opportunity to
purchase another farm or home provided he has paid his purchase
contract in full and has served during more than one period for which
eligibility is granted.


987.17.  The department shall establish the actual interest rate to
be paid. To this end the department, by a two-thirds vote of
California Veterans Board members and with the approval of the
Veterans' Finance Committee of 1943, is empowered to establish a
uniform rate of interest payable upon the amount remaining unpaid
under any veteran's purchase contract executed prior to the effective
date of the amendments to this section enacted at the 1972 Regular
Session of the Legislature. The California Veterans Board and the
Veterans' Finance Committee shall periodically, at least once each
year, make a finding as to the rate of interest to be charged, not to
exceed 5 percent per annum on contracts for the purchase of farms or
homes, and not to exceed 8 percent per annum on contracts for the
purchase of mobilehomes, taking into consideration the current value
of money, bond market conditions, and the solvency of the Veterans'
Farm and Home Building Fund of 1943. The California Veterans Board
may raise or lower the rate of interest payable under such contracts
for any given period as many times and as frequently as it deems to
be for the best interests of the department, as well as the contract
holders, if in so doing its action is made applicable alike to any
and all contract holders and 90 days' advance notice be given of the
time when the new rate of interest is to become effective. Any change
in the interest rate shall not affect the total amount of any
installment payment, but the difference shall be credited to interest
or principal and accelerate or prolong the period of payment.




987.17a.  (a) The department shall establish the actual interest
rate to be paid. To this end the department, by a two-thirds vote of
California Veterans Board members and with the approval of the
Veterans' Finance Committee of 1943, is empowered to establish a
uniform effective rate of interest. The California Veterans Board and
the Veterans' Finance Committee shall periodically, at least once
each year, make a finding as to the effective rate of interest to be
charged, not to exceed 5 percent per annum, taking into consideration
the current value of money and the solvency of the Veterans' Farm
and Home Building Fund of 1943 and the interest paid on participation
contracts to which the interest of the department is subject. The
California Veterans Board may raise or lower the effective rate of
interest payable under those contracts for any given period as many
times and as frequently as it deems to be for the best interests of
the department, as well as the contractholders, if in so doing its
action is made applicable alike to any and all contracts executed
after the effective date of this section, and 90 days' advance notice
be given of the time when the new rate of interest is to become
effective.
   (b) The total amount of any installment payment shall be raised or
lowered to reflect a change in the effective rate of interest. The
department shall, upon request of the purchaser, instead increase or
decrease the period fixed by the department for amortization of the
purchase price without changing the amount of the installment
payment. The department shall provide the purchaser with full
information as to the repayment options available to him or her under
this subdivision and, upon request of the purchaser, the financial
consequences of each option. The actual interest rate to be paid on
the amount remaining unpaid under any veteran's purchase contract
shall be a rate of interest that, when combined with the interest
paid on the unpaid balance of a participation contract to which the
department's interest is subject, equals the effective rate of
interest.



987.25.  (a) In the event the department enters into a master
agreement with one or more insurance companies to provide life
insurance coverage for the purchasers of farms and homes from the
department, the master agreement shall provide that the life
insurance coverage offered under the master agreement will be offered
by the insurance company or companies to disabled and nondisabled
veterans on an equal basis and that no veteran shall be denied
coverage because that veteran is disabled at the time of application.
   (b) Any 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.



987.30.  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.



987.31.  This article shall be applicable to all farm and home
purchase loans made or entered into prior to the effective date of
the legislation adding this section during the 1974 legislative
session and thereafter Article 3.1 (commencing with Section 987.50)
of this chapter shall apply.


State Codes and Statutes

State Codes and Statutes

Statutes > California > Mvc > 985-987.31

MILITARY AND VETERANS CODE
SECTION 985-987.31



985.  As used in this article:
   (a) "Farm" means a tract of land, which, in the opinion of the
department, is capable of producing sufficiently to provide a living
for the purchaser and the purchaser's dependents.
   (b) "Home" means any of the following:
   (1) A parcel of real estate upon which there is a dwelling house
or 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.
   (2) Condominium, as defined in subdivision (h).
   (3) Mobilehome, as defined in subdivision (k).
   (4) Cooperative housing, as defined in subdivision (m).
   (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 interest rate
of the interest on the unpaid balance due on a participation contract
to which the interest of the department is subject and the interest
rate 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 situated a mobilehome 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.
   (l) "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.
   (m) "Cooperative housing corporation" means a real estate
development in which membership in the corporation, by stock
ownership, is coupled with the exclusive right to possess a portion
of the real property.


985.1.  This article may be cited as the Veterans' Farm and Home
Purchase Act of 1943.



985.2.  The object of this article is to provide veterans with the
opportunity to acquire farms and homes.



985.3.  The administration of the provisions of this article is
vested in the Department of Veterans Affairs.



985.4.  The department shall adopt rules and regulations in keeping
with the purpose of this article to establish preferences in the
granting of the benefits conferred by this article.



986.  The department shall prescribe and determine the
qualifications of all veterans. Any person deeming himself a veteran
and desiring to benefit hereunder, shall submit to the department
information, in such form as the department prescribes, which will
enable the department to determine his eligibility and
qualifications. The department may make further inquiries and
investigations in order to determine such eligibility and
qualifications. Veterans who are otherwise qualified 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 or not the veteran was
wounded or disabled as a result of service.
   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, entered active duty while in
the State of California, lived in this state for six months
immediately preceding his or her entry into active duty, and were
killed in the line of duty while on active duty.
   (b) Members of the armed forces who entered active military duty
while in the State of California, lived in this state for six months
preceding his or her entry into active duty, and were held as
prisoners of war.
   (c) The unremarried spouse of members of the armed forces who
entered active military duty while in the State of California, lived
in this state for six months preceding his or her entry into active
duty, and have been designated by the armed forces as missing in
action.
   Veterans 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.
   Nothing in this section regarding preferences shall affect any
eligibility requirement for benefits conferred by this article.



986.01.  On and after January 1, 1974, all applications for the
benefits contained in this article shall be filed with the department
within 25 years from the date of the applicant's discharge from the
service, except applications filed by either:
   (a) Veterans who were wounded or are disabled as a result of
wartime service; or
   (b) Veterans who were previously declared prisoners of war.



986.1.  (a) If a veteran dies after filing an application for a farm
or a home, and the application setting forth the veteran's
eligibility and qualifications is subsequently approved, his or her
surviving spouse may, in the discretion of the department, succeed to
the veteran's rights under the application, and may be entitled to
the rights, privileges, and benefits under this article that would
have been the veteran's, but for his or her death. The contract of
purchase that the department otherwise would have made with the
veteran may be made with his or her 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, he or she shall be considered to be a "veteran" for the
purposes of this article, and his or her unremarried surviving spouse
may file an application, may be entitled to the same rights,
privileges, and benefits, and may contract with the department as
provided in the case of a surviving spouse under subdivision (a).
   (c) If a member of the armed forces entered active military duty
while in the State of California, and lived in this state for six
months 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, he or she shall be considered to be a "veteran"
for the purposes of this article, and his or her surviving spouse
may file an application, may be entitled to the same rights,
privileges, and benefits, and may contract with the department as
provided in the case of a surviving spouse under subdivision (a).




986.2.  When a veteran has been authorized by the department to
select a farm or home, he shall submit his selection in such form as
the department prescribes.



986.3.  The department may acquire a farm or home from the owner
thereof 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 if:
   (a) The department is satisfied of the desirability of the
property submitted.
   (b) The veteran has agreed with the department that the veteran or
members of his or her immediate family will actually reside on the
property within 60 days from the day 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.
   (c) The sum to be expended by the department pursuant to a
contract for the construction of a dwelling house and other
improvements does not exceed twenty-five thousand dollars ($25,000).
   (d) Where 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:
   (1) The veteran is the owner in fee of the real property on which
the dwelling house and other buildings are to be constructed, or is
the owner in fee of the real property or 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.
   (2) The veteran has paid a reasonable fee set by the department to
cover the cost of any preliminary service of the department as may
be necessary to process the application.
   (3) 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 eight months
after the acquisition of the real property by the department, and a
bond executed by the contractor 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,
authorized to do business in the State of California.
   (4) The plans, specifications, contract and bond are approved by
the department.
   (5) 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.
   As used in this section "immediate family" includes only the
following:
   Spouse, children, either natural or adoptive; and the parents if
they are dependent upon the veteran for 50 percent or more of their
support.



986.31.  The department may purchase property, subject to a
participation contract providing for a loan term of not less than 23
years. In no event shall the purchase price plus the participation
contract exceed twenty-five thousand dollars ($25,000) or equal more
than 90 percent of the market value of the property as determined by
department appraisal, whichever is the lower amount.



986.35.  The department, after consummating a purchase under the
provisions of this article and the veteran having occupied the
property as required by Section 986.3 of this code, may waive the
occupancy requirement for a period not to exceed four years on a
showing of good cause. 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 or home unsuitable for occupancy,
and such waiver shall be effective as long as such conditions exist.




986.36.  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 farm or home reenters the active
military, naval, or air service of the United States, 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.



986.4.  The department shall not acquire a home under the provisions
of this article where the market value of the improvements exceeds
the sum of forty-five thousand dollars ($45,000), to be determined by
an appraiser or an authorized representative of the department.



986.5.  The purchase price of a home to the department shall not
exceed the sum of twenty-five thousand dollars ($25,000), except that
the purchase price of a mobilehome to the department shall not
exceed twelve thousand five hundred dollars ($12,500), and a veteran
purchasing the home may advance, subject to the provisions of Section
986.4, 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 is required under Section 986.9 of this
code to add to the purchase price of the home in fixing the selling
price thereof to the veteran. The purchase price of a farm to the
department shall not exceed eighty thousand dollars ($80,000), and a
veteran purchasing the farm may advance the difference between the
total price of the farm or cost of the dwelling and improvements to
be constructed on a farm under a contract and the sum of such
purchase price to the department or contract price to the department
and any amount which the department is required under Section 986.9
of this code to add to such purchase or contract price to the
department in fixing the selling price of the farm to the veteran.




986.6.  The department may acquire a farm in which the veteran to
whom such farm is to be sold has theretofore acquired an interest.



986.7.  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) in lieu of the appraisal by the department, the
department may accept 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.



986.8.  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.



986.9.  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 by adding to the purchase
price thereof, to the total cost of improvements constructed, or to
the value of such property as determined by the department when such
property is acquired by the department in a manner other than by
purchase, all expenses incurred and estimated to be incurred by the
department in relation thereto, inclusive of interest,
administration, appraisals, examination of title, incidental
expenses, and the sum deemed necessary to meet unforeseen
contingencies. In the case of real property acquired from a veteran
for the purpose of constructing improvements thereon, the department
shall forthwith after acquiring said real property enter into the
contract with the veteran authorized by this section at a selling
price determined by the amount of the contract price for the
improvements and any of the other additions herein authorized. After
the execution of said 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 said real property, making progress payments thereon
in such amounts and at such times as the department approves. The
department shall upon written request of the veteran and his
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
contract.



986.10.  For the purposes of this article any veteran who is under
the age of 21 shall be deemed to be of the age of majority and to be
an adult person for the purpose of entering into any contract for the
purchase of a farm or home from the department or any other contract
with respect to such property.


987.  The purchaser shall make an initial payment of at least 10
percent of the selling price of the property, in case of a farm, and
5 percent in the case of a home. The department may waive the initial
payment in any case where the value of the property as determined by
the department appraisal shall equal the amount to be paid by the
department plus at least 10 percent in the case of a farm, and 5
percent in the case of a home. The balance of the purchase price may
be amortized over a period fixed by the department, not exceeding 40
years for farms or homes, but not exceeding 15 years for mobilehomes,
together with interest thereon at the rate as determined by the
department pursuant to Section 987.17 for such amortization purposes.
The purchaser on any installment date may pay any or all
installments still remaining unpaid. In any individual case the
department may for good cause postpone from time to time, upon terms
as the department deems proper, the payment of the whole or any part
of any installment of the purchase price or interest thereon. 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.



987.01.  The provisions of Section 987, 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 apply to veteran purchasers only.



987.02.  (a) Notwithstanding Section 987.01, upon the dissolution of
marriage or legal separation of a veteran contract purchaser and the
veteran's spouse, an assignment may be made in favor of the
nonveteran former spouse at the same rate of interest and upon the
same terms and conditions as are provided to veteran purchasers,
provided the veteran's entire beneficial interest is transferred to
the spouse and provided there are dependent children of the veteran
occupying the property and the spouse agrees to: (1) actually reside
in the home and (2) continue to make the payments in the same amount
required by the purchase contract. For the purposes of this
subdivision, any child of the veteran who is legally adopted or who
acquires a separate domicile or marries shall not be considered a
dependent child.
   (b) Should the veteran retain entire beneficial interest in the
property after dissolution or legal separation, the veteran may
continue as purchaser provided either the veteran or the former
spouse continues to occupy the property.



987.1.  (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 the provisions of
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.



987.2.  The contract made between the department and the purchaser
shall provide that the purchaser maintain the farm or home as the
purchaser's place of residence and keep in good order and repair all
buildings, fences, and other permanent improvements situated thereon,
and that the purchaser, if required, insure and keep insured against
fire or other hazards, all buildings, fences, other permanent
improvements, or crops on the property, the loss, if any, under the
insurance policies to be made payable to the department as its
interest appears. Insurance shall be in the amount, with the
insurance companies, and under the conditions specified by the
department. The department shall make an annual report on or before
September 1st of each year to the Legislature regarding any insurance
coverage implemented or required by it. The report shall include,
but not be limited to, the type of insurance coverage, its cost, the
reason for requiring that coverage, loss-ratio information, and any
changes in existing insurance coverage and the reason for those
changes.



987.3.  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 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.



987.4.  The department shall be the sole judge of:
   (a) The legality or validity of taxes, assessments, charges, 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 such insurance.
   (c) The necessity and nature of the work necessary to keep the
buildings, fences, and other improvements in good order and repair,
and the amount necessary to be paid therefor.



987.5.  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.



987.6.  In the event of a forfeiture of a contract of purchase under
the provisions of this article, the department may sell or otherwise
dispose of the property covered by the forfeited contract to such
person and upon such terms and conditions as it deems proper.
   In the event such property is subject to a participation contract,
the department may, at its option, pay the balance due upon such
participation contract, including accrued interest without penalty.



987.7.  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.



987.8.  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
such terms as it deems proper. In the case of a farm, the department
may cultivate the farm or harvest the crop.



987.9.  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.


987.10.  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.



987.12.  For the purposes of carrying out the Veterans' Farm and
Home Purchase Act of 1943 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
1943. 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.



987.14.  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 deparement in said real property or any
portion thereof.


987.15.  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 unimproved real property owned by the applicant.
   (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 his or her
application by the department.
   (c) Where the application is to pay the balance due on an existing
loan not insured or guaranteed by the federal government, and which
bears an interest rate of more than 5 3/4 percent.
   (d) Where the application is for purchase of a mobilehome to be
situated upon real property, or an undivided interest therein, owned
by the applicant.
   (e) Where the veteran had a prior interest of record in the
property as a result of property left in trust at the time of filing
his or her application. The loan may only be used to pay the amount
of any existing encumbrance.



987.16.  (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 because of any of the following:
   (1) Condemnation proceedings instituted by a public agency.
   (2) A change in the veteran's employment which compels a change in
residence location.
   (3) The health of a veteran or of a member of his immediate family
compels a change in residence location.
   (4) Any increase or decrease in the veteran's obligation to
provide housing for dependents has resulted in the livable area of
the house being inadequate or excessive for the veteran's current
housing needs.
   (5) Increased real property taxes beyond the veteran's ability to
pay.
   (b) The provisions of subdivision (a) shall apply only if the
veteran pays his purchase contract in full, applies for a subsequent
loan within six months from date of sale and pays toward the purchase
of the new farm or home the net equity received from sale of the
former property.
   (c) 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 under the provisions of this article.
   (d) 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 if he has paid his purchase contract in full, and
qualifies as a veteran as described in Section 980, under another
separate period of service, or the veteran and the veteran's spouse
each qualify as a veteran as described in Section 980.
   (e) A member of the armed forces, eligible for military retirement
who meets the residence requirements of Section 980, or a veteran as
described in Section 980 who is receiving military retirement pay,
for whom a farm or home was purchased under this article while in
active military service, may be granted a subsequent opportunity to
purchase another farm or home provided he has paid his purchase
contract in full and has served during more than one period for which
eligibility is granted.


987.17.  The department shall establish the actual interest rate to
be paid. To this end the department, by a two-thirds vote of
California Veterans Board members and with the approval of the
Veterans' Finance Committee of 1943, is empowered to establish a
uniform rate of interest payable upon the amount remaining unpaid
under any veteran's purchase contract executed prior to the effective
date of the amendments to this section enacted at the 1972 Regular
Session of the Legislature. The California Veterans Board and the
Veterans' Finance Committee shall periodically, at least once each
year, make a finding as to the rate of interest to be charged, not to
exceed 5 percent per annum on contracts for the purchase of farms or
homes, and not to exceed 8 percent per annum on contracts for the
purchase of mobilehomes, taking into consideration the current value
of money, bond market conditions, and the solvency of the Veterans'
Farm and Home Building Fund of 1943. The California Veterans Board
may raise or lower the rate of interest payable under such contracts
for any given period as many times and as frequently as it deems to
be for the best interests of the department, as well as the contract
holders, if in so doing its action is made applicable alike to any
and all contract holders and 90 days' advance notice be given of the
time when the new rate of interest is to become effective. Any change
in the interest rate shall not affect the total amount of any
installment payment, but the difference shall be credited to interest
or principal and accelerate or prolong the period of payment.




987.17a.  (a) The department shall establish the actual interest
rate to be paid. To this end the department, by a two-thirds vote of
California Veterans Board members and with the approval of the
Veterans' Finance Committee of 1943, is empowered to establish a
uniform effective rate of interest. The California Veterans Board and
the Veterans' Finance Committee shall periodically, at least once
each year, make a finding as to the effective rate of interest to be
charged, not to exceed 5 percent per annum, taking into consideration
the current value of money and the solvency of the Veterans' Farm
and Home Building Fund of 1943 and the interest paid on participation
contracts to which the interest of the department is subject. The
California Veterans Board may raise or lower the effective rate of
interest payable under those contracts for any given period as many
times and as frequently as it deems to be for the best interests of
the department, as well as the contractholders, if in so doing its
action is made applicable alike to any and all contracts executed
after the effective date of this section, and 90 days' advance notice
be given of the time when the new rate of interest is to become
effective.
   (b) The total amount of any installment payment shall be raised or
lowered to reflect a change in the effective rate of interest. The
department shall, upon request of the purchaser, instead increase or
decrease the period fixed by the department for amortization of the
purchase price without changing the amount of the installment
payment. The department shall provide the purchaser with full
information as to the repayment options available to him or her under
this subdivision and, upon request of the purchaser, the financial
consequences of each option. The actual interest rate to be paid on
the amount remaining unpaid under any veteran's purchase contract
shall be a rate of interest that, when combined with the interest
paid on the unpaid balance of a participation contract to which the
department's interest is subject, equals the effective rate of
interest.



987.25.  (a) In the event the department enters into a master
agreement with one or more insurance companies to provide life
insurance coverage for the purchasers of farms and homes from the
department, the master agreement shall provide that the life
insurance coverage offered under the master agreement will be offered
by the insurance company or companies to disabled and nondisabled
veterans on an equal basis and that no veteran shall be denied
coverage because that veteran is disabled at the time of application.
   (b) Any 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.



987.30.  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.



987.31.  This article shall be applicable to all farm and home
purchase loans made or entered into prior to the effective date of
the legislation adding this section during the 1974 legislative
session and thereafter Article 3.1 (commencing with Section 987.50)
of this chapter shall apply.