Article 4Improvements

Section § 1917.510

Explanation

This law lets borrowers add the value of big home improvements to their property's worth when calculating their total loan amount. The borrower has to mail the lender a notice and proof of the improvements' cost within 60 days of finishing them if these improvements cost more than $1,000 within a year. The lender can question the increased value and request an appraisal if both parties can't agree on the value. Two appraisers decide on the value increase, each selected by borrower and lender, who will pay for their own appraisers. Borrowers get a credit for the increased property value if it exceeds $1,000. If the borrower did at least half the work themselves, the improvement costs don't have to be over $1,000 to apply for this credit.

The borrower may have the value of capital improvements added to the fair market value of the borrower’s property, for purposes of determining the total loan obligation, but only if the procedures set forth in this article are followed.
(a)CA Civil Law Code § 1917.510(a) Within 60 days following the completion of capital improvements during any 12-month period with a cost in excess of one thousand dollars ($1,000), the borrower shall send by first-class mail a notice of the completion of the improvements to the lender and shall submit proof of cost and an estimate of the increase in value of the property by reason of the improvements.
(b)CA Civil Law Code § 1917.510(b) If, within 30 days of receipt of the notice, the lender questions the claimed increase in value of the property by reason of the improvements, the lender and the borrower may, by mutual agreement, establish the value of the capital improvements or the lender may require appraisal of the property. An appraisal shall be made to determine the increase in value of the property, if any, by reason of the improvements, by two appraisers selected in the same manner specified in Section 1917.412. If appraisals are performed, the increase in value resulting from the improvements for the purposes of this section, shall be one-half of the sum of the two appraisals. The cost of the appraiser selected by the borrower shall be borne by the borrower, and the cost of the appraiser selected by the lender shall be borne by the lender.
(c)CA Civil Law Code § 1917.510(c) A credit for the value of capital improvements shall be provided if the increase in value of the property resulting therefrom is determined pursuant to subdivision (b) to exceed one thousand dollars ($1,000).
(d)CA Civil Law Code § 1917.510(d) If 50 percent or more of the value of the labor or other work on the improvements was performed by the borrower, then the actual cost of the improvements need not exceed one thousand dollars ($1,000) for purposes of making application under subdivision (a).
borrower capital improvements fair market value loan obligation property value increase in value notice of completion first-class mail proof of cost appraisal mutual agreement cost of improvements property appraisal credit for improvements borrower labor
(Added by Stats. 1984, Ch. 1701, Sec. 1.)

Section § 1917.511

Explanation

This section says that senior loans can offer borrowers more credit for home improvements than the law typically allows, as long as the loan documents accurately show these terms with the right disclosures.

Nothing in this article shall preclude a shared appreciation loan for seniors from providing the borrower with a greater credit for improvements than specified in this article, provided the relevant disclosures required by Article 7 (commencing with Section 1917.710) are appropriately modified to accurately disclose the terms of the credit.
shared appreciation loan senior loans greater credit home improvements borrower credit loan disclosures Article 7 requirements Section 1917.710 credit terms modification accurate disclosure improved loan terms enhanced credit offer disclosures modification
(Added by Stats. 1984, Ch. 1701, Sec. 1.)