Loans To Public Officials - Conflicts Of Interest - Government - CA

Section § 87460

This law prohibits elected officials and certain public officials in state or local government from receiving personal loans from people working for the agency they oversee, or from those who have contracts with their agency. The rule lasts from the time they're elected until they leave office. It doesn't apply to loans from banks or credit card companies if those loans are just like what anyone else could get. There are exceptions for campaign loans, small loans under $250, and loans from family members. Additionally, if the loan was offered in writing before the law started, it's also exempt.

(a) An elected officer of a state or local government agency shall not, from the date of the elected officer’s election to office through the date that the elected officer vacates office, receive a personal loan from any officer, employee, member, or consultant of the state or local government agency in which the elected officer holds office or over which the elected officer’s agency has direction and control.

(b) A public official who is required to file a statement of economic interests pursuant to Section 87200 or a public official who is exempt from the state civil service system pursuant to subdivisions (c), (d), (e), (f), and (g) of Section 4 of Article VII of the Constitution shall not, while the public official holds office, receive a personal loan from any officer, employee, member, or consultant of the state or local government agency in which the public official holds office or over which the public official’s agency has direction and control. This subdivision does not apply to loans made to a public official whose duties are solely secretarial, clerical, or manual.

(c) An elected officer of a state or local government agency shall not, from the date of the elected officer’s election to office through the date that the elected officer vacates office, receive a personal loan from any person who has a contract with the state or local government agency to which that elected officer has been elected or over which that elected officer’s agency has direction and control. This subdivision does not apply to loans made by banks or other financial institutions or to any indebtedness created as part of a retail installment or credit card transaction, if the loan is made or the indebtedness created in the lender’s regular course of business on terms available to members of the public without regard to the elected officer’s official status.

(d) A public official who is required to file a statement of economic interests pursuant to Section 87200 or a public official who is exempt from the state civil service system pursuant to subdivisions (c), (d), (e), (f), and (g) of Section 4 of Article VII of the Constitution shall not, while the public official holds office, receive a personal loan from any person who has a contract with the state or local government agency to which that elected officer has been elected or over which that elected officer’s agency has direction and control. This subdivision does not apply to loans made by banks or other financial institutions or to any indebtedness created as part of a retail installment or credit card transaction, if the loan is made or the indebtedness created in the lender’s regular course of business on terms available to members of the public without regard to the elected officer’s official status. This subdivision does not apply to loans made to a public official whose duties are solely secretarial, clerical, or manual.

(e) This section does not apply to the following:

(1) Loans made to the campaign committee of an elected officer or candidate for elective office.

(2) Loans made by a public official’s spouse, child, parent, grandparent, grandchild, brother, sister, parent-in-law, brother-in-law, sister-in-law, nephew, niece, aunt, uncle, or first cousin, or the spouse of any such persons, provided that the person making the loan is not acting as an agent or intermediary for any person not otherwise exempted under this section.

(3) Loans from a person which, in the aggregate, do not exceed two hundred fifty dollars ($250) at any given time.

(4) Loans made, or offered in writing, before the operative date of this section.

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Section § 87461

This law states that elected officials in California cannot receive personal loans of $500 or more while in office unless the loan is documented in writing with all terms clearly outlined, such as loan amount, repayment schedule, and interest rate. However, exceptions to this rule include loans given to the official's campaign committee, loans from family members, and loans agreed to before this law took effect. This law is a part of broader financial regulations for government officials.

(a) Except as set forth in subdivision (b), an elected officer of a state or local government agency shall not, from the date of the elected officer’s election to office through the date the elected officer vacates office, receive a personal loan of five hundred dollars ($500) or more, except when the loan is in writing and clearly states the terms of the loan, including the parties to the loan agreement, date of the loan, amount of the loan, term of the loan, date or dates when payments shall be due on the loan and the amount of the payments, and the rate of interest paid on the loan.

(b) This section does not apply to the following types of loans:

(1) Loans made to the campaign committee of the elected officer.

(2) Loans made to the elected officer by the elected officer’s spouse, child, parent, grandparent, grandchild, brother, sister, parent-in-law, brother-in-law, sister-in-law, nephew, niece, aunt, uncle, or first cousin, or the spouse of any such person, provided that the person making the loan is not acting as an agent or intermediary for any person not otherwise exempted under this section.

(3) Loans made, or offered in writing, before the operative date of this section.

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Section § 87462

This California law explains when a personal loan becomes a gift. If the loan has a set repayment date and the time limit for suing over a missed payment passes, the loan is considered a gift. If there's no set repayment date, it's a gift if a year has gone by since the loan was given, a $100 payment was made, or small payments totaling less than $250 were made in a year.

Exceptions to this rule include loans made to political campaigns, loans that aren't gifts under other rules, or loans where the lender tries to collect the debt. Also, loans where not collecting is sensible for business, with the lender needing to prove it, and loans discharged in bankruptcy, aren't gifts either. All other relevant laws still apply.

(a) Except as set forth in subdivision (b), a personal loan shall become a gift to the debtor for the purposes of this title in the following circumstances:

(1) If the loan has a defined date or dates for repayment, when the statute of limitations for filing an action for default has expired.

(2) If the loan has no defined date or dates for repayment, when one year has elapsed from the later of the following:

(A) The date the loan was made.

(B) The date the last payment of one hundred dollars ($100) or more was made on the loan.

(C) The date upon which the debtor has made payments on the loan aggregating to less than two hundred fifty dollars ($250) during the previous 12 months.

(b) This section shall not apply to the following types of loans:

(1) A loan made to the campaign committee of an elected officer or a candidate for elective office.

(2) A loan that would otherwise not be a gift as defined in this title.

(3) A loan that would otherwise be a gift as set forth under paragraph (a), but on which the creditor has taken reasonable action to collect the balance due.

(4) A loan that would otherwise be a gift as set forth under paragraph (a), but on which the creditor, based on reasonable business considerations, has not undertaken collection action. Except in a criminal action, a creditor who claims that a loan is not a gift on the basis of this paragraph has the burden of proving that the decision for not taking collection action was based on reasonable business considerations.

(5) A loan made to a debtor who has filed for bankruptcy and the loan is ultimately discharged in bankruptcy.

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