Contract proposed to be used by an applicant for a public report (Subdivider)
for the sale or lease of subdivision interests shall provide that if the escrow
for sale or lease of a subdivision interest does not close on or before the
date set forth in the contract, or a later closing date mutually agreed to by
subdivider and the prospective buyer or lessee (Buyer), within 15 days after
the closing date set forth in the contract or an extended closing date mutually
agreed to by Subdivider and Buyer, Subdivider shall, except as provided in
subdivision (c), order all of the money remitted by Buyer under the terms of
the Contract for acquisition of the subdivision interest (Purchase Money) to be
refunded to Buyer.
may provide for disbursements or charges to be made against Purchase Money for
payments to third parties for credit reports, escrow services, preliminary
title reports, appraisals and loan processing services by such parties provided
that the Contract includes:
enumeration of all of the disbursements or charges that may be made against
Purchase Money, and
Subdivider's estimate of the total amount of such disbursements and
(1) Any contractual provision which calls for
disbursement or a charge against Purchase Money based upon Buyer's alleged
failure to complete the purchase of the subdivision interest must conform with
Civil Code Sections
either subsection (c) or subsection (d) thereof), 1676, 1677 and
(2) Except for a disbursement
made following substantial compliance with the procedures set forth in
paragraph (4) below or pursuant to a written agreement of the parties which
either cancels the Contract or is executed after the final closing date
specified by the parties, a disbursement or charge against Purchase Money as
liquidated damages may be done only pursuant to a determination by a court of
law, or by an arbitrator if the parties have so provided by contract, that
Subdivider is entitled to a disbursement or charge against Purchase Money as
contractual provision for a determination by arbitration that Subdivider is
entitled to a disbursement or charge against Purchase Money as liquidated
damages shall require that the arbitration be conducted in accordance with
procedures that are equivalent in substance to the commercial arbitration rules
of the American Arbitration Association, that any arbitration include every
cause of action that has arisen between Buyer and Subdivider under the
Contract, and that the Subdivider remit the fee to initiate arbitration with
the costs of the arbitration ultimately to be borne as determined by the
The contract of
sale may include a procedure under which Purchase Money may be disbursed by the
escrow holder to the Subdivider as liquidated damages upon Buyer's failure to
timely give the escrow holder Buyer's written objection to disbursement of
Purchase Money as liquidated damages. This procedure shall contain at least the
(A) The Subdivider shall
give written notice, in the manner prescribed by Section
of the Code of Civil Procedure for service in a small claims action, to escrow
holder and to Buyer that Buyer is in default under the Contract and that
Subdivider is demanding that escrow holder remit $_______ from the Purchase
Money to Subdivider as liquidated damages unless, within 20 days, Buyer gives
escrow holder Buyer's written objection to disbursement of Purchase Money as
(B) Buyer shall
have a period of 20 days from the date of receipt of the Subdivider's 20-day
notice and demand in which to give escrow holder Buyer's written objection to
disbursement of Purchase Money as liquidated damages.
(5) The Contract may not make Buyer's failure
to timely give the escrow holder the aforesaid written objection a waiver of
any cause of action, other than a waiver of the right to specific performance
of the contract, that the Buyer may have against the Subdivider under the
Contract unless the waiver is conditioned upon service of the Subdivider's
20-day notice and demand in a manner prescribed by Section
of the Code of Civil Procedure for service in a small claims action.
(6) If the Subdivider has had the use of
Purchase Money pending consummation of the sale or lease transaction under
authorization by the Bureau pursuant to subdivision (c) or (d) of Section
11013.2 of the Code or subdivision (b) or (c) of Section 11013.4 of the Code,
Subdivider shall immediately upon alleging the default of Buyer, transmit to
the escrow holder, funds equal to all of the Purchase Money paid by
Cal. Code Regs. Tit.
Note: Authority cited: Section
Business and Professions Code. Reference: Sections 11013.2 and 11013.4,
Business and Professions Code.
1. New section filed
12-3-80; effective thirtieth day thereafter (Register 80, No. 49). For history
of former section, see Register 71, No. 50.
2. Amendment filed
1-21-83; effective thirtieth day thereafter (Register 83, No. 4).
Amendment filed 11-13-96; operative 11-13-96 pursuant to Government Code
(Register 96, No. 46).
4. Amendment of subsection (c)(3) filed
7-31-98; operative 8-30-98 (Register 98, No. 31).
5. Amendment of
subsections (c)(1) and (c)(5) filed 2-28-2006; operative 3-30-2006 (Register
2006, No. 9).
6. Change without regulatory effect amending
subsection (c)(6) filed 6-30-2014 pursuant to section 100, title 1, California
Code of Regulations (Register
2014, No. 27).